ICA TBML Specialist Cert key terms

A method of disguising the proceeds of crime by using trade transactions to move value across borders, often through over- or under-invoicing, multiple invoicing, or misrepresenting goods.

The practice of stating a price on an invoice that is higher than the true value of the goods, allowing the buyer to transfer extra funds to the seller and thereby move money across borders.

The practice of stating a price on an invoice that is lower than the true value of the goods, enabling the buyer to pay less and the seller to retain value offshore, often to evade duties or move money.

The deliberate falsification of the price, quantity, or quality of goods on trade documents to transfer value illicitly, a common technique in trade-based money laundering.

A scheme where goods are traded across borders multiple times, often involving missing traders, to claim repeated VAT refunds or to move money across jurisdictions without genuine economic activity.

A fictitious trade transaction where no goods actually move, but documents are created to justify payments, often used to transfer money across borders.

A system used by Colombian drug traffickers to launder money by selling drug proceeds in the US for pesos, often through trade transactions, to avoid currency controls.

Financial products and services that facilitate international trade, such as letters of credit, guarantees, and documentary collections, which can be exploited for money laundering.

A bank's written commitment to pay a seller on behalf of a buyer, provided specified documents are presented, often used in trade but vulnerable to fraudulent documentation.

A trade transaction where the seller's bank acts as an intermediary to exchange documents for payment or acceptance, without the bank guaranteeing payment, often used in trade finance.

The process of concealing the origin of money obtained from illegal activities, typically through placement, layering, and integration, to make it appear legitimate.

The first stage of money laundering, where illicit cash is introduced into the financial system, often through deposits, purchases, or currency exchanges.

The second stage of money laundering, involving complex layers of financial transactions to distance the money from its illegal source and obscure the audit trail.

The final stage of money laundering, where laundered money is reintroduced into the economy and appears legitimate, often through investments or business ownership.

A report filed by financial institutions to the relevant authority to flag transactions that may indicate money laundering, fraud, or other financial crimes.

A report submitted to a financial intelligence unit when a transaction is suspected of being linked to criminal activity, often used interchangeably with SAR in some jurisdictions.

A national agency responsible for receiving, analyzing, and disseminating suspicious transaction reports and other financial intelligence to combat money laundering and terrorist financing.

Laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income, including customer due diligence and reporting obligations.

The process of identifying and verifying a customer's identity, understanding their business, and assessing their risk profile before and during a business relationship.

The process of gathering information about a customer to understand their activities and assess risk, including identifying beneficial owners and the purpose of the account.

Additional scrutiny applied to high-risk customers or transactions, such as those involving politically exposed persons or high-risk jurisdictions, including source of funds checks.

A reduced level of customer due diligence applied to low-risk situations, such as certain regulated financial products, where the risk of money laundering is considered minimal.

An AML strategy where institutions allocate resources according to the assessed risk of money laundering, applying stricter measures to higher-risk customers and activities.

An individual entrusted with a prominent public function, posing a higher risk for money laundering due to potential influence and corruption, requiring enhanced due diligence.

The natural person(s) who ultimately own or control a legal entity or arrangement, such as owning 25% or more of a company, required to be identified under AML rules.

The origin of the money involved in a transaction or relationship, which must be understood and verified, especially for high-risk customers, to ensure legitimacy.

The origin of a customer's entire wealth, such as business ownership or inheritance, which must be understood and verified for high-risk customers.

A company with no significant assets or operations, often used to obscure ownership and facilitate money laundering or tax evasion.

A jurisdiction with low taxes and minimal financial regulation, often used to hold assets or conduct transactions with reduced transparency, attracting money launderers.

A country or jurisdiction that offers low or zero tax rates and financial secrecy, making it attractive for hiding assets and laundering money.

An intergovernmental organization that sets international standards for combating money laundering and terrorist financing, including the FATF Recommendations.

A peer review process conducted by FATF or regional bodies to assess a country's compliance with AML/CFT standards and effectiveness of its regime.

Laws and regulations aimed at preventing the funding of terrorist activities, often integrated with AML measures to detect and report suspicious transactions.

A relationship where one bank provides services to another, often across borders, which can be exploited for money laundering if due diligence on the respondent bank is inadequate.

The act of breaking down large cash transactions into smaller ones to avoid reporting thresholds, a common money laundering technique also known as smurfing.

A money laundering method where multiple individuals make small deposits or purchases to evade detection and reporting requirements, often coordinated by a launderer.

The process of evaluating a customer's money laundering risk based on factors such as business type, geography, and transaction patterns, to determine appropriate due diligence.

The process of establishing a business relationship with a new customer, including identity verification, risk assessment, and initial due diligence checks.