Glossary
The AML and financial crime glossary
Plain definitions of the laws, regulators, payment rails and AI terms that shape financial crime compliance, each with an official source.
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- AFCAnti-Financial CrimeAnti-financial crime (AFC) is the discipline covering all measures an organization uses to prevent, detect and respond to financial crime, including money laundering, terrorist financing, sanctions evasion, bribery and corruption, tax evasion and fraud. Many institutions now run a dedicated AFC function that brings AML, CFT, sanctions and fraud oversight together under one risk framework.
- AIArtificial IntelligenceArtificial intelligence (AI) is the use of computer systems to perform tasks that normally require human intelligence, such as recognizing patterns, making predictions and generating language. In compliance, AI is applied to anomaly detection, transaction monitoring, sanctions and name screening, customer risk scoring and alert investigation. Unlike rule-based systems, AI can detect patterns and networks of suspicious behavior that fall outside pre-programmed scenarios.
- Alert PrioritizationAlert prioritization is the practice of ranking compliance alerts by risk severity and urgency so that investigators review the most important cases first. AI tools can weigh contextual factors such as customer risk scores, geographic exposure, transaction anomalies and links to previously reported activity. This improves investigator efficiency, reduces time spent on false positives and ensures high-risk cases are reviewed first.
- AMLAnti-Money LaunderingAnti-money laundering (AML) is the set of laws, regulations and controls designed to stop criminals from disguising illicit funds as legitimate income. AML obligations include customer due diligence (CDD), ongoing monitoring, record-keeping, sanctions screening and filing suspicious activity reports (SARs). Standards are set internationally by the FATF and enforced nationally by authorities such as FinCEN and the federal banking agencies in the US, the FCA in the UK, and national supervisors in the EU, now coordinated by the EU Anti-Money Laundering Authority (AMLA).
- AMLAEUAnti-Money Laundering AuthorityThe Anti-Money Laundering Authority (AMLA) is the EU's central AML/CFT authority, based in Frankfurt am Main. Established in June 2024 under Regulation (EU) 2024/1620, it began operating in 2025 and will directly supervise selected high-risk cross-border financial institutions, which can include crypto-asset service providers, from 2028. AMLA also coordinates national supervisors and financial intelligence units, drafts technical standards and issues guidelines, and helps settle disagreements between national supervisors.
- AMLA 2020USAnti-Money Laundering Act of 2020The Anti-Money Laundering Act of 2020 (AMLA 2020), enacted on January 1, 2021 as Division F of the National Defense Authorization Act for Fiscal Year 2021, modernized the Bank Secrecy Act (BSA). Key provisions include the Corporate Transparency Act (CTA) on beneficial ownership reporting, national AML/CFT priorities, expanded whistleblower incentives and protections, stronger information sharing between FinCEN, law enforcement and financial institutions, and enhanced penalties for repeat violators. It is the most significant update to US AML law since the USA PATRIOT Act.
- AMLAREUAnti-Money Laundering Authority RegulationThe AMLA Regulation (AMLAR), Regulation (EU) 2024/1620, establishes the EU Anti-Money Laundering Authority (AMLA) and sets out its mandate, governance and powers. Unlike a directive, it is directly applicable in all EU member states without national transposition, which supports harmonized AML/CFT supervision across the Union.
- AMLD6EUSixth Anti-Money Laundering DirectiveAMLD6 most often refers to Directive (EU) 2018/1673 on combating money laundering by criminal law, which requires EU member states to criminalize money laundering on a common basis. It harmonized the definition of predicate offenses, set a maximum prison term of at least four years, criminalized aiding, abetting and attempting money laundering, and established liability for legal persons. Member states had to transpose it by 3 December 2020; Denmark and Ireland are not bound by it.
- AMLREUAnti-Money Laundering RegulationThe Anti-Money Laundering Regulation (AMLR), Regulation (EU) 2024/1624, creates a single, directly applicable AML/CFT rulebook for obliged entities across the EU. It sets harmonized rules on customer due diligence, beneficial ownership, internal controls, reporting and the implementation of targeted financial sanctions. It applies from 10 July 2027 and works alongside the Anti-Money Laundering Authority (AMLA) and the Sixth AML Directive as the core of the EU's new framework.
- APIApplication Programming InterfaceAn application programming interface (API) is a defined way for software applications to request and exchange data with each other. In AML, APIs enable real-time integration between core banking and payment systems, sanctions and watchlist data, KYC and identity verification providers, and transaction monitoring and case management tools.
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- BaaSBanking-as-a-ServiceBanking-as-a-Service (BaaS) is a model in which licensed banks make their infrastructure, such as accounts, cards and payment rails, available to fintechs and other non-banks, usually through APIs, so those partners can offer financial products under their own brand. While it fosters innovation, BaaS extends AML/CFT risk into non-traditional ecosystems.
- BAFAGermanyFederal Office for Economic Affairs and Export ControlThe Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA) is Germany's central licensing authority for export controls. Based in Eschborn, it decides whether exports of goods, technology and services require a license, and it administers EU and German embargoes covering goods, technical assistance and economic resources. Financial sanctions relating to funds fall to the Deutsche Bundesbank.
- BAUBusiness As UsualBusiness as usual (BAU) refers to an organization's normal, ongoing day-to-day operations, as distinct from projects or change programs. In compliance, maintaining BAU means keeping screening, monitoring, alert review and regulatory reporting running without interruption, including during AML system migrations and regulatory change projects.
- BSAUSBank Secrecy ActEnacted in 1970 as the Currency and Foreign Transactions Reporting Act, the BSA is the foundation of US AML law. It requires financial institutions to keep records, report cash transactions over $10,000 in a day through Currency Transaction Reports (CTRs), and file Suspicious Activity Reports (SARs). FinCEN administers the BSA on behalf of the US Treasury.
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- CASPCrypto-Asset Service ProviderA business that provides crypto-asset services such as custody, operating a trading platform, exchanging crypto-assets for funds or other crypto-assets, or transferring crypto-assets on behalf of clients. In the EU, CASPs are authorized under the Markets in Crypto-Assets Regulation (MiCA) and are obliged entities under EU AML/CFT law.
- CDDCustomer Due DiligenceThe obligation to identify and verify customers and their beneficial owners, understand the purpose and intended nature of the relationship, assess the customer's risk, and monitor the relationship on an ongoing basis. Enhanced Due Diligence (EDD) applies to higher-risk situations, such as politically exposed persons (PEPs), high-risk jurisdictions and complex or opaque ownership structures.
- CFPBUSConsumer Financial Protection BureauThe US federal agency that implements and enforces federal consumer financial law. It was created by the Dodd-Frank Act of 2010. The CFPB is not an AML authority, but many of the banks, lenders and fintechs it oversees also carry BSA/AML obligations.
- CFTCountering the Financing of TerrorismAlso called combating the financing of terrorism. The laws, controls and practices designed to detect and stop funds and other assets from reaching terrorists and terrorist organizations. FATF standards treat AML and CFT as an integrated framework.
- Cognitive AIThetaRay's AI technology for financial crime detection, based on unsupervised and semi-supervised machine learning. Cognitive AI identifies anomalous activity without relying only on predefined rules, learns from analyst feedback, and prioritizes the highest-risk alerts.
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- DFPIUSCalifornia Department of Financial Protection and InnovationCalifornia's state financial regulator. DFPI licenses and supervises state-chartered banks and credit unions, money transmitters, lenders, securities firms and other financial service providers, and enforces state consumer financial protection law. It works with federal agencies on BSA/AML examinations of the institutions it oversees.
- Digital AssetsCryptocurrencies, stablecoins, tokenized assets and other blockchain-based units of value that can be traded or transferred digitally. Their speed, pseudonymity and cross-border reach make them attractive for money laundering and terrorist financing, and regulators now apply full AML/CFT regimes to the businesses that handle them.
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- EBAEUEuropean Banking AuthorityThe EU authority that develops the single rulebook for banking and promotes consistent supervision across member states. From 2020 to the end of 2025 it led EU AML/CFT policy, issuing guidelines and technical standards. On 31 December 2025 that AML/CFT mandate passed to the Anti-Money Laundering Authority (AMLA).
- Embedded FinanceThe integration of financial services, such as payments, accounts, cards or lending, into non-financial platforms like e-commerce marketplaces, software products or ride-hailing apps. It creates new AML touchpoints outside traditional banking channels.
- EUEuropean UnionA political and economic union of 27 member states. It legislates on AML/CFT through directives (the AMLDs) and directly applicable regulations (the AMLR and the AMLA Regulation), and it adopts sanctions (restrictive measures) that implement UN sanctions and add its own autonomous measures.
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- FATFFinancial Action Task ForceThe intergovernmental body that sets global standards for AML, CFT and countering proliferation financing. The FATF issues the 40 Recommendations, assesses countries through mutual evaluations, and publicly lists jurisdictions with strategic deficiencies. Its nine Special Recommendations on terrorist financing, issued in 2001 and 2004, were integrated into the 40 Recommendations in the 2012 revision.
- FCCFinancial Crime ComplianceThe policies, systems and processes financial institutions use to meet AML, CFT, sanctions, fraud and anti-bribery requirements. FCC helps institutions comply with laws and global standards while reducing regulatory, financial and reputational risk.
- FedNowUSFedNow ServiceThe Federal Reserve's instant payment service, launched on 20 July 2023. It lets US depository institutions send and receive payments in seconds, 24 hours a day, every day of the year. Faster settlement improves efficiency but shortens the window for AML/CFT and fraud review, which calls for real-time monitoring.
- FFIECUSFederal Financial Institutions Examination CouncilA US interagency body, established in 1979, that prescribes uniform principles, standards and report forms for the federal examination of financial institutions. Its members are the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB) and the State Liaison Committee. The FFIEC publishes the BSA/AML Examination Manual, which keeps AML examinations consistent across agencies.
- FIFinancial InstitutionAny entity that provides financial services, such as banks, credit unions, broker-dealers, insurers, money services businesses, payment institutions, e-money issuers and fintechs. Which entities count as financial institutions for AML/CFT purposes, and which obligations apply to them, is set by the law of each jurisdiction.
- FinCENUSFinancial Crimes Enforcement NetworkFinCEN is a bureau of the US Department of the Treasury and the financial intelligence unit (FIU) of the United States. It administers the Bank Secrecy Act, issues AML/CFT regulations, collects and analyzes suspicious activity reports (SARs) and other BSA filings, shares financial intelligence with law enforcement, and takes enforcement action for BSA violations.
- FIUGlobalFinancial Intelligence UnitA national authority that receives, analyzes and disseminates suspicious transaction reports and other financial information related to money laundering, its predicate offenses and terrorist financing. Examples include FinCEN (US), TRACFIN (France) and the UK Financial Intelligence Unit (UKFIU) within the National Crime Agency.
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- MSAMonitoring and Surveillance ActivitiesThe techniques and tools a financial institution uses to monitor transactions and customer behavior and to detect unusual or suspicious activity. Monitoring and surveillance activities combine rule-based scenarios, AI and machine learning models, and analysis of typologies to surface hidden risks.
- MSBMoney Services BusinessA money services business (MSB) is a non-bank business that transmits money, cashes checks, exchanges currency, issues or sells money orders and traveler's checks, or provides or sells prepaid access. MSBs range from small check cashers to large money transmitters, and in the US they are subject to Bank Secrecy Act requirements administered by FinCEN. While MSBs focus on moving money and providing cash services, payment service providers (PSPs) focus on processing electronic payments for businesses.
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- OCCUSOffice of the Comptroller of the CurrencyAn independent bureau of the US Department of the Treasury, created in 1863, that charters, regulates and supervises national banks, federal savings associations, and federal branches and agencies of foreign banks. OCC examinations cover compliance with the Bank Secrecy Act and related AML/CFT laws.
- OFACUSOffice of Foreign Assets ControlAn office of the US Department of the Treasury that administers and enforces economic and trade sanctions based on US foreign policy and national security goals. OFAC maintains the Specially Designated Nationals and Blocked Persons (SDN) List and other sanctions lists that financial institutions screen customers and transactions against. Its sanctions bind all US persons and can reach transactions that pass through the US financial system, which gives them global influence.
- OFSIUKOffice of Financial Sanctions ImplementationPart of HM Treasury, OFSI helps ensure UK financial sanctions are understood, implemented and enforced. It issues guidance, grants licenses for otherwise prohibited activity, receives breach reports, and imposes civil monetary penalties. Designations are published on the UK Sanctions List, maintained by the Foreign, Commonwealth and Development Office (FCDO).
- OMBUSOffice of Management and BudgetAn office within the Executive Office of the President that prepares the federal budget and oversees how federal agencies implement policy, including how they manage information technology. OMB issues the government-wide guidance on how federal agencies use and acquire artificial intelligence.
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- PEPPolitically Exposed PersonAn individual who is or has been entrusted with a prominent public function, such as a head of state, senior politician, senior government or judicial official, senior military officer, or senior executive of a state-owned enterprise or international organization. Because their positions carry a higher risk of bribery and corruption, institutions apply enhanced due diligence to PEPs. Their family members and close associates, commonly called relatives and close associates (RCAs), are subject to the same measures.
- PSPPayment Service ProviderAn entity that provides payment services, such as executing transfers, issuing payment instruments, acquiring card transactions, or money remittance. PSPs include banks, payment institutions, e-money institutions and fintechs. In the EU, payment services are regulated under the Second Payment Services Directive (PSD2).
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- SARSuspicious Activity ReportA report a financial institution must file when it knows, suspects or has reason to suspect that a transaction involves illicit funds, is designed to evade reporting requirements or has no apparent lawful purpose. In the US, SARs are filed with FinCEN under the Bank Secrecy Act, generally within 30 calendar days of initial detection, and often form the basis for criminal investigations. Outside the US, the equivalent filing is usually called a suspicious transaction report (STR) and goes to the national financial intelligence unit (FIU).
- Semi-Supervised Machine LearningA hybrid machine learning approach that trains models on a small set of labeled data combined with a much larger set of unlabeled data. It is useful in AML, where confirmed money laundering cases are scarce compared with the volume of unlabeled transactions.
- SEPASingle Euro Payments AreaA European initiative that lets people and businesses make euro payments across participating countries as easily as domestic ones, using common schemes for credit transfers, SEPA Instant Credit Transfers (SCT Inst) and direct debits managed by the European Payments Council (EPC). The SEPA schemes cover 41 countries: the 27 EU member states, Iceland, Liechtenstein and Norway, and 11 other countries: Albania, Andorra, Moldova, Monaco, Montenegro, North Macedonia, San Marino, Serbia, Switzerland, the United Kingdom and Vatican City.
- STRSuspicious Transaction ReportA report that a financial institution or other obliged entity files with its national financial intelligence unit (FIU) when it suspects, or has reasonable grounds to suspect, that funds are the proceeds of crime or related to terrorist financing. Required under FATF Recommendation 20, it is the international equivalent of the US suspicious activity report (SAR).
- Supervised Machine LearningA machine learning approach in which models learn from labeled examples (inputs paired with known outcomes) to predict outcomes for new data. In AML, labels usually come from past alert decisions and filed suspicious activity reports. It is effective for recurring patterns but limited in detecting risks that are absent from the training data.
- SWIFTSociety for Worldwide Interbank Financial TelecommunicationA member-owned cooperative, headquartered in Belgium, that operates a secure messaging network connecting more than 11,500 financial institutions in over 200 countries and territories. Swift carries standardized messages for payments, securities and trade finance. It does not hold accounts or move money itself, but it is critical to global correspondent banking.
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- UBOUltimate Beneficial OwnerThe natural person or persons who ultimately own or control a legal entity or arrangement, directly or indirectly, or on whose behalf a transaction is conducted. UBO transparency prevents the misuse of shell companies, trusts and nominee arrangements. FATF Recommendations 24 and 25 require countries to ensure that adequate, accurate and up-to-date beneficial ownership information is available to competent authorities.
- UNUnited NationsAn intergovernmental organization of 193 member states. Acting under Chapter VII of the UN Charter, the Security Council can impose sanctions that are binding on all member states, such as asset freezes, travel bans and arms embargoes, which countries implement through their national and regional sanctions and AML/CFT frameworks.
- Unsupervised Machine LearningAn AI method that analyzes unlabeled data to discover patterns, clusters and anomalies without being told in advance what to look for. In AML, it can detect previously unknown typologies, such as emerging fraud schemes or money mule networks, that rules and models trained on past cases would miss.
- USA PATRIOT ActUniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001US legislation enacted on October 26, 2001 (Public Law 107-56) after the September 11 attacks. Its Title III, the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, enhanced and expanded the Bank Secrecy Act (BSA) anti-money laundering and counter-terrorist financing framework, most notably by requiring customer identification programs, prohibiting dealings with foreign shell banks and improving information sharing between financial institutions and the government.
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