IBSL Intermediate in Applied Banking and Finance (IABF) Exam key terms

Provision of deposit, payment, and lending services to individuals and small businesses, typically through branches, digital channels, and standardized products rather than bespoke corporate arrangements.

Banking services provided to large corporates, financial institutions, and public bodies, including syndicated lending, trade finance, custody, and treasury services, usually in larger ticket sizes than retail business.

A transactional bank account used for everyday payments, allowing deposits and withdrawals on demand with no notice period, and typically paying little or no interest.

Funds placed with a bank that the customer can withdraw immediately without prior notice, such as balances held in current or savings accounts.

A savings product where funds are locked for an agreed period at a fixed or variable rate, with early withdrawal usually restricted or subject to a penalty.

A short-term borrowing facility allowing an account holder to draw funds beyond the available balance up to an agreed limit, with interest charged on the amount used.

The process by which a bank verifies a customer's identity, beneficial ownership, and risk profile before and during the relationship, forming part of anti-money-laundering obligations.

Laws, rules, and internal controls designed to prevent criminals from disguising the proceeds of crime as legitimate funds through the financial system.

Ongoing steps a bank takes to understand a customer's business, source of funds, and expected transaction patterns, proportionate to the assessed risk of the relationship.

Additional scrutiny applied to higher-risk customers, such as politically exposed persons or those in high-risk jurisdictions, involving extra identity checks and closer monitoring of activity.

An individual entrusted with prominent public functions, or a close associate or family member, who presents elevated corruption risk and therefore attracts enhanced monitoring.

A confidential filing a bank submits to the financial intelligence unit when it detects transactions or behavior that may indicate money laundering or other criminal activity.

Automated or manual review of customer activity against expected patterns and thresholds to detect unusual or potentially illicit transactions in real time or after the event.

A control requiring two authorized individuals to review and approve a transaction or decision independently, reducing the risk of error or fraud by a single person.

A processing control in which one employee prepares or enters a transaction and a different employee verifies and releases it before it takes effect.

The policies, procedures, and checks a bank operates to safeguard assets, ensure accurate records, and keep activities within approved limits and regulations.

The process of comparing two sets of records, such as internal ledgers and external statements, to confirm they agree and to identify and correct any differences.

The stage of a payment or trade process in which participants exchange and confirm transaction details and calculate the obligations each party owes before settlement occurs.

The final transfer of funds or securities between parties that discharges the underlying payment or trade obligation, completing the transaction.

The infrastructure, rules, and participants that enable the transfer of funds between institutions, including clearing houses, messaging networks, and settlement accounts.

The risk that a bank cannot meet its payment and funding obligations as they fall due without incurring unacceptable losses, for example by selling assets cheaply.

A regulatory measure comparing a bank's stock of high-quality liquid assets with its projected net cash outflows over a 30-day stress period, requiring a minimum buffer.

The requirement that a bank holds enough regulatory capital relative to the riskiness of its assets and activities, so that losses can be absorbed without depositor harm.

A bank's exposures adjusted for credit, market, and operational risk using regulatory weights, forming the denominator of capital adequacy ratios.

The highest-quality regulatory capital, mainly ordinary shares and retained earnings, which absorbs losses first and is measured against risk-weighted assets.

The risk that a borrower or counterparty fails to meet its repayment or contractual obligations on time and in full, causing the bank a financial loss.

A situation where a borrower fails to make a required payment or otherwise breaches key loan terms, triggering the bank's right to demand repayment and pursue recovery.

A loan on which payments are overdue beyond an agreed period or where repayment is considered unlikely, requiring the bank to recognize impairment and monitor recovery.

An amount charged against profit to cover expected losses on loans or other exposures that have become impaired or are likely to be uncollectible.

Assets or guarantees pledged by a borrower to secure a loan, which the lender may realize if the borrower defaults, reducing the lender's potential loss.

The amount of a loan expressed as a percentage of the value of the asset securing it, used to gauge lending risk and set maximum borrowing limits.

The risk that changes in market interest rates reduce a bank's net interest income or the value of its assets and liabilities, given mismatches in repricing.

The percentage charged or paid for the use of money over a period, reflecting the cost of borrowing or the return on funds lent or deposited.

A graph showing the interest rates of bonds of similar credit quality across different maturities, indicating market expectations about future rates and growth.

The date on which a financial instrument, loan, or deposit reaches the end of its term and the principal or outstanding amount becomes due for repayment.

The risk of loss from failed or inadequate internal processes, people, systems, or external events, including fraud, errors, and technology failures.

Intentional deception by an employee, customer, or third party to obtain money or advantage unlawfully, such as forged documents, card misuse, or false loan applications.

An international framework of bank capital, leverage, and liquidity standards agreed after the global financial crisis to strengthen resilience and reduce systemic risk.

A scheme that protects depositors up to a specified limit if a bank fails, funded by levies on banks and intended to maintain confidence in the banking system.

A situation where many depositors withdraw funds simultaneously because they doubt the bank's solvency, which can turn a liquidity shortage into failure.