CAFCA key terms

The process of disguising the criminal origin of money so it appears to come from a legitimate source. It usually involves placement, layering, and integration, and is prohibited by anti-money laundering laws.

The first stage of money laundering, in which illicit cash enters the financial system through deposits, purchases, or businesses. It is often the riskiest stage because cash can leave a visible trail.

The money laundering stage that moves funds through multiple transactions, accounts, or jurisdictions to hide their source. Complex layers make tracing harder for investigators and compliance teams.

The final money laundering stage, in which laundered funds re-enter the legitimate economy as apparently lawful assets or income. Property purchases, investments, and loan repayments are common examples.

Splitting cash transactions into smaller amounts to avoid reporting or recordkeeping thresholds. Also called smurfing, it is often spotted through deposits or withdrawals set just below required limits.

A confidential report filed with a financial intelligence unit when customer activity or a transaction appears unusual or potentially criminal. It helps authorities investigate money laundering, fraud, and other financial crimes.

The process of identifying customers, verifying their identity, and understanding their business and risk profile. It is a core obligation in anti-money laundering programs and supports ongoing monitoring.

Extra scrutiny for higher-risk customers, such as politically exposed persons or those connected to high-risk jurisdictions. It usually includes deeper source-of-funds checks, senior approval, and more frequent monitoring.

A person entrusted with a prominent public function, or a close family member or associate. Financial institutions treat them as higher risk because their position may create corruption or bribery exposure.

The natural person who ultimately owns or controls a legal entity or arrangement, even when shares are held through nominees. Identifying them helps prevent misuse of anonymous companies.

An approach that directs anti-money laundering resources according to the likelihood and impact of illicit finance. Higher-risk relationships get more scrutiny, while lower-risk ones may receive simplified measures.

Using international trade to move value and disguise criminal proceeds, often through false invoicing, over-shipment, or misrepresented goods. It exploits gaps between customs, shipping, and banking records.

A legal entity with little or no real operations or assets, often used to hold accounts or move funds while hiding control. It can be legitimate but is frequently linked to laundering and tax evasion.

A model describing fraud as the result of pressure, opportunity, and rationalization. It helps investigators understand motives and identify where controls should be strengthened.

Fraud committed by employees or insiders against their own organization, such as theft, false expenses, or collusion with outsiders. It often exploits access and knowledge of control weaknesses.

Fraud committed by customers, vendors, or other outsiders against an organization, including payment fraud, identity theft, and cyber schemes. Controls rely on verification, authentication, and monitoring.

A scheme in which a criminal gains control of a legitimate customer account, often through stolen credentials or social engineering, then moves funds or changes details. Detection relies on behavioral and device monitoring.

A social engineering attack that tricks people into revealing passwords, payment details, or personal information, usually through deceptive messages or websites. It is a common route to account takeover and payment fraud.

Fraud involving card payments made without the physical card, such as online or telephone purchases. It uses stolen card details and is detected through velocity, geolocation, and device checks.

Using another person's personal information, such as name, date of birth, or identification number, to commit fraud or access accounts. Mismatched data and unusual credit activity can reveal it.

A scheme that combines real and fabricated information to create a new fake identity, then uses it to open accounts and build credit before defaulting. No single victim may report the fraud.

Restrictive measures imposed by governments or international bodies to influence behavior, such as asset freezes, transaction bans, or travel restrictions. Financial institutions must comply to avoid penalties and reputational harm.

Checking customers, transactions, and counterparties against sanctions lists and watchlists. The aim is to identify matches before funds move or relationships are established.

A screening result that appears to match a sanctioned party but, after review, does not. Effective programs tune rules and document clearances to reduce friction while staying compliant.

A US Treasury list of individuals and entities subject to asset blocking and transaction restrictions. US persons are generally prohibited from dealing with them, and many global banks screen against it.

A legal restriction that prevents designated persons from accessing or transferring funds and economic resources. Institutions must identify and hold such assets and often report them to authorities.

Measures that target non-nationals or foreign entities for certain dealings with a sanctioned country or party. They extend pressure beyond the sanctioning country's jurisdiction and can affect third-party banks.

Attempts to circumvent sanctions through intermediaries, false documentation, shell companies, or alternative payment channels. Detecting it requires scrutiny of ownership, shipping, and payment patterns.

A principle extending sanctions to entities owned fifty percent or more, directly or indirectly, by one or more blocked persons. It prevents evading sanctions through partly owned subsidiaries.

Terminating or restricting business relationships to avoid, rather than manage, risk. In sanctions and anti-money laundering contexts it can exclude legitimate customers and reduce financial inclusion.

A report to a financial intelligence unit about a transaction that may involve criminal proceeds or terrorist financing. The name varies by jurisdiction but the purpose resembles a suspicious activity report.

Unlawfully informing a person that a suspicious activity or transaction report has been made or is being considered. It can alert criminals and is often a criminal offense.

A structured process of gathering and analyzing information to determine whether wrongdoing occurred, who was involved, and what action is needed. It must be documented, fair, and proportionate.

A documented record of who handled evidence, when, and how it was transferred or stored. It preserves integrity and supports credibility in legal or disciplinary proceedings.

A structured conversation with a witness, subject, or other person to obtain information relevant to an investigation. Skilled interviewing separates facts from assumptions and records statements accurately.

A written account of an investigation's scope, evidence, findings, and conclusions. It should be clear, factual, and suitable for decision-makers, regulators, or legal proceedings.

Referring a potential issue to a higher authority, specialized team, or regulator when it exceeds normal handling limits. Clear escalation paths ensure timely decisions and preserve evidence.

A warning sign suggesting possible fraud, money laundering, or sanctions evasion. Red flags are not proof of wrongdoing, but they should prompt further review or escalation.

Coordinated tracking of an investigation or compliance alert from intake through review, decision, and closure. It maintains accountability, deadlines, documentation, and audit trails.

The use of accounting, auditing, and investigative skills to examine financial records for legal or disciplinary purposes. It often quantifies losses and traces funds in fraud or money laundering cases.