CAMS-RM key terms

The principle that AML/CFT resources should be proportionate to the money laundering and terrorist financing risk a customer, product, channel, or jurisdiction presents, so higher-risk situations receive stronger controls and lower-risk ones simplified measures.

A governance model in which the business owns and manages risk (first line), an independent compliance or risk function sets frameworks and challenges (second line), and internal audit provides independent assurance (third line).

The documented combination of policies, procedures, controls, systems, training, and independent testing that an institution maintains to detect, prevent, and report money laundering, terrorist financing, and sanctions breaches.

The senior individual accountable for receiving internal suspicion reports, deciding whether to escalate to the financial intelligence unit, and overseeing the institution's AML/CFT framework and its reporting to senior management.

The amount and type of AML/CFT risk an institution is willing to accept in pursuit of its strategy, expressed through qualitative statements and quantitative thresholds that guide customer acceptance, product design, and control investment.

The level of money laundering or terrorist financing risk that exists before any controls are applied, driven by factors such as customer type, geography, product features, and delivery channel.

The money laundering or terrorist financing risk that remains after the institution's controls have been applied, calculated by comparing inherent risk against control effectiveness.

A classification, often low, medium, or high, assigned to a customer based on scored or judged factors such as occupation, source of wealth, geography, and expected activity, which determines the depth of due diligence and monitoring.

The assessed threat posed by a customer's nationality, residence, incorporation, or transaction links to jurisdictions with weak AML/CFT regimes, conflict, corruption, sanctions exposure, or known terrorist financing activity.

A documented evaluation of the money laundering, terrorist financing, sanctions, and corruption risk attached to a country, used to set country risk weightings, enhanced due diligence triggers, and geographic monitoring thresholds.

The identification and verification of a customer's identity, understanding of the intended business relationship and expected activity, and ongoing review that allows the institution to form a reasonable belief about who the customer is.

Reduced identification, verification, or monitoring measures permitted only where a documented risk assessment shows the customer, product, and geography present low money laundering or terrorist financing risk.

The explanation and evidence of where the money involved in a specific transaction or relationship originates, such as salary, savings, a property sale, or a loan.

The explanation and evidence of how a customer accumulated their overall net worth over time, such as business ownership, inheritance, or long-term employment, distinct from the funds used in a single transaction.

The continuous process of reviewing customer activity against expected behaviour, keeping due diligence information current, and escalating unusual patterns for investigation.

A scheduled refresh of a customer's due diligence information and risk rating, with frequency set by risk level, so that higher-risk relationships are re-examined more often.

The natural person who ultimately owns or controls a legal entity or arrangement, typically identified through ownership thresholds or control tests, and who must be identified and verified.

The method of identifying beneficial owners by tracing ownership percentages and voting rights, and by identifying persons who exercise control through other means such as senior management or shareholder agreements.

An ownership chain involving multiple layers of entities, offshore companies, trusts, or nominee arrangements that obscures who ultimately owns or controls a customer and therefore requires additional scrutiny.

Additional and more intrusive measures applied to higher-risk customers, such as politically exposed persons, correspondent relationships, or high-risk jurisdictions, including deeper ownership analysis, source of wealth evidence, and senior approval.

The documented sign-off by an appropriately senior individual required before establishing or continuing a higher-risk relationship, evidencing that the risk has been consciously accepted.

The automated or manual surveillance of customer transactions and account activity against rules, thresholds, and behavioural baselines to identify activity that may indicate money laundering, terrorist financing, or other financial crime.

The first-stage review of a monitoring or screening alert to decide whether it can be closed with documented rationale or must be escalated for deeper investigation.

The periodic adjustment of monitoring rule parameters and scenarios, using data on alert volumes, hit rates, and confirmed cases, to keep detection effective while controlling false positives.

An alert or screening match that, after review, does not represent genuine money laundering, terrorist financing, or sanctions exposure, though the review itself must still be documented.

The comparison of customer and counterparty names against sanctions lists, politically exposed person lists, and adverse media sources, including handling of transliteration, aliases, and partial matches.

The control that checks customers, beneficial owners, and transactions against designated-party lists to prevent prohibited dealings and to freeze or reject assets as required by applicable sanctions regimes.

The legal obligation to prohibit dealing with, moving, or making available funds and economic resources owned or controlled by a designated person or entity, without prior authorisation.

An individual entrusted with prominent public functions, and their family members and close associates, who presents higher corruption and money laundering risk and therefore requires enhanced due diligence and senior approval.

The provision of funds or financial services, or the conduct of financial transactions, that could contribute to the development, acquisition, or use of weapons of mass destruction and their delivery systems.

Items, materials, or technology that have legitimate civilian uses but can also be applied to military or weapons programmes, making their trade a recognised proliferation financing red flag.

A confidential report filed with the national financial intelligence unit describing activity suspected of involving criminal proceeds or terrorist financing, protected by a prohibition on tipping off the customer.

The criminal offence of disclosing to a customer or third party that a suspicious activity report has been or may be filed, or that an investigation is under way, in a way that could prejudice detection.

The documented process by which front-line staff or monitoring analysts refer unusual activity to the compliance function or MLRO for assessment and possible external reporting.

Independent or second-line evaluation of whether a control, such as screening, monitoring, or due diligence, is designed appropriately and operating as intended, with results reported to governance bodies.

A periodic review of the AML/CFT programme performed by internal audit or an external party free from operational responsibility, assessing design and effectiveness and reporting findings to the board or its committee.

The risk of adverse consequences from decisions based on incorrect or misused models, including monitoring scenarios, risk-scoring tools, and screening algorithms, managed through validation, documentation, and ongoing performance review.

The accuracy, completeness, timeliness, and consistency of customer and transaction data feeding AML systems, since poor data directly degrades screening, monitoring, and risk-scoring outcomes.

The manipulation of trade documents, invoices, prices, or quantities to move value across borders, often detected through mismatches between declared goods and payment flows.

A business that conducts exchange, transfer, custody, or related activities involving virtual assets, presenting distinct risks such as anonymity, cross-border speed, and mixing or chain-hopping typologies.