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.
AML customer onboarding is the first step towards a customer and business relationship, where institutions and other regulated entities must collect a range of important information about their customers as part of the CDD and know-your-customer (KYC) process. By obtaining this information, institutions can establish that their customers are who they say they are and are being truthful about the nature of the business they are involved in.
A systematic process used by financial institutions and related entities to evaluate the potential risks associated with a customer in terms of money laundering and terrorist financing (AML/CFT). This assessment involves analysing various factors, including the customer’s identity, financial transactions, geographic location, and business activities, to determine their overall risk level. The goal is implementing appropriate monitoring and control measures tailored to the customer’s risk profile, ensuring compliance with regulatory requirements, and preventing illicit activities.
Verifying and analysing potential and existing customers involves consulting regulatory watchlists, sanctions lists, politically exposed persons (PEP) lists, and negative media sources.
Enabling identify persons or businesses involved in money laundering, terrorism funding, or other financial crimes. Customer screening assists financial institutions and linked businesses in ensuring compliance with AML/CFT requirements, mitigating risks, and maintaining operational integrity by preventing unlawful activity and protecting against reputational damage.
A dataset provider is an entity that gathers, compiles, and supplies datasets containing relevant information such as sanctions lists, politically exposed persons (PEPs) data, adverse media reports, and other sources of information pertinent to AML and CFT compliance.
A deep fake is a synthetic media — typically video or audio — that uses artificial intelligence and machine learning techniques to create realistic but fake representations of people. Deep fakes can manipulate existing images, videos, or sounds to make it appear that someone is saying or doing something they never actually said or did.
This technology often relies on deep learning algorithms, particularly generative adversarial networks, to produce compelling results. Deep fakes are used for various purposes, including entertainment, education, and malicious activities like misinformation, fraud, or identity theft.
Removing a sanctions target from a list after the restrictions imposed on them have been removed or another terminology known in the forex exchange delisting removes a quoted security from an exchange. Delisting can either be voluntary or involuntary.
Mode of a financial institution and affiliated enterprises supply products and services to their customers (servicing methods and distribution channels).
For example, reliance upon brokers, intermediaries, and other independent third parties poses a higher sanctions risk than when a business interacts directly with customers and suppliers. The absence of face-to-face onboarding presents a higher risk than when customers are onboarded directly or through a domestic affiliate. Other distribution methods that do not require face-to-face onboarding, such as Internet banking and money services businesses, are thought to offer a more significant risk of sanctions. A delivery channel that accepts payments fast carries a higher risk.
A diverse group of entities or individuals involved in activities outside the traditional financial sector but potentially exploited for money laundering, terrorist financing, or other illicit financial activities; regulatory authorities designate these businesses and professions and are subject to specific AML and CTF regulations.
Complex ownership structures involving several organisations in different countries can lower the percentage of a business held by a sanctioned party to levels that would impede transactions. This dilution enables a sanctioned country or entity to bypass the sanctions’ constraints.
The Digital Operational Resilience Act (DORA) is a regulation by the European Commission that establishes a comprehensive framework for the operational resilience of the digital sector, including financial services, across the European Union (EU). DORA seeks to enhance company’s ability to withstand and recover from cyber threats and incidents, ensuring the continuity of essential services and the protection of customer data.
