Terminology

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ARS

Alternative 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.

AML

Anti Money Laundering.

 

APG

Asia Pacific Group on Money laundering. Pakistan is a member of this
group.

 

AUSTRAC

Australian Transaction Reports and Analysis Center.

 

Bank Secrecy

This prohibits banks to disclose information about an account without
the consent of the consumer.

 

Basle Principles

These 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 Owner

The 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.

 

BIS

Bank of International Settlements.

 

Black List

These 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

 

BMPE

Black Market Peso Exchange. It refers to the principal money laundering
system of the Columbian drug cartels.

 

Bureau de Change

Money Exchange Office

 

CDPC

European Committee on Crime Problems – Council of Europe

 

CICP

The Center for International Crime Prevention

 

CICAD

Inter-American Drug Abuse Control Commission. It is an agency of the
Organization of American States.

 

CIP

Customer Identification Program. A requirement for companies to check
their customers against list of know money launderers.

 

CFATF

The Caribbean Financial Action Task force on Money laundering

 

CFT

Countering Financing of Terrorism

 

Confiscation

See ‘Forfeiture’ below.

 

DCC

Downstream 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-cash

Digital or Electronic Money

 

EDD

Enhanced Due Diligence

 

EFT

Electronic Funds Transfer

 

Egmont Group

Egmont 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.

 

ESAAMLG

Eastern and Southern African Anti Money Laundering Group.

 

Extradition

Legal surrender of a person to the jurisdiction of another state, country,
or government for trial according to terms of extradition treaty.

 

FATF

The Financial Action Task Force, founded at the 1989 OECD Economic
Summit, to deal with the problem of ML

 

FATF Recommendations

The 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.

 

FINCEN

Financial Crimes Enforcement Network of the department of the
treasury, which is the financial intelligence unit of the United States.

 

FIU

Financial Intelligence Unit. It is a central agency formed/nominated to
collect, analyze, disseminate and create/maintain database for suspicious
transaction reports.

 

Foreign Shell Bank

A foreign Bank without a physical presence in any country and has no
employees.

 

Forfeiture

When the government or a regulatory authority confiscates property or
assets due to failure to comply with law.

 

Front Company

It is the company used by the money launderer for the purpose of
concealing the true identity of the owner

 

FSA

Financial Services Authority of the United Kingdom

 

GAFI

Grupo de Accion Financiera Internacional, Spanish term for Financial
Action Task Force.

 

Gate Keepers

Gate 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-7

The Group of Seven industrialized nations: U.S, Japan, Germany,
France, Italy, the U.K and Canada.

 

Hawala Also known as hundi.

See ARS above.

 

IMF

International Monetary fund

 

INTERPOL

International Police Organization, based in France

 

Integration

It 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.

 

JMLSG

Joint Money Laundering Steering Group. U.K

 

KYB

Know Your Business

 

KYC

Know Your Customer/Client.

 

KYCB

Know Your Correspondent Bank

 

KYCC

Know Your Customer’s Customer

 

KYE

Know Your Employee

 

Layering

It 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.

 

MLAT

Mutual Legal Assistance Treaty

 

MLCA

Money Laundering Control Act of 1986. United States.

 

MLRO

Money Laundering Reporting Officer

 

MSB

Money 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.

 

NCIS

National Crime Intelligence Service of the United Kingdom

 

NFBP

Non-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
service providers.

 

ODCCP

United Nation’s Office for Drug Control and Crime Prevention

 

OFAC

The Office of Foreign Assets Control of the United States

 

OFC

Offshore Financial Centre

 

OGBS

Offshore Group of Banking Supervisors

 

Palermo Convention

A UN Convention against Transnational Organized Crime, 2000.

 

PEP

Politically Exposed Persons: Individuals who are prominent public
functionaries.

 

Placement

It 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 Offences

Crimes 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
etc.

 

Red Flag

A potentially suspicious or money laundering situation raises a Red Flag,
a warning signal

 

Safe Harbor

A 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/SAR

Suspicious Transaction Report/ Suspicious Activity Report

 

Shell Bank

A bank that exists merely on paper. It does not have a physical presence
in any country

 

Smurfing

This entails a process whereby many individuals deposit cash or
purchase bank drafts in amounts just under the reporting threshold.

 

SWIFT

Society for Worldwide Inter-bank Financial Telecommunication

 

Tax Haven

Countries, which offer special tax incentives/avoidance to foreign
investors and depositors

 

Typology

A term used by FATF and APG to refer to money laundering and
terrorist financing methods and techniques.

 

UNODC

United Nation Office on Drugs and Crime

 

Vienna convention

UN Convention against the Illicit Traffic in Narcotic Drugs and
Psychotropic Substances, 1988

 

Wolsberg Group

The 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.