Reference · 35 terms

AML Glossary

Clear, plain-language definitions of the Anti-Money Laundering and financial-crime terms compliance teams use every day — from STR and CTR through to sanctions, watchlists, CDD, EDD, UBO, PEP and the FATF Travel Rule.

A

Adverse Media: Negative news coverage linking a person or entity to financial crime, fraud, corruption, terrorism or other reputational risks. A standard input to risk-based screening alongside sanctions and PEP data.
AMLA: The EU Anti-Money Laundering Authority — a new EU-level supervisor stood up under the 2024 AML package. From 2027 it will directly supervise the highest-risk cross-border financial groups.
AMLD 6: The Sixth EU Anti-Money Laundering Directive, part of the 2024 AML package alongside the AMLR and AMLA Regulation. Harmonises predicate offences, beneficial-ownership transparency and supervisory powers across Member States.
AMLR: The EU Anti-Money Laundering Regulation — a single, directly applicable AML rulebook for the EU covering CDD, beneficial ownership, sanctions and reporting obligations.
Anti-Money Laundering (AML): The framework of laws, regulations and controls designed to prevent criminals from disguising illegally obtained funds as legitimate income.

B

Bank Secrecy Act (BSA): The foundational US AML statute (1970), enforced by FinCEN. Requires US financial institutions to maintain records, file CTRs and SARs, and operate AML programmes.

C

Counter-Financing of Terrorism (CFT): Controls designed to detect and prevent the funding of terrorism. CFT obligations sit alongside AML in nearly every regulatory regime (often referred to together as AML/CFT).
Currency Transaction Report (CTR): A US BSA filing required from financial institutions for any cash transaction exceeding USD 10,000 in a single business day, whether single or aggregated.
Customer Due Diligence (CDD): The standard set of identification, verification and risk-assessment checks performed on every customer at onboarding and updated throughout the relationship.

E

Enhanced Due Diligence (EDD): A deeper level of due diligence applied to high-risk customers — PEPs, high-risk jurisdictions, complex ownership structures or unusual activity. Typically requires source-of-funds evidence and senior approval.

F

False Positive: An alert generated by a screening or monitoring system that, on review, does not represent a true match or risk. Reducing false positives without missing true hits is the central tuning challenge of any AML programme.
FATF: The Financial Action Task Force — the inter-governmental body that sets global AML/CFT standards through its 40 Recommendations and evaluates jurisdictions on their implementation.
Financial Intelligence Unit (FIU): The national authority that receives, analyses and disseminates Suspicious Activity / Transaction Reports filed by regulated firms. Examples: FinCEN (US), MOKAS (CY), NCA-UKFIU (UK).
FinCEN: The Financial Crimes Enforcement Network — the US Treasury bureau that administers the BSA and operates as the US FIU.

K

Know Your Business (KYB): The B2B equivalent of KYC: verifying a legal entity's existence, structure, directors and ultimate beneficial owners before onboarding.
Know Your Customer (KYC): The process of verifying a customer's identity, suitability and risk before and during a business relationship.

M

MiCA: The EU Markets in Crypto-Assets Regulation (2023/1114). Brings crypto-asset service providers (CASPs) into the EU AML perimeter and imposes harmonised authorisation and conduct rules.
MLRO: Money Laundering Reporting Officer — the named individual within a regulated firm responsible for the AML programme and for filing SARs/STRs with the FIU.

O

OFAC: The US Treasury's Office of Foreign Assets Control. Administers and enforces US economic and trade sanctions, including the Specially Designated Nationals (SDN) list.
OFSI: The UK's Office of Financial Sanctions Implementation, part of HM Treasury. Maintains the UK consolidated sanctions list and enforces breaches.

P

Perpetual KYC (pKYC): An operating model in which customer data is continuously and event-driven re-verified, replacing fixed periodic refresh cycles. Reduces stale records and analyst workload.
Politically Exposed Person (PEP): An individual entrusted with a prominent public function (heads of state, ministers, senior judges, military, central bank officials, etc.). PEPs require enhanced due diligence under FATF and EU rules.

R

Relatives and Close Associates (RCAs): Family members and close business associates of a PEP, who are treated as PEPs themselves for due-diligence purposes.

S

Sanctions: Restrictive measures imposed by governments and supranational bodies (UN, EU, US, UK) against countries, entities or individuals to achieve foreign-policy or security objectives. Breaches typically carry strict-liability penalties.
Sanctions Screening: The process of matching customers, counterparties and transactions against sanctions lists in real time and continuously thereafter.
Source of Funds (SoF): Evidence of the origin of the specific funds used in a transaction or relationship — for example salary, business revenue, sale of an asset. Mandatory for higher-risk customers under EDD.
Source of Wealth (SoW): Evidence of how the customer accumulated their overall net worth, distinct from Source of Funds. Required for PEPs and high-net-worth EDD.
Suspicious Activity Report (SAR): A confidential filing made by a regulated firm to the national FIU when it knows or suspects funds are linked to crime or terrorism. Used in the US and UK.
Suspicious Transaction Report (STR): The equivalent of a SAR in many EU and international regimes — a confidential report to the FIU about a specific transaction (or attempted transaction) suspected of being linked to financial crime.
Simplified Due Diligence (SDD): A reduced level of due diligence permitted under the risk-based approach for clearly low-risk customers (e.g. listed companies, regulated FIs).

T

Tipping-off: The criminal offence of disclosing to a customer (or any third party) that a SAR/STR has been or will be filed about them, or that an investigation is under way.
Transaction Monitoring: The continuous surveillance of customer transactions against rules, thresholds and behavioural models to detect patterns indicative of money laundering, fraud or sanctions evasion.
Travel Rule: FATF Recommendation 16 requirement that originator and beneficiary information must travel alongside wire transfers — and, since 2021, alongside crypto-asset transfers above defined thresholds.

U

Ultimate Beneficial Owner (UBO): The natural person who ultimately owns or controls a legal entity, directly or indirectly (typically a 25%+ ownership or control threshold under EU rules).

W

Watchlist: Any curated list of high-risk parties used in screening — sanctions lists, PEP databases, law-enforcement lists, internal blocklists or SAR-derived lists.

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