For financial crime professionals, AML officers, or anyone seeking clarity on fraud and AML terms, Edifice offers a glossary of common acronyms and definitions.
We’ll continuously update this resource to reflect industry developments.
Any relationship directly connected with obliged entities’ commercial or professional activities and expected to have an element of duration“. This concept extends beyond the financial sector to include a variety of professions that require specific licensing or approval.
Obliged entities engage in commercial or professional activities requiring licensure or approval due to ML and TF inherent risks associated with their services.
A cash-intensive business receives a significant portion of its revenue in cash, for example, a restaurant, a grocery shop, a beauty salon, or a convenience store.
A government department under the Financial Services and the Treasury Bureau of the Government of Hong Kong. The Registry administers and enforces most parts of the Companies Ordinance. It registers local and non-Hong Kong companies and statutory returns and provides the public with services and facilities for inspecting and obtaining company information in the Companies Register. The Registry processes applications relating to money lender licences and maintains a register of money lenders for public inspection. Since 1 March 2018, The Registry has undertaken a new role as the licensing authority for trust and company service providers (TCSP).
A proprietorship, partnership, corporation, or other form of enterprise that engages in business.
Compliance refers to the adherence to laws, regulations, guidelines, and standards relevant to an organisation’s operations and industry. In AML and CFT, compliance involves implementing policies, procedures, and controls to prevent, detect, and report suspicious activities that may include money laundering or terrorist financing. Compliance efforts aim to uphold legal requirements, mitigate risks, and maintain the integrity and reputation of the organisation while contributing to broader efforts to combat financial crime globally.
Compliance officers ensure that all organisational operations and procedures obey the law. A Compliance Officer ensures that a company’s operations comply with internal standards and the law. Businesses that do not have a Compliance Officer who should regularly monitor and drive compliance management are at risk of violating applicable rules and regulations, subjecting themselves to reputational loss and financial penalties.
Sanctions prohibit all transactions and activity with a sanctioned country by the sanctioning country except in rare, specific instances.
Concentration risk primarily applies to the asset side of the balance sheet. As a common practice, supervisory authorities require financial institutions to have information systems to identify credit concentrations and set limits to restrict bank exposure to single borrowers or groups of related borrowers. On the liability side, concentration risk is associated with funding risk, especially the risk of early and sudden withdrawal of funds by large depositors that could harm an institution’s liquidity.
Duty imposed in conduct whereby individuals and companies must keep ‘customer’ matters confidential.
Confidentiality can be overridden by customer consent or if the law requires disclosure. Breach of this duty and making an unauthorised disclosure in any other circumstance is a disciplinary matter.
