Terrorist Financing and Money Laundering
Expert-defined terms from the Graduate Certificate in Forensic and National Security Studies course at LearnUNI. Free to read, free to share, paired with a professional course.
Terrorist Financing and Money Laundering Glossary #
Terrorist Financing and Money Laundering Glossary
A #
A
Anti #
Money Laundering (AML)
Anti #
money laundering refers to a set of regulations, laws, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. AML measures are put in place to detect and prevent money laundering activities, including terrorist financing.
Asset Forfeiture #
Asset Forfeiture
Asset forfeiture is the confiscation of assets by the government due to illegal… #
In the context of terrorist financing and money laundering, assets can be seized if they are suspected to have been acquired through criminal activities.
B #
B
Beneficial Owner #
Beneficial Owner
The beneficial owner is the individual who ultimately owns or controls a legal e… #
In the context of money laundering, criminals may use complex ownership structures to obscure the true beneficial owner of illicit funds.
C #
C
Compliance #
Compliance
Compliance refers to the act of adhering to relevant laws, regulations, and guid… #
In the context of terrorist financing and money laundering, organizations must ensure compliance with AML regulations to prevent illicit activities.
Customer Due Diligence (CDD) #
Customer Due Diligence (CDD)
Customer due diligence is the process of verifying the identity of clients and a… #
Financial institutions are required to conduct CDD to prevent money laundering and terrorist financing.
D #
D
Designated Non #
Financial Business or Profession (DNFBP)
DNFBPs are entities that are not traditional financial institutions but are stil… #
Examples include lawyers, accountants, and real estate agents.
E #
E
Enhanced Due Diligence (EDD) #
Enhanced Due Diligence (EDD)
Enhanced due diligence is a higher level of scrutiny applied to clients or trans… #
EDD measures are used to mitigate the risk of money laundering and terrorist financing.
F #
F
Financial Action Task Force (FATF) #
Financial Action Task Force (FATF)
The Financial Action Task Force is an intergovernmental organization that sets i… #
The FATF evaluates countries' compliance with these standards and issues recommendations to improve AML/CFT measures.
G #
G
Gatekeeper #
Gatekeeper
Gatekeepers are professionals, such as lawyers and accountants, who have the pot… #
They are required to adhere to AML regulations and report suspicious activities to authorities.
H #
H
Hawala #
Hawala
Hawala is an informal money transfer system that operates outside of traditional… #
While hawala can be a legitimate means of transferring funds, it is also vulnerable to exploitation by criminals for money laundering and terrorist financing.
I #
I
Integration #
Integration
Integration is the final stage of money laundering where illicit funds are reint… #
Criminals use various methods to disguise the origin of the funds and make them appear as legitimate income.
J #
J
Jurisdictional Risk #
Jurisdictional Risk
Jurisdictional risk refers to the risk associated with conducting financial tran… #
Some jurisdictions may have weak AML/CFT regulations, making them attractive to money launderers and terrorist financiers.
K #
K
Know Your Customer (KYC) #
Know Your Customer (KYC)
Know Your Customer is a process used by financial institutions to verify the ide… #
KYC measures are essential for preventing money laundering and terrorist financing.
L #
L
Layering #
Layering
Layering is the second stage of money laundering where illicit funds are moved t… #
Criminals use multiple accounts and transactions to make it difficult to trace the illicit funds.
M #
M
Placement #
Placement
Placement is the first stage of money laundering where illicit funds are introdu… #
Criminals use various methods, such as cash deposits and wire transfers, to place illicit funds into the legitimate economy.
N #
N
National Risk Assessment (NRA) #
National Risk Assessment (NRA)
The National Risk Assessment is an evaluation conducted by a country to identify… #
The NRA helps authorities develop strategies to mitigate these risks.
O #
O
Outreach #
Outreach
Outreach refers to the efforts made by authorities to educate and raise awarenes… #
Outreach programs aim to inform the public, businesses, and other stakeholders about the risks and consequences of these illicit activities.
P #
P
Politically Exposed Person (PEP) #
Politically Exposed Person (PEP)
A politically exposed person is an individual who holds a prominent public posit… #
PEPs are considered to be at higher risk of involvement in money laundering or terrorist financing due to their access to power and influence.
Q #
Q
Quantitative Restrictions #
Quantitative Restrictions
Quantitative restrictions are limits imposed on the amount of currency that can… #
These restrictions are designed to prevent money laundering and terrorist financing by monitoring the flow of funds across borders.
R #
R
Regulatory Technology (RegTech) #
Regulatory Technology (RegTech)
Regulatory technology refers to the use of technology to streamline and automate… #
RegTech solutions help organizations comply with AML regulations more efficiently and effectively.
S #
S
Suspicious Activity Report (SAR) #
Suspicious Activity Report (SAR)
A suspicious activity report is a document filed by financial institutions to re… #
SARs are used to alert regulators to possible instances of money laundering or terrorist financing.
T #
T
Terrorist Financing #
Terrorist Financing
Terrorist financing is the act of providing financial support to terrorist organ… #
This support can come in the form of funds, goods, or services and is used to facilitate terrorist activities, including attacks and recruitment.
Transaction Monitoring #
Transaction Monitoring
Transaction monitoring is the process of tracking and analyzing financial transa… #
Financial institutions use transaction monitoring systems to identify potential instances of money laundering or terrorist financing.
U #
U
Ultimate Beneficial Owner (UBO) #
Ultimate Beneficial Owner (UBO)
The ultimate beneficial owner is the natural person who ultimately owns or contr… #
Identifying the UBO is essential for preventing money laundering and terrorist financing by understanding the true ownership of funds.
V #
V
Virtual Currency #
Virtual Currency
Virtual currency is a type of digital currency that operates independently of a… #
While virtual currencies offer benefits such as anonymity and accessibility, they are also vulnerable to exploitation by criminals for money laundering and terrorist financing.
W #
W
Wire Transfer #
Wire Transfer
A wire transfer is a method of electronically transferring funds from one financ… #
Wire transfers are commonly used for legitimate purposes, but they can also be exploited by criminals for money laundering and terrorist financing.
X #
X
Exchange Control #
Exchange Control
Exchange control refers to government regulations that restrict the flow of fore… #
These controls are implemented to prevent money laundering and terrorist financing by monitoring cross-border transactions.
Y #
Y
Yellow Card #
Yellow Card
A yellow card is a warning issued by authorities to financial institutions for f… #
Continued non-compliance may result in penalties or sanctions against the institution.
Z #
Z
Zero #
Tolerance Policy
A zero #
tolerance policy is a strict approach taken by organizations to prevent money laundering and terrorist financing. Under a zero-tolerance policy, any suspicious activities are reported and investigated, with no tolerance for non-compliance.