A

Account Monitoring: The process of regularly checking and observing financial accounts to detect any suspicious or unusual activities that may indicate potential money laundering or other financial crimes.

AML Compliance: The adherence and implementation of Anti-Money Laundering (AML) policies, procedures, and regulations by financial institutions and businesses to prevent money laundering and terrorist financing.

AML Regulations: The rules and guidelines set by regulatory authorities and government bodies to combat money laundering and terrorist financing activities in the financial system.

Anti-Money Laundering (AML): The measures, laws, and procedures implemented by financial institutions and businesses to prevent the illegal process of making large amounts of money generated from criminal activities appear legitimate.

B

Beneficial Owner: The individual who ultimately owns or controls a customer account or business entity and enjoys the benefits of the assets held, even though the account may be in a different name.

Blacklist: A list of individuals, entities, or countries identified as high-risk or involved in illegal activities, subject to additional scrutiny, and may be subject to sanctions or restrictions.

Bulk Cash Smuggling: Illegally transporting large amounts of cash across borders to avoid detection by authorities and facilitate money laundering.

C

CAME (Certified Anti-Money Laundering Expert): A professional certification that indicates expertise in anti-money laundering practices and techniques.

CDD (Customer Due Diligence): The process of collecting and verifying customer information to ensure their identity and assess the potential risks associated with the business relationship.

CCCLE (Certified Crypto Currency Laundering Expert): A professional certification that indicates expertise in identifying and preventing money laundering involving cryptocurrencies.

CFCRA (Certified Financial Crime Risk Analyst): A professional certification that indicates expertise in analyzing and managing financial crime risks.

CFT (Combating the Financing of Terrorism): Measures and actions taken by governments and financial institutions to prevent and combat the funding of terrorist activities.

CKYCE (Certified KYC Expert): A professional certification that indicates expertise in Know Your Customer (KYC) procedures and compliance.

Compliance Officer: An individual responsible for ensuring that a company or financial institution complies with relevant laws, regulations, and internal policies.

Counter-Terrorism Financing (CTF): Efforts and actions taken to prevent the financing of terrorist activities.

Country Risk: The level of risk associated with doing business or conducting financial transactions with a specific country, considering factors like political stability, economic conditions, and regulatory environment.

CTR (Currency Transaction Report): A report that financial institutions are required to file with the authorities for certain cash transactions exceeding a specified threshold.

CTBMLE (Certified Trade-Based Money Laundering Expert): A professional certification that indicates expertise in identifying and preventing money laundering through trade transactions.

Customer Identification Program (CIP): The process of verifying the identity of customers by collecting specific information to establish and maintain a customer relationship.

Customer Risk Assessment: The evaluation of a customer’s potential risk level based on factors like their transaction history, geographic location, and business activities.

D

Designated Non-Financial Business or Profession (DNFBP): Businesses or professions that are not financial institutions but are susceptible to money laundering risks, such as real estate agents, lawyers, and accountants.

Due Diligence: The process of conducting thorough research and investigation to assess potential risks before entering into a business relationship or transaction.

Directorate of Revenue Intelligence: The agency responsible for detecting and preventing customs and revenue-related offenses in India.

E

EDD (Enhanced Due Diligence): A higher level of due diligence applied to customers or transactions that are considered high-risk or suspicious.

Enhanced Monitoring: The continuous and more intensive scrutiny of customer accounts and transactions identified as high-risk or suspicious.

Enforcement Directorate: The law enforcement agency in India responsible for investigating and prosecuting economic offenses, including money laundering.

F

FATF (Financial Action Task Force): An international body that sets global standards for combating money laundering, terrorist financing, and other related threats.

FATCA (Foreign Account Tax Compliance Act): A U.S. law that requires foreign financial institutions to report information about their U.S. account holders to the Internal Revenue Service (IRS).

Financial Crimes: Criminal activities related to money, such as money laundering, fraud, bribery, and corruption.

FIU-Ind (Financial Intelligence Unit – India): The central agency in India responsible for receiving, processing, and disseminating information. It also provides financial intelligence related to money laundering and financial crimes.

Fraud Detection: The process of identifying and preventing fraudulent activities, including financial fraud and scams.

G

Geographic Risk: The level of risk associated with conducting financial transactions or business activities in specific geographic locations, considering factors like the prevalence of financial crimes in the region.

H

High-Risk Jurisdiction: A country or geographic location identified as having a higher risk of money laundering or terrorist financing activities.

High-Risk Transaction: A financial transaction that is considered suspicious or associated with a higher risk of money laundering or terrorist financing.

I

Identity Verification: The process of confirming the identity of an individual through official identification documents and other means.

Indiaforensic: A leading organization providing training and certifications in the field of forensic accounting and anti-money laundering.

Insider Threat: The risk posed by individuals within an organization who use their access and knowledge to engage in illegal or unethical activities.

Internal Controls: Procedures and measures put in place by a company to safeguard assets, prevent fraud, and ensure compliance with regulations.

IRDA (Insurance Regulatory and Development Authority of India): The regulatory body for the insurance industry in India. It is responsible for overseeing insurance companies. It also protects policyholders’ interests.

Integration: In the context of AML, integration refers to the process of combining different pieces of information to get a complete picture of potential money laundering or terrorist financing activities. It involves analyzing data from various sources to connect the dots and identify suspicious transactions.

J

Jurisdiction Risk: Jurisdiction risk refers to the potential risks associated with conducting financial transactions in a specific country or region. In some places, there are weaker rules and regulations to prevent money laundering and illegal financial activities.

K

KYC (Know Your Customer): KYC is a banking process to verify the identity of their customers. It involves collecting information about customers, such as their names, address, and also identification documents. It ensures that they are legitimate and not involved in any criminal activities.

KYB (Know Your Business): KYB is similar to KYC but focuses on understanding the businesses that banks deal with. It involves gathering information about a company’s ownership, structure, and business activities to assess its risk level.

KYE (Know Your Employee): KYE is a business process to verify the identity and background of their employees. It ensures that the employees are trustworthy. Also not involved in any illegal activities that could pose a risk to the company.

KYS (Know Your Supplier): KYS is the process of gathering information about suppliers to assess their reliability. It ensures that they are dealing with reputable suppliers. Also not unwittingly facilitating money laundering or other illegal activities.

L

Layering: Layering is a technique used by money launderers to obscure the origin of illicit funds. It involves moving money through multiple accounts. This way financial transactions become difficult to trace the source of the funds.

M

Machine Learning for AML: Machine learning allows computer systems to learn and improve from experience without explicit programming. In the context of AML, machine learning algorithms analyze large amounts of data. They are also helpful to detect patterns of suspicious activity.

MLRO (Money Laundering Reporting Officer): The MLRO is an individual within a financial institution who is responsible for overseeing the institution’s AML compliance program. They are tasked with reporting suspicious transactions to the authorities and ensuring the institution’s adherence to AML regulations.

Monitoring Software: Monitoring software is a tool used by financial institutions to track and analyze customer transactions in real-time. It helps identify and flag suspicious activities for further investigation.

N

NPO (Non-Profit Organization): NPOs are organizations that are not operated for profit but rather for social, charitable, or educational purposes. While most NPOs are legitimate, some can be used as vehicles for money laundering or terrorist financing.

Non-Compliance: Non-compliance refers to the failure of a financial institution or individual to follow AML regulations and requirements. It can result in penalties and legal consequences.

O

Offshore Financial Center (OFC): An OFC is a jurisdiction that provides financial services to non-residents in a tax-efficient and confidential manner. Some OFCs have weak AML regulations, making them attractive to money launderers.

Outbound Transactions: Outbound transactions are financial transactions that involve sending money or assets from one country or jurisdiction to another.

P

PEP (Politically Exposed Person): PEPs are individuals who hold prominent public positions or have close relationships with such individuals. They are at higher risk due to their positions of influence.

PEP-Database: A PEP database compiles information on Politically Exposed Persons. It helps financial institutions identify and monitor high-risk customers.

PEP Screening: PEP screening means checking customers against a PEP database to find out if they have a political background. This helps to know if they might be at a higher risk for potential issues.

Peer Group Analysis: Peer group analysis involves comparing the financial behavior of a customer or entity to that of similar customers or entities. It helps identify unusual patterns or deviations that may indicate potential money laundering or other illicit activities.

Placement: Placement is the first stage of money laundering, where illicit funds are introduced into the financial system. It involves converting cash into financial instruments or depositing it into bank accounts.

PMLA 2002:Prevention of Money Laundering Act, 2002 is the Indian Law. It is a significant rule made to stop money laundering activities in the country. This law also discourages and penalizes money laundering offenders.

Q

QR Code: A QR code is a type of barcode that contains information that can be scanned by a smartphone or other devices. It is used in various payment systems and can also be used to facilitate money laundering if not properly monitored.

R

Real-Time Monitoring: Real-time monitoring involves continuously monitoring customer transactions as they occur, allowing for immediate detection and response to suspicious activities.

Red Flags: Red flags are warning signs or indicators of potential money laundering or other illicit activities. Financial institutions use red flags to identify and investigate suspicious transactions.

Reserve Bank of India: The Reserve Bank of India (RBI) is the central banking institution of India, responsible for regulating the country’s monetary and financial system.

Regulatory Reporting: Regulatory reporting is the process of submitting required information and reports to relevant authorities to demonstrate compliance with AML regulations.

Risk Assessment: Risk assessment is the process of evaluating the potential risk associated with a customer, transaction, or business relationship. It helps financial institutions determine the appropriate level of due diligence and monitoring required.

Risk Indicator: A risk indicator is a specific factor or data point used to assess the level of risk associated with a customer or transaction.

Risk Management: Risk management involves identifying, evaluating, and mitigating potential risks to ensure compliance with AML regulations and prevent financial crimes.

Risk-Based Approach: The risk-based approach is a method of AML compliance that focuses resources on higher-risk customers and transactions.

Risk-Based Monitoring: Risk-based monitoring involves adjusting the intensity and frequency of transaction monitoring based on the level of risk associated with a customer or transaction.

Riskpro: Riskpro provides PEP Database and Anti Money Laundering Training, Certifications, and Education in India.

S

Sanctions List: A list of individuals, entities, or countries that are subject to economic or trade restrictions by governments or international organizations. These sanctions are imposed to prevent financial crimes, terrorism, or other illegal activities.

Sanctions Screening: The process of checking individuals, businesses, or transactions against the sanctions list to ensure compliance with the imposed restrictions. This helps financial institutions identify and report any potential matches to the authorities.

SEBI: Securities and Exchange Board of India (SEBI) is the regulatory authority responsible for overseeing and regulating the securities market in India. It aims to protect investors and maintain fair and transparent market practices.

Source of Funds: Refers to the origin of the money used in a financial transaction. It is essential to verify the legitimacy of the funds and ensure they are not derived from illegal activities.

Source of Wealth: The legitimate sources from which an individual or entity has accumulated their wealth or assets. It is important to establish the legitimacy of the wealth to prevent money laundering or terrorist financing.

STR (Suspicious Transaction Report): A report filed by financial institutions with the designated authorities when they come across a transaction that seems suspicious or unusual. This report helps in identifying potential money laundering or terrorist financing activities.

Smurfing: A technique used by criminals to break down large amounts of money into smaller, less suspicious transactions to avoid detection by authorities.

Shell Companies: Companies that exist only on paper and have no significant assets or operations. They are often used to conceal illegal activities, such as money laundering or tax evasion.

Suspicious Transactions: Transactions that raise red flags due to their unusual nature or lack of legitimate business purpose. Financial institutions are required to report such transactions to the relevant authorities.

T

TBML (Trade-Based Money Laundering): A method used by criminals to disguise illicit funds by manipulating trade transactions. It involves over or under-invoicing goods to move money across borders.

Terrorist Financing: The act of providing funds or financial support to terrorist organizations or individuals to carry out terrorist activities.

Terrorist Watchlist: A list maintained by government agencies or international organizations containing names of individuals or entities suspected of involvement in terrorist activities or financing.

Tipping-off: Disclosing to a person that they are under suspicion for money laundering or terrorist financing. It is a criminal offense in many jurisdictions.

Transaction Monitoring: The process of reviewing and also analyzing customer transactions. It helps to identify and also report any suspicious activities or patterns.

Transaction Monitoring System: Technology used by financial institutions to automate the monitoring of customer transactions. and identify potential suspicious activities.

U

Ultimate Beneficial Ownership (UBO): Refers to the natural person(s) who ultimately own or control a legal entity. Identifying the UBO is crucial to understanding the ownership structure and preventing money laundering and terrorist financing.

Unexplained Wealth: It refers to wealth that a person cannot reasonably explain using their known legitimate sources of income. It means having money that has come from suspicious sources. It is difficult even for the holder to justify where it came from.

Unusual Behavior Detection: The process of identifying and flagging unusual or suspicious behavior by customers in their financial activities.

Unusual Transactions: Transactions that deviate from the customer’s normal behavior, signaling potential suspicious activities.

V

Virtual Asset Service Provider (VASP): Entities that offer services related to virtual assets, such as cryptocurrencies. They are subject to AML regulations to prevent misuse of illegal activities.

Virtual Currency: It refers to a digital form of exchange, similar to how we use regular money. Examples of virtual currencies include well-known ones like Bitcoin or Ethereum. Moreover, virtual currencies have gained popularity in recent years, and people can use them for various transactions and online activities.

W

Watchlist Screening: The process of checking individuals, businesses, or entities against various watchlists. It includes sanctions and terrorist watchlists, to ensure compliance with regulatory requirements.

Whistleblowing: The act of reporting illegal or unethical activities within an organization to the authorities or relevant parties for investigation.

Wire Stripping: Wire stripping is a new technique of hiding the source information about sanctioned countries or entities from banks.

Wire Transfer: A method of electronic funds transfer, often used for international transactions. In this transaction, money is sent from one bank account to another electronically.