GLOSSARY OF TERMS FOR USE IN COMPLETING PRE-ASSESSMENT QUESTIONNAIRES
Current list of countries or territories listed by the Financial Action Task Force (FATF) or Caribbean Financial Action Task Force (CFATF) as having strategic AML/CFT deficiencies:
Bosnia & Herzegovina
- Democratic People’s Republic of Korea
Anti-money Laundering (AML) – a set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. The responsibility to perform and apply AML procedures is applicable to all businesses and organizations.
Beneficial Owner – refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.
Bequeathed Assets – refers to assets, which may include money, land and other real assets passed on or disposed of (typically by a last will of a person now deceased).
Competent Authorities – refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements.
Countering the Financing of Terrorism (CFT) – a set of procedures, laws or regulations aimed at the detection, prevention and suppression of the financing of terrorism and terrorist acts.
Customer due diligence (CDD) – refers to the steps required of an entity or a professional in dealings with an applicant for business or a customer in relation to a business relationship or one-off transaction in order to forestall and prevent money laundering, terrorist financing and other financial crimes.
Enhanced customer due diligence (ECDD) – refers to the steps additional to customer due diligence which an entity or a professional is required to perform in dealings with an applicant for business or a customer in relation to a business relationship or one-off transaction in order to forestall and prevent money laundering, terrorist financing and other financial crime.
EU – the European Union is an economic and political union of 28 member states that are located primarily in Europe.
FATF - The Financial Action Task Force (FATF) is an inter-governmental body which develops and promotes global standards for combating money laundering, terrorist financing and other illicit finance. The FATF Recommendations set out a comprehensive and consistent framework of measures which countries should adopt in order to combat money laundering and terrorist financing effectively.
Money Laundering - is the process of concealing the source of illegally obtained money while making the proceeds of the crime appear as if they are legitimate. The three steps in money laundering are placement, layering and integration of illegally obtained money.
MLRO – the Money Laundering Reporting Officer (MLRO) is a person designated for employees to report suspicious transactions and suspicious activities. In addition, the MLRO acts as a liaison between the Financial Investigation Agency and the company. The MLRO’s functions include the submission of suspicious activity reports and suspicious transaction reports.
Politically Exposed Persons – Politically Exposed Persons (PEPs) are individuals who are or have been entrusted with prominent public functions, either locally, or in a foreign country; for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials. Business relationships with family members or close associates of PEPs involve reputational risks similar to those with PEPs themselves. As such, entities should also consider the level of risk associated with these persons when establishing business relationships. Family relations cover persons in consanguine and affinity relations with PEPs (e.g. parents, siblings, spouses, in-laws etc). Close associates include personal advisers/consultants to, close business colleagues and friends likely to benefit from their association with a PEP.
Proliferation Financing – proliferation financing can be defined as the act of providing funds or financial services which are used, in whole or in part, for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials (including both technologies and dual use goods used for non-legitimate purposes), in contravention of national laws or, where applicable, international obligations.
STR – an STR is a Suspicious Transaction Report; a written report that documents a suspicious transaction (which may not involve monies) and is immediately reported to the Financial Investigation Agency.
SAR – an SAR is a Suspicious Activity Report where suspicious activity is documented and a written submission is made to the Financial Investigation Agency.
Terrorist Financing - the use of funds, or the making available of funds, for the purposes of terrorism; or the acquisition, possession, concealment, conversion or transfer of funds that are, directly or indirectly, intended to be used or made available for the purposes of terrorism.
UN – the United Nations (UN) is an intergovernmental organisation established to promote international cooperation. Its objectives include maintaining international peace and security, promoting human rights, fostering social and economic development, protecting the environment, and providing humanitarian aid in cases of famine, natural disaster, and armed conflict.