Glossary
The vocabulary of AML, from A to Z.
Every term you meet in a policy, an audit report or a supervisory letter — explained in two lines, with a link to go further.
A–Z70 terms
A
- Adverse media Sanctions & PEPs
- Negative news about a customer or beneficial owner that may indicate involvement in crime or a higher risk. Part of screening, to be assessed rather than counted.
- AML/CFT Basics
- Anti-money laundering and countering the financing of terrorism — the umbrella term for the whole framework. Often extended to AML/CFT/CPF to include proliferation.
- AMLA Institutions & law
- The EU Anti-Money Laundering Authority, based in Frankfurt. It coordinates national supervisors and FIUs and will directly supervise selected high-risk institutions from 2028. Learn more →
- AMLD6 Institutions & law
- Directive (EU) 2024/1640, which organises national supervisors, FIUs and beneficial ownership registers. Largely to be transposed by 10 July 2027. Learn more →
- AMLR Institutions & law
- Regulation (EU) 2024/1624, the EU single AML/CFT rulebook. Directly applicable across the Union from 10 July 2027. Learn more →
- Asset freeze Sanctions & PEPs
- A prohibition on moving, transferring, altering or using the funds and economic resources of a designated person.
- Asset-side due diligence Investment funds
- AML/CFT checks on what the fund invests in and who it deals with — targets, sellers, co-investors, counterparties. A key expectation for alternative fund managers. Learn more →
B
- Beneficial owner (UBO) Ownership
- The natural person or persons who ultimately own or control a customer, or on whose behalf a transaction is carried out. Always a human being, never a company. Learn more →
- Beneficial ownership register Ownership
- A central register of beneficial owners of companies and trusts — in Luxembourg, the RBE. Since a 2022 ruling of the EU Court of Justice, access is no longer open to the general public. Learn more →
- Business-wide risk assessment Basics
- An obliged entity's documented assessment of the money-laundering and terrorist-financing risks it is exposed to — customers, products, geographies, distribution channels — kept up to date and approved by management. Learn more →
C
- Correspondent relationship Due diligence
- One institution providing services to another — typically a bank clearing payments for a foreign bank. Requires specific due diligence on the respondent and its controls. Learn more →
- CSSF Institutions & law
- The Luxembourg financial supervisor — banks, investment firms, payment institutions, fund managers and investment funds.
- Cuckoo smurfing Typologies
- Criminals deposit cash into the account of an unsuspecting person who is expecting a legitimate international transfer — and take over the payment.
- Customer due diligence (CDD) Due diligence
- Identifying and verifying the customer and its beneficial owners, understanding the purpose and intended nature of the relationship, and monitoring it throughout its life. Learn more →
- Customer risk rating Due diligence
- The risk level assigned to each customer from a set of factors. It drives the depth of due diligence and the frequency of reviews.
E
- Egmont Group Institutions & law
- The international network of financial intelligence units, created in 1995, through which FIUs exchange information securely.
- Enhanced due diligence (EDD) Due diligence
- Additional measures for higher-risk situations: more information on the customer and beneficial owners, source of funds and wealth, senior-management approval and closer monitoring.
F
- False positive Sanctions & PEPs
- A screening or monitoring alert that, once reviewed, turns out not to concern the customer. Every closure needs a documented rationale.
- FATF (GAFI) Institutions & law
- The Financial Action Task Force, the intergovernmental standard-setter created by the G7 in 1989. Its 40 Recommendations are the global AML/CFT standard. Learn more →
- Financial intelligence unit (FIU) Reporting & controls
- The national centre that receives and analyses suspicious transaction reports and disseminates intelligence — in Luxembourg, the CRF. Learn more →
- Front company Typologies
- A real business — restaurant, car wash, trading company — that mixes illicit proceeds with genuine revenue.
G
- Grey list Institutions & law
- The FATF list of jurisdictions under increased monitoring. The 'black list' covers high-risk jurisdictions subject to a call for action. Learn more →
H
- Hawala Typologies
- An informal value-transfer system: brokers pay out in one country against funds received in another and settle their balances later — value moves, money doesn't. Learn more →
I
- Integration Basics
- The final stage: the funds return to the legitimate economy as apparently clean wealth — property, investments, business income. Learn more →
- Investor due diligence Investment funds
- CDD on the investors who subscribe to a fund. Often performed by the registrar and transfer agent on behalf of the fund or its manager, who remain responsible. Learn more →
K
- KYC (Know Your Customer) Due diligence
- Knowing who the customer is, what they do and why they come to you. Commonly used as shorthand for customer due diligence. Learn more →
L
- Layering Basics
- The second stage: moving funds through successive transactions, accounts, companies and jurisdictions to break the audit trail. Learn more →
- Legal arrangement Ownership
- A trust or similar arrangement (fiducie, Treuhand). Its beneficial owners include the settlor, trustees, protector, beneficiaries and anyone else exercising control. Learn more →
- Loan-back Typologies
- Lending your own illicit money to yourself through an offshore entity, so that it comes back looking like a loan.
M
- Mirror trading Typologies
- Buying securities in one currency and selling the same securities in another through related parties, to move value across borders.
- Mixer (tumbler) Crypto
- A service that pools and redistributes crypto-assets to break their traceability. Exposure to mixers is a strong risk indicator.
- Money laundering Basics
- Disguising the criminal origin of proceeds so that they appear legitimate. Usually described in three stages: placement, layering and integration. Learn more →
- Money mule Typologies
- A person who lets their account be used to receive and pass on illicit funds — sometimes knowingly, often recruited through job or romance scams.
- Mutual evaluation Institutions & law
- The peer review of a country's AML/CFT system, assessing both technical compliance with the 40 Recommendations and effectiveness in practice.
N
- National risk assessment (NRA) Basics
- A country's assessment of the threats and vulnerabilities it faces. Firms are expected to reflect its conclusions in their own risk assessments.
- Nominee Ownership
- A person who holds shares or a directorship on behalf of someone else. The arrangement must be disclosed and the person behind it identified.
- Nominee in distribution Investment funds
- A distributor holding fund units in its own name on behalf of underlying investors. Requires due diligence on the nominee and on the controls it applies to its clients.
O
- Obliged entity Basics
- A business subject to AML/CFT obligations: banks, payment and e-money institutions, investment firms, fund managers, insurers, crypto-asset service providers, and professions such as notaries, accountants, lawyers (in certain activities) and real-estate agents.
- Ongoing monitoring Due diligence
- Scrutinising transactions throughout the relationship and keeping customer information current, to check that activity stays consistent with what you know.
P
- Periodic review Due diligence
- A scheduled refresh of the customer file, at a frequency driven by risk — and earlier whenever a trigger event occurs.
- Placement Basics
- The first stage of laundering: getting criminal proceeds, often cash, into the financial system — deposits, cash-intensive businesses, currency exchange, purchase of assets. Learn more →
- Politically exposed person (PEP) Sanctions & PEPs
- Someone entrusted with a prominent public function, plus their family members and close associates. Not a suspect — a higher-risk profile that requires enhanced due diligence. Learn more →
- Predicate offence Basics
- The underlying crime that generates the proceeds being laundered — fraud, corruption, drug trafficking, tax crimes and many others. Without a predicate offence there is nothing to launder. Learn more →
- Proliferation financing (PF) Basics
- Financing the development, acquisition or transfer of weapons of mass destruction and their delivery systems. Countered mainly through targeted financial sanctions. Learn more →
R
- Real-estate laundering Typologies
- Buying property with illicit funds, often through companies or trusts, with cash, inflated or deflated valuations, or quick resales.
- Record keeping Reporting & controls
- Keeping due-diligence documents and transaction records, generally for at least five years after the end of the relationship, retrievable quickly by the authorities. Learn more →
- Red flag Reporting & controls
- An indicator that warrants a closer look. One red flag is a question, not a conclusion. Learn more →
- Registrar and transfer agent Investment funds
- The entity that keeps a fund's register of investors and processes subscriptions and redemptions — usually the front line of investor due diligence.
- Reliance on third parties Due diligence
- Using customer due diligence performed by another regulated entity. Allowed under conditions — but the relying entity keeps full responsibility. Learn more →
- Remote onboarding Due diligence
- Onboarding a customer without physical presence. Acceptable when identity is verified through reliable means such as qualified electronic identification.
- Risk-based approach (RBA) Basics
- Applying measures in proportion to the risk identified: enhanced where risk is higher, simplified where it is demonstrably lower. The organising principle of the FATF standards. Learn more →
- RR and RC (Luxembourg) Reporting & controls
- In Luxembourg, the RR is the member of senior management responsible for AML/CFT compliance; the RC is the compliance officer in charge of controlling it day to day.
S
- Sanctions screening Sanctions & PEPs
- Checking customers, beneficial owners, counterparties and payments against applicable sanctions lists — UN, EU, national and, where relevant, others. Learn more →
- Senior managing official Ownership
- The person recorded when no beneficial owner can be identified through ownership or control — a fallback, which must be documented, not a shortcut.
- Shell bank Due diligence
- A bank with no physical presence where it is incorporated and licensed, and not part of a regulated group. Correspondent relationships with shell banks are prohibited. Learn more →
- Shell company Typologies
- A company without significant operations or assets. Often legitimate, but a classic tool to hide ownership and move funds.
- Simplified due diligence (SDD) Due diligence
- Reduced measures allowed where the risk is assessed as low. It lightens CDD; it never removes it, and it stops as soon as suspicion appears.
- Source of funds (SoF) Due diligence
- Where the money used in a specific transaction or subscription comes from — which account, and how it got there.
- Source of wealth (SoW) Due diligence
- How the customer built their overall wealth — employment, sale of a business, inheritance, investments. Checked in higher-risk cases, notably for PEPs.
- Structuring (smurfing) Typologies
- Splitting cash deposits or transfers into amounts below identification or reporting thresholds, often using several people — the 'smurfs'.
- Suspicious transaction report (STR/SAR) Reporting & controls
- A report to the financial intelligence unit when you know, suspect or have reasonable grounds to suspect that funds are the proceeds of crime or linked to terrorist financing. Learn more →
T
- Targeted financial sanctions Sanctions & PEPs
- Asset freezes and the prohibition to make funds available to designated persons and entities. They must be applied without delay. Learn more →
- Terrorist financing (TF) Basics
- Providing or collecting funds, by any means, knowing or intending that they will be used for terrorist acts or by terrorists. The money can be perfectly clean — what matters is where it goes. Learn more →
- Tipping-off Reporting & controls
- Disclosing to the customer, or to anyone else, that a report has been or may be filed, or that an analysis is under way. Prohibited. Learn more →
- Trade-based money laundering (TBML) Typologies
- Moving value through trade: over- or under-invoicing, phantom shipments, multiple invoices for the same goods, misdescribed merchandise.
- Transaction monitoring Reporting & controls
- The rules, scenarios and systems that detect unusual patterns for investigation. Its value lies in coverage, calibration and the quality of the reviews. Learn more →
- Travel rule Crypto
- Originator and beneficiary information must travel with transfers — including crypto-asset transfers, under the EU rules applicable since 30 December 2024. Learn more →
V
- VASP / CASP Crypto
- Virtual asset service provider (FATF term) or crypto-asset service provider (EU term): exchanges, custodians, brokers and similar, all subject to AML/CFT rules. Learn more →
W
- Wolfsberg Group Institutions & law
- An association of global banks that publishes AML guidance and standard tools, such as the correspondent banking questionnaire.
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