CAFP key terms

Forty non-binding standards issued by the Financial Action Task Force that set the global baseline for anti-money-laundering, counter-terrorist-financing and counter-proliferation-financing regimes, which countries implement through national law.

Peer review in which FATF or a regional body assesses whether a country's laws, supervision and enforcement actually deliver the FATF standards in practice, publishing a report with ratings and follow-up actions.

Principle that firms and supervisors allocate the most controls and scrutiny where money-laundering and terrorist-financing risk is highest, so that measures are proportionate rather than uniform for every customer.

Private-sector guidance developed by major banks that describes good practice for correspondent banking, customer due diligence, and payment transparency, supplementing but not replacing binding national rules.

Supervisory papers from the Basel Committee on Banking Supervision describing how banks should manage money-laundering risk, including customer acceptance, KYC, ongoing monitoring and the duties of the compliance function.

United States statute forming the core of federal AML law; it requires financial institutions to keep records, file reports such as CTRs and SARs, and maintain programs reasonably designed to prevent money laundering.

2001 United States law that expanded AML obligations, notably section 312 due diligence on foreign correspondent accounts, section 319 beneficial ownership records, and section 326 customer identification programs.

Mandated process for verifying the identity of each new account holder using name, date of birth, address and an identification number, with records kept and identity checked against government lists.

Set of measures a firm applies to know its customer: identifying and verifying the customer, understanding the purpose of the relationship, and keeping that knowledge current through periodic review.

Additional, documented scrutiny applied to higher-risk relationships, such as politically exposed persons or clients in high-risk jurisdictions, including source-of-funds checks and senior management approval.

The natural person who ultimately owns or controls a legal entity or arrangement, or on whose behalf a transaction is conducted, identified by ownership percentage thresholds or by control exercised through other means.

An individual entrusted with a prominent public function, plus close family members and associates, whose position may expose the firm to corruption risk and therefore triggers enhanced scrutiny.

Evidence of where the money used in a specific transaction or relationship came from, such as salary, asset sale or loan proceeds, distinct from the broader source of a customer's overall wealth.

Explanation and evidence of how a customer accumulated total net worth over time, used to judge whether the size and pattern of account activity are plausible for that person.

An entity with no meaningful operations, employees or physical presence, often used to hold assets or move money while obscuring who really controls it.

Automated and manual review of customer activity against expected behaviour, thresholds and typology scenarios to detect unusual patterns that may indicate money laundering, fraud or terrorist financing.

First-stage review of system-generated alerts to decide whether activity is explained by known customer information or needs escalation to a full investigation.

An alert or screening match that, after review, does not reflect genuine suspicious activity or a true sanctions hit, usually because of common names or legitimate transaction patterns.

Confidential filing to the national financial intelligence unit describing transactions or behaviour the institution suspects may involve criminal proceeds or terrorist financing, made without tipping off the customer.

The equivalent reporting mechanism in many jurisdictions outside the United States, used to notify the financial intelligence unit of transactions believed linked to money laundering or terrorist financing.

Disclosing to a customer or third party that a suspicious report has been or may be filed, which is itself a criminal offence in most regimes because it can frustrate investigation.

Splitting cash or transfers into amounts below reporting thresholds to avoid triggering currency transaction or disclosure requirements, a common indicator of laundering intent.

United States filing required for cash transactions above a set threshold, typically ten thousand dollars in a business day, subject to defined exemptions.

Systematic comparison of customers, counterparties and transactions against designated-persons lists and embargo rules, before and during the relationship, to block or reject prohibited dealings.

United States Treasury list of specially designated nationals and blocked persons; assets of listed parties under United States jurisdiction must be frozen and dealings with them are prohibited.

Immediate immobilisation of funds or property belonging to a designated person, preventing any movement, use or transfer without a licence from the competent authority.

Matching a person or entity name against watchlists and adverse-media sources, using transliteration and fuzzy logic, with human review of any potential match before a decision.

Negative news coverage linking a customer to alleged criminal conduct, corruption or sanctions evasion, used as a risk indicator that may prompt enhanced due diligence or exit.

Arrangement in which one bank holds accounts for another bank and processes payments on its behalf, creating indirect exposure to the respondent's customers and requiring specific due diligence.

Middle stage of money laundering in which complex series of transfers, conversions or trades separate criminal proceeds from their origin and disguise the audit trail.

First stage of money laundering, introducing illicit cash into the financial system through deposits, purchases or businesses, which is where physical cash controls matter most.

Final laundering stage in which funds re-enter the legitimate economy appearing as lawful income, for example through property, investments or business revenue.

Abuse of entrusted power for private gain, including bribery, embezzlement and facilitation payments, generating proceeds that firms must detect through PEP and payment controls.

Offering, promising, giving, requesting or accepting an undue advantage to influence official or commercial action, an offence with cross-border reach under laws such as the FCPA and UK Bribery Act.

Small payment made to speed up a routine administrative action by a public official; treated as a bribery offence under some laws, though certain statutes carve out a narrow exception.

Illegal concealment of income or assets from tax authorities, often through offshore structures or false invoicing; proceeds are predicate criminal funds in many AML regimes.

Person responsible for day-to-day operation of the AML program, including policy design, training, monitoring oversight and escalation, with sufficient authority and independence from revenue lines.

Structured analysis of how exposed the institution is to money-laundering and terrorist-financing risk across customers, products, channels and geographies, used to size controls and monitoring.

Assigned score or tier reflecting a customer's perceived laundering risk based on factors such as occupation, location, product use and delivery channel, driving the intensity of due diligence.

Periodic review by parties free from the function being tested, verifying that the AML program's policies, monitoring, training and recordkeeping operate effectively and reporting findings to senior management.

National agency that receives suspicious transaction reports, analyses them together with other data and disseminates intelligence to law enforcement and foreign counterparts.

Exchange of customer and transaction data between institutions, within groups or with authorities, under legal gateways and safeguards that preserve confidentiality and data protection.

Global network of financial intelligence units that provides secure channels and standards for exchanging financial intelligence across borders in support of investigations.

Digital representation of value that can be traded or transferred and used for payment or investment, including cryptocurrencies, which FATF treats as a regulated financial activity.

Business conducting exchange, transfer, custody or safekeeping of virtual assets for customers, subject to AML registration, due diligence and reporting duties in adopting jurisdictions.

Requirement that originator and beneficiary information accompany virtual asset transfers above a threshold, mirroring wire-transfer rules so counterparties can screen the parties involved.

Digitally captured and verified representation of a person's identity, used for remote onboarding, which raises questions about document authenticity, liveness checks and ongoing re-verification.