ARSAlternative Remittance Systems: also referred as underground or parallel
banking.It typically involves transfer of values between countries, outside the legitimate banking system and does not involve a physical movement of currency. ARS can be defined as means of transferring
funds and sometimes gold through traditional “underground” banking
networks by which trading companies accept money at one location and
make it available in another. These systems are also known as Hawala,
Hundi, Chiti Banking, chop chop banking etc.
AMLAnti Money Laundering.
APGAsia Pacific Group on Money laundering. Pakistan is a member of this
AUSTRACAustralian Transaction Reports and Analysis Center.
Bank SecrecyThis prohibits banks to disclose information about an account without
the consent of the consumer.
Basle PrinciplesThese refer to the Core Principles for Effective Banking Supervision
issued by the Basle Committee on Banking Supervision in recognition of
the vulnerability of the financial sector to misuse by criminals. First
issued in 1988.
Beneficial OwnerThe person(s) entitled to the benefits of ownership even though another
party such as a broker or bank – the nominal owner – actually has
possession and title to the security.
BISBank of International Settlements.
Black ListThese countries are labeled as non-cooperative countries and territories
(NCCT) on the list issued by the FATF. It points to those countries that
lack adequate ML controls or are an impediment in the efforts of the
fight against ML
BMPEBlack Market Peso Exchange. It refers to the principal money laundering
system of the Columbian drug cartels.
Bureau de ChangeMoney Exchange Office
CDPCEuropean Committee on Crime Problems – Council of Europe
CICPThe Center for International Crime Prevention
CICADInter-American Drug Abuse Control Commission. It is an agency of the
Organization of American States.
CIPCustomer Identification Program. A requirement for companies to check
their customers against list of know money launderers.
CFATFThe Caribbean Financial Action Task force on Money laundering
CFTCountering Financing of Terrorism
ConfiscationSee ‘Forfeiture’ below.
DCCDownstream Correspondent Clearer: a correspondent banking client who
receives banking services from an institution and itself provides
correspondent banking services to other financial institutions in the same
currency as the account it maintains with the institution as described by
Wolfsberg AML principles
E-cashDigital or Electronic Money
EDDEnhanced Due Diligence
EFTElectronic Funds Transfer
Egmont GroupEgmont Group of Financial Intelligence Units: a number of financial
Intelligence units in 1995 began working together in an informal
organization known as Egmont group. Their agenda is to provide a
platform for the FIUs to improve support to their respective national
AML programs and liaison for the sharing of information.
ESAAMLGEastern and Southern African Anti Money Laundering Group.
ExtraditionLegal surrender of a person to the jurisdiction of another state, country,
or government for trial according to terms of extradition treaty.
FATFThe Financial Action Task Force, founded at the 1989 OECD Economic
Summit, to deal with the problem of ML
FATF RecommendationsThe FATF have issued 40 general and 9 special recommendations to
combat ML and Terrorist Financing and are to be of universal
application. These are the measures the FATF has agreed to implement
and which all countries are encouraged to adopt.
FINCENFinancial Crimes Enforcement Network of the department of the
treasury, which is the financial intelligence unit of the United States.
FIUFinancial Intelligence Unit. It is a central agency formed/nominated to
collect, analyze, disseminate and create/maintain database for suspicious
Foreign Shell BankA foreign Bank without a physical presence in any country and has no
ForfeitureWhen the government or a regulatory authority confiscates property or
assets due to failure to comply with law.
Front CompanyIt is the company used by the money launderer for the purpose of
concealing the true identity of the owner
FSAFinancial Services Authority of the United Kingdom
Grupo de Accion Financiera Internacional, Spanish term for Financial
Action Task Force.
Gate KeepersGate Keepers is a term that is being applied to qualified professionals
such as layers, accountants etc that can facilitate the laundering of money
or assets to enable the conversion and ultimate inclusion of the assents in
legitimate financial circles.
G-7The Group of Seven industrialized nations: U.S, Japan, Germany,
France, Italy, the U.K and Canada.
Hawala Also known as hundi.See ARS above.
IMFInternational Monetary fund
INTERPOLInternational Police Organization, based in France
IntegrationIt is the third stage of money laundering process in which the funds are
moved back into the country of origin at which stage the ‘black money’
is whitened. Other two stages are Placement and Layering.
JMLSGJoint Money Laundering Steering Group. U.K
KYBKnow Your Business
KYCKnow Your Customer/Client.
KYCBKnow Your Correspondent Bank
KYCCKnow Your Customer’s Customer
KYEKnow Your Employee
LayeringIt is the second stage of money laundering process in which funds are
either transferred to another account somewhere around the world on a
false pretext or are used to buy securities/instruments so as to move the
funds away from the source.
MLATMutual Legal Assistance Treaty
MLCAMoney Laundering Control Act of 1986. United States.
MLROMoney Laundering Reporting Officer
MSBMoney Services Business. This include non-bank financial institutions,
currency dealers, exchange companies and travelers cheque issuers.
NCCTs Non-Cooperative Countries and Territories. See ‘Black List’ above.
NCISNational Crime Intelligence Service of the United Kingdom
NFBPNon-Financial Businesses and Professionals: These include casinos, real
estate agents, dealers in precious metals, precious stones, lawyers,
notaries and other legal professionals, accountants, trust and company
ODCCPUnited Nation’s Office for Drug Control and Crime Prevention
OFACThe Office of Foreign Assets Control of the United States
OFCOffshore Financial Centre
OGBSOffshore Group of Banking Supervisors
Palermo ConventionA UN Convention against Transnational Organized Crime, 2000.
PEPPolitically Exposed Persons: Individuals who are prominent public
PlacementIt is the first stage of money laundering process in which the money is
introduced through various channels e.g., it is deposited into a bank
account after the larger amount is fragmented and made to appear less
obvious. The other two stages are Layering and Integration.
Predicate OffencesCrimes underlying money laundering or terrorist financing activity.
These may include drug trafficking, gambling and prostitution rings,
arms trade, smuggling, and even embezzlement, insider trading, bribery
Red FlagA potentially suspicious or money laundering situation raises a Red Flag,
a warning signal
Safe HarborA provision in law that provide protection to financial institutions, NFBP
and their officers from civil or criminal liability for disclosing/furnishing
information, suspicious transaction reporting etc
STR/SARSuspicious Transaction Report/ Suspicious Activity Report
Shell BankA bank that exists merely on paper. It does not have a physical presence
in any country
SmurfingThis entails a process whereby many individuals deposit cash or
purchase bank drafts in amounts just under the reporting threshold.
SWIFTSociety for Worldwide Inter-bank Financial Telecommunication
Tax HavenCountries, which offer special tax incentives/avoidance to foreign
investors and depositors
TypologyA term used by FATF and APG to refer to money laundering and
terrorist financing methods and techniques.
UNODCUnited Nation Office on Drugs and Crime
Vienna conventionUN Convention against the Illicit Traffic in Narcotic Drugs and
Psychotropic Substances, 1988
Wolsberg GroupThe Wolfsberg Group is an association of twelve global banks, which
aims to develop financial services industry standards, and related
products, for Know Your Customer, Anti-Money Laundering and
Counter Terrorist Financing policies. This Group came together in 2000
at Switzerland. The Wolfsberg Anti-Money Laundering Principles are
recommended as effective anti-money laundering procedures for private
banking. These were published in October 2000 (and revised in May
2002). The Group has also published a Statement on the Financing of
Terrorism in January 2002, and also released the Wolfsberg Anti-Money
Laundering Principles for Correspondent Banking in November 2002.