ANFI key terms

The process of disguising the origin of money obtained from crime so it appears to come from a legitimate source. It typically moves through placement, layering and integration stages.

The first stage of money laundering, where illicit cash first enters the financial system, for example through deposits, purchases or currency exchange, often split into smaller amounts to avoid scrutiny.

The middle stage of money laundering, in which a series of transfers, trades or transactions is used to separate funds from their criminal source and obscure the audit trail.

The final stage of money laundering, where laundered funds are reintroduced into the legitimate economy as apparently lawful assets, investments or income.

The raising, movement or provision of funds for terrorist activity, whether from legal or illegal sources. The focus is on the destination and purpose of funds rather than their origin.

Deliberately breaking transactions into smaller amounts to stay below reporting or monitoring thresholds. It is itself a suspicious indicator even where the underlying funds are legitimate.

A confidential filing made to the financial intelligence unit when an institution knows, suspects or has reasonable grounds to suspect criminal activity or terrorist financing linked to a client or transaction.

Unlawfully disclosing to a client or third party that a suspicious activity report has been made or that an investigation is underway. It is a criminal offence in most regimes.

A national body that receives, analyses and disseminates suspicious activity reports and other financial information to law enforcement and regulators.

The set of steps an institution takes to identify and verify a client, understand the nature of the relationship and assess the risk the client presents before and during onboarding.

Additional and more intrusive checks applied to higher-risk clients or transactions, such as extra source-of-funds evidence, senior sign-off and more frequent monitoring.

A reduced level of identification and verification permitted for demonstrably lower-risk situations, such as certain regulated products or low-risk client types, subject to documented justification.

The natural person who ultimately owns or controls a client entity, usually defined by ownership or voting thresholds, or who exercises control by other means.

A person entrusted with prominent public functions, or a close associate or family member of such a person, who is treated as higher risk and requires enhanced scrutiny.

The specific origin of the money used in a particular transaction or relationship, such as salary, sale proceeds or a loan, which must be evidenced where risk requires it.

The origin of a client's overall accumulated assets, such as business ownership, inheritance or long-term earnings, as distinct from the funds used in a single transaction.

The overall framework of identifying clients, verifying their details, understanding their activity and keeping that information current throughout the relationship.

The continuous review of a client's transactions and activity against their known profile, so that unusual patterns are detected and due diligence information stays up to date.

The principle that the intensity of controls, due diligence and monitoring should be proportionate to the assessed likelihood and impact of money laundering or other financial crime.

The level and type of risk an institution is willing to accept in pursuit of its objectives, expressed in a formal statement that guides business decisions and control design.

A structured evaluation of threats, vulnerabilities and consequences that identifies, measures and prioritises risks so that controls can be targeted effectively.

A governance model in which business units own risk, a separate compliance or risk function oversees it, and internal audit provides independent assurance.

The policies, procedures, systems and checks an institution puts in place to prevent, detect and correct errors, fraud and regulatory breaches.

The independent team responsible for advising on regulatory obligations, monitoring adherence and escalating breaches to senior management and the board.

The periodic submission of prescribed information, such as transaction data or compliance metrics, to a regulator or supervisory authority within set deadlines.

The obligation to keep client identification, transaction and compliance records for a defined minimum period, so they can be produced to regulators or investigators on request.

The documented, chronological record of transactions and decisions that allows an activity to be reconstructed and verified after the event.

The legal separation between a company and its owners. Criminals exploit it by using layered company structures to hide who really controls the entity.

An entity with no meaningful operations or assets, often used to hold accounts or move funds while concealing the identity of the people behind it.

A requirement to report certain transactions, such as large cash movements, to the authorities once they exceed a defined amount, regardless of suspicion.

The duty to protect client information from unauthorised disclosure, subject to lawful exceptions such as regulatory requests and suspicious activity reporting.

The rules governing how personal information is collected, used, stored and shared, including the rights of individuals over their own data.

Situations where a person's or firm's own interests, or duties to another party, could improperly influence their judgement or actions for a client.

The obligation to act in the best interests of another party, placing that party's interests ahead of one's own and avoiding exploitation of trust.

The requirement to ensure a product or recommendation matches a client's circumstances, objectives, knowledge and tolerance for loss.

The process of designing, approving, monitoring and reviewing products so they meet the needs of an identified target market and do not cause foreseeable client harm.

A fee, commission or non-monetary benefit paid or received in connection with a service, which must be disclosed and, where required, justified as improving the client's outcome.

The protected reporting of wrongdoing within an organisation to an internal or external authority, with legal safeguards against retaliation for the reporter.

The process of checking clients, counterparties and transactions against designated lists of prohibited or restricted persons and entities before and during a relationship.