IFMP Anti-Money Laundering (AML/CFT) Certification, Pakistan key terms

The process of disguising the true origin, ownership, or destination of money obtained from crime so that it appears to come from a legitimate source, typically through placement, layering, and integration stages.

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

The stage of money laundering that separates illicit proceeds from their source through a series of transactions, transfers, and corporate structures designed to obscure the audit trail and beneficial ownership.

The final laundering stage, where funds that appear legitimate are reintroduced into the economy and used for investment, property purchase, or business activity, making the criminal origin very difficult to trace.

The provision or collection of funds, by any means, with the intention or knowledge that they will be used to carry out terrorist acts, whether the funds are from legal or illegal sources.

The legal, regulatory, and operational measures a country and its financial institutions take to prevent funds and assets from reaching terrorists, terrorist organisations, or those who support them.

The Financial Action Task Force, an intergovernmental body that sets global AML/CFT standards, the Forty Recommendations, and evaluates jurisdictions through mutual assessments against those standards.

The internationally endorsed standards covering criminalisation, preventive measures, transparency, supervision, and international cooperation that countries must implement to build an effective AML/CFT regime.

The principle that institutions apply controls proportionate to the assessed likelihood and impact of money laundering or terrorist financing, focusing greater effort and resources on higher-risk customers, products, and transactions.

The set of measures institutions take to identify and verify a customer's identity, understand the nature of the business relationship, and monitor activity, including identifying beneficial owners and the purpose of the account.

The identification and verification procedures an institution performs before and during a business relationship to confirm who its customer is and to understand the expected nature of that customer's activity.

Additional, more intensive checks applied to higher-risk relationships, such as politically exposed persons or complex offshore structures, including source of funds and wealth verification and senior management approval.

A reduced level of customer identification and verification permitted where risk is assessed as low, for example certain low-value products, provided the institution documents the rationale and continues monitoring.

The natural person who ultimately owns or controls a customer or the funds involved, or on whose behalf a transaction is conducted, including through ownership thresholds or control by other means.

A person entrusted with prominent public functions, domestically or internationally, along with close family members and associates, who presents higher corruption and laundering risk and requires enhanced scrutiny.

A report a financial institution files with the national financial intelligence unit when it knows, suspects, or has reasonable grounds to suspect that funds are linked to crime or terrorism, without tipping off the customer.

A filing to the financial intelligence unit describing unusual or potentially unlawful customer activity that does not meet the threshold for a transaction-specific report but still warrants official attention.

A national agency that receives, analyses, and disseminates suspicious transaction and other reports, and shares intelligence with domestic and foreign authorities to support investigations.

Disclosing to a customer or any other person that a suspicious transaction report has been or will be filed, or that an investigation is under way, which is generally a criminal offence.

A warning indicator or pattern of behaviour, such as unusual cash intensity, rapid movement of funds, or reluctance to provide identification, that suggests possible money laundering or terrorist financing and prompts further enquiry.

Deliberately breaking up transactions into smaller amounts to stay below reporting or identification thresholds, a practice also known as smurfing and itself a reportable suspicious activity.

The obligation to report transactions above a specified value, such as large cash deposits or cross-border transfers, to the financial intelligence unit regardless of whether any suspicion exists.

The ongoing, often automated, review of customer transactions against expected activity profiles and risk indicators to detect unusual patterns that may require investigation or reporting.

The process of scoring or classifying a customer's money laundering and terrorist financing risk using factors such as geography, product, channel, occupation, and expected transaction behaviour, which determines the level of due diligence applied.

The origin of the specific money used in a transaction or relationship, which institutions may need to verify, for example through salary slips, sale contracts, or bank statements, particularly for higher-risk customers.

The origin of a customer's total accumulated assets and income over time, such as business ownership, inheritance, or property sales, which must be understood for higher-risk relationships.

An entity with no meaningful operations, employees, or physical presence, often used to hold assets or move funds while concealing the identity of the people who actually control it.

A person or entity that holds an asset, account, or directorship on behalf of another person, sometimes used to hide the real owner from the institution and from authorities.

An informal value transfer system operating outside formal banking channels, where a network of brokers settles obligations through trust and offsetting, commonly used in South Asia and a recognised terrorist financing risk.

Money or value transfer services that move funds outside the regulated banking system, including informal brokers and unregistered operators, which are subject to registration and reporting obligations.

Measures that freeze the assets of and prohibit dealings with named individuals and entities linked to terrorism or proliferation, without requiring a criminal conviction, and require immediate screening compliance.

The process of checking customers, beneficial owners, and transactions against national and international sanctions lists to identify matches and prevent prohibited dealings or asset freezing breaches.

A peer review by the FATF or a regional body that assesses a country's AML/CFT regime against the global standards, rates its technical compliance and effectiveness, and may lead to grey or black listing.

The published outcome of a mutual evaluation, setting out a jurisdiction's ratings, findings, and recommended actions, and used by institutions and regulators to understand country risk.

An international network of financial intelligence units that facilitates secure exchange of intelligence and best practice, and sets principles for FIU operation and information sharing.

The duty not to disclose customer information or the existence of suspicious reports except as permitted by law, supporting the effectiveness of reporting and preventing tipping off.