CFCS (Other exams) key terms

A method of allocating compliance resources in proportion to the assessed likelihood and impact of financial crime, so that higher-risk customers, products, channels and geographies receive more scrutiny than lower-risk ones.

The steps a financial institution takes to identify a customer, verify identity with reliable documents or data, understand the purpose of the relationship, and assess risk before and during the relationship.

Additional, more intrusive checks applied to higher-risk relationships, such as politically exposed persons or customers in high-risk jurisdictions, often including source-of-funds and source-of-wealth verification and senior management sign-off.

The identity of the natural persons who ultimately own or control a legal entity or arrangement, usually determined by ownership thresholds or control tests rather than by the name appearing on the account.

An individual entrusted with prominent public functions, together with close family members and known associates, who presents elevated corruption risk and therefore requires enhanced scrutiny and senior-level approval.

A report filed by a financial institution with the national financial intelligence unit describing activity suspected to involve criminal proceeds or terrorist financing, normally backed by a safe harbour and a tipping-off prohibition.

An operating model in which business units own risk, a compliance or risk function provides oversight and challenge, and internal audit supplies independent assurance to the board.

Automated or manual review of customer transactions against scenarios and thresholds to spot patterns consistent with money laundering, fraud or terrorist financing, generating alerts that analysts investigate and document.

The practice of exiting or refusing entire categories of customers or jurisdictions instead of managing their specific risks, which can push transactions into less regulated channels and cause financial exclusion.

The shared values, behaviour and incentives across an organisation that determine whether rules are genuinely followed, shaped most strongly by senior management example and by how misconduct is rewarded or punished.

The first stage of money laundering, in which cash or other criminal proceeds enter the financial system, for example through deposits, currency exchange, casinos or the purchase of high-value assets.

The second stage of money laundering, in which a series of transfers, conversions, trades or corporate structures is used to obscure the origin, ownership and audit trail of criminal proceeds.

The final stage of money laundering, in which laundered funds are reintroduced into the legitimate economy as apparently lawful assets or income, such as property, investments or business revenue.

Deliberately breaking up cash transactions into amounts below reporting or record-keeping thresholds, or arranging patterns of transfers, to avoid triggering disclosures; also called smurfing.

The underlying crime that generates the proceeds later laundered, such as drug trafficking, fraud or corruption; laundering requires such an offence, though many jurisdictions no longer require a conviction for it.

Moving value between parties by misrepresenting the price, quantity or quality of goods, for example through over-invoicing, under-invoicing or phantom shipments, so funds cross borders under commercial cover.

A legal entity with no genuine operations, employees or physical presence, often incorporated in a secrecy jurisdiction and used to hold accounts, conceal beneficial ownership or move funds without economic rationale.

A person who receives or moves criminal proceeds for others, sometimes knowingly and sometimes after recruitment through fraud, romance scams or false job offers, helping launder funds and evade detection.

A network that moves value across borders outside formal banking, settling obligations between trusted intermediaries through netting and cash with little written record; hawala is a common example.

An account held by a business or individual that rapidly consolidates funds from many sources, including criminal proceeds, and then disburses them in payments that appear routine or legitimate.

Providing, collecting or moving funds and other assets, whether from legal or illegal sources, with the intention or knowledge that they will support terrorist acts or terrorist organisations.

A terrorist financing pattern in which an individual or small group raises money through ordinary income, petty crime, loans or crowdfunding and uses it to fund their own attack, leaving a minimal financial footprint.

Misuse of charities, religious bodies or other non-profits to collect or channel funds to terrorists, often exploiting cash-intensive operations, weak governance or activities in conflict zones.

A person who travels from their home country to a conflict zone to join or support a terrorist group, creating identifiable travel, funding and communication patterns that financial institutions may detect.

A terrorist financing method in which hostages are taken and ransoms collected through intermediaries and cross-border transfers, sometimes routed through charities or informal value transfer channels.

The creation of a fictitious identity from a mix of real and invented data, such as a genuine national identifier paired with a fabricated name, cultivated over time to obtain credit before being abandoned unpaid.

Unauthorised access to and control of a genuine customer's account, typically after phishing, credential stuffing or data theft, used to move funds or to launder money through the victim's profile.

A scheme in which criminals impersonate an executive, supplier or colleague by email to trick staff into sending payments or revealing data, often using lookalike domains and manipulated invoices.

A fraud in which returns paid to earlier investors come from money contributed by later investors rather than from genuine profit, collapsing once new investment stops; a classic long-duration investment fraud.

Fraud committed by the genuine account holder or applicant, such as overstating income, claiming a bogus loss or later denying a legitimate transaction, where the customer is the perpetrator rather than the victim.

A scam in which a victim is deceived into instructing their bank to send a payment to a criminal's account, so the transfer is genuinely authorised and ordinary authentication controls do not stop it.

Offering, giving, requesting or accepting a financial or other advantage to influence the actions of a person in a position of trust, in business or public office, often using intermediaries to conceal the link.

A small payment made to a low-ranking official to speed up a routine action the official is already obliged to perform; many anti-corruption laws treat it as a bribe, notably the UK Bribery Act.

A secret portion of a contract value or payment returned to the person who influenced its award, typically routed through intermediaries, offshore accounts or inflated invoices to disguise the payment.

The process of comparing customers, counterparties, transactions and vessels against designated-person and embargo lists, using name matching, fuzzy logic and list management, to detect prohibited dealings.

A preventative measure that blocks designated persons from accessing or dealing with their funds and economic resources without changing ownership, so the assets remain in place pending further action.

A court-ordered permanent deprivation of criminal property or its equivalent value, usually following conviction but in some systems available through non-conviction-based proceedings against unexplained wealth.

Formal cooperation between states, under a treaty or domestic law, to obtain evidence, freeze or confiscate assets, or serve process in a criminal investigation, usually through a designated central authority.

Measures imposed by one country on non-nationals for dealing with a sanctioned target, extending beyond territorial jurisdiction and creating risk for third-country banks with no direct link to the issuing state.

The principle that an entity owned fifty percent or more, directly or indirectly, by one or more blocked persons is itself blocked even though it does not appear by name on the sanctions list.