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FATF Recommendations

This glossary includes definitions from the Glossary of the FATF Recommendations, as well as definitions and acronyms from other sources.

Accounts

References to “accounts” should be read as including other similar business relationships between financial institutions and their customers.

Source: Glossary of the FATF Recommendations

 

Accurate

Describes information that has been verified for accuracy (as this term is used in the Interpretive note to Recommendation 16).

Source: Glossary of the FATF Recommendations

 

Agent

For the purposes of Recommendations 14 and 16, agent means any natural or legal person providing Money or Value Transfer Service(s) (MVTS) on behalf of an MVTS provider, whether by contract with or under the direction of the MVTS provider.

Source: Glossary of the FATF Recommendations

 

AML/CFT

Anti-Money Laundering / Countering the Financing of Terrorism (also used for Combating the financing of terrorism)

 

Appropriate authorities

Refers to competent authorities, including accrediting institutions, and self-regulatory organisations(as this term is used in the Interpretive note to Recommendation 8).

Source: Glossary of the FATF Recommendations

 

Associate NPOs

Includes foreign branches of international Non-Profit Organisations (NPOs) (as this term is used in the Interpretive Note to Recommendation 8).

Source: Glossary of the FATF Recommendations

 

Batch transfer

Is a transfer comprised of a number of individual wire transfers that are being sent to the same financial institutions, but may/may not be utlimately intended for different persons (as this term is used in the Interpretive Note to Recommendation 16).

Source: Glossary of the FATF Recommendations

 

Bearer negotiable instruments

Bearer negotiable instruments (BNIs) includes monetary instruments in bearer form such as: traveller’s cheques; negotiable instruments (including cheques, promissory notes and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery; incomplete instruments (including cheques, promissory notes and money orders) signed, but with the payee’s name omitted.

Source: Glossary of the FATF Recommendations

 

Bearer shares

Bearer shares refers to negotiable instruments that accord ownership in a legal person to the person who possesses the bearer share certificate.

Source: Glossary of the FATF Recommendations

 

Beneficiary Financial Institution

refers to the financial institution which receives the wire transfer from the ordering financial institution directly or through an intermediary financial institution and makes the funds available to the beneficiary (as this term is used in the Interpretive Note to Recommendation 16).

Source: Glossary of the FATF Recommendations

 

Beneficial owner

Beneficial owner refers to the natural person(s) who ultimately1 owns or controls a customer2 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.

[1]        Reference to “ultimately owns or controls” and “ultimate effective control” refer to situations in which ownership/control is exercised through a chain of ownership or by means of control other than direct control.

[2]        This definition should also apply to beneficial owner of a beneficiary under a life or other investment linked insurance policy.

Source: Glossary of the FATF Recommendations

 

Beneficiary

The meaning of the term beneficiary in the FATF Recommendations depends on the context:

Please also refer to the Interpretive Notes to Recommendations 10 and 16.

Source: Glossary of the FATF Recommendations

 

BNI

Bearer-Negotiable Instrument

 

CDD

Customer Due Diligence

 

Competent authorities

Competent authorities refers to all public authorities1  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 & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities.

[1]           This includes financial supervisors established as independent non-governmental authorities with statutory powers.

Source: Glossary of the FATF Recommendations

 

Confiscation

The term confiscation, which includes forfeiture where applicable, means the permanent deprivation of funds or other assets by order of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to be transferred to the State. In this case, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture loses all rights, in principle, to the confiscated or forfeited funds or other assets. Confiscation or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated or forfeited property is determined to have been derived from or intended for use in a violation of the law.

Source: Glossary of the FATF Recommendations

 

Core Principles

Core Principles refers to the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision, the Objectives and Principles for Securities Regulation issued by the International Organization of Securities Commissions, and the Insurance Supervisory Principles issued by the International Association of Insurance Supervisors.

Source: Glossary of the FATF Recommendations

 

Correspondent banking

Correspondent banking is the provision of banking services by one bank (the “correspondent bank”) to another bank (the “respondent bank”). Large international banks typically act as correspondents for thousands of other banks around the world. Respondent banks may be provided with a wide range of services, including cash management (e.g. interest-bearing accounts in a variety of currencies), international wire transfers, cheque clearing, payable-through accounts and foreign exchange services.

Source: Glossary of the FATF Recommendations

 

Country

All references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions.

Source: Glossary of the FATF Recommendations

 

Cover Payment

refers to a wire transfer that combines a payment message sent directly by the ordering financial institution to the beneficiary financial institution with the routing of the funding instruction (the cover) from the ordering financial institution to the beneficiary financial institution through one or more intermediary financial institutions (as this term is used in the Interpretive Note to Recommendation 16).

Source: Glossary of the FATF Recommendations

 

Criminal activity

Criminal activity refers to: (a) all criminal acts that would constitute a predicate offence for money laundering in the country; or (b) at a minimum to those offences that would constitute a predicate offence as required by Recommendation 3.

Source: Glossary of the FATF Recommendations

 

Cross-border Wire Transfer

refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country (as this term is used in the Interpretive Note to Recommendation 16).

Source: Glossary of the FATF Recommendations

 

Currency

Currency refers to banknotes and coins that are in circulation as a medium of exchange.

Source: Glossary of the FATF Recommendations

 

DNFBP

Designated Non-Financial Business or Profession

Accounts

References to “accounts” should be read as including other similar business relationships between financial institutions and their customers.

Source: Glossary of the FATF Recommendations

 

Agent

For the purposes of Recommendations 14 and 16, agent means any natural or legal person providing Money or Value Transfer Service(s) (MVTS) on behalf of an MVTS provider, whether by contract with or under the direction of the MVTS provider.

Source: Glossary of the FATF Recommendations

 

AML/CFT

Anti-Money Laundering / Countering the Financing of Terrorism (also used for Combating the financing of terrorism)

 

Bearer negotiable instruments

Bearer negotiable instruments (BNIs) includes monetary instruments in bearer form such as: traveller’s cheques; negotiable instruments (including cheques, promissory notes and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery; incomplete instruments (including cheques, promissory notes and money orders) signed, but with the payee’s name omitted.

Source: Glossary of the FATF Recommendations

 

Bearer shares

Bearer shares refers to negotiable instruments that accord ownership in a legal person to the person who possesses the bearer share certificate.

Source: Glossary of the FATF Recommendations

 

Beneficial owner

Beneficial owner refers to the natural person(s) who ultimately1 owns or controls a customer2 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.

[1]        Reference to “ultimately owns or controls” and “ultimate effective control” refer to situations in which ownership/control is exercised through a chain of ownership or by means of control other than direct control.

[2]        This definition should also apply to beneficial owner of a beneficiary under a life or other investment linked insurance policy.

Source: Glossary of the FATF Recommendations

 

Beneficiary

The meaning of the term beneficiary in the FATF Recommendations depends on the context:

Please also refer to the Interpretive Notes to Recommendations 10 and 16.

Source: Glossary of the FATF Recommendations

 

BNI

Bearer-Negotiable Instrument

 

CDD

Customer Due Diligence

 

Competent authorities

Competent authorities refers to all public authorities1  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 & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities.

[1]           This includes financial supervisors established as independent non-governmental authorities with statutory powers.

Source: Glossary of the FATF Recommendations

 

Confiscation

The term confiscation, which includes forfeiture where applicable, means the permanent deprivation of funds or other assets by order of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to be transferred to the State. In this case, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture loses all rights, in principle, to the confiscated or forfeited funds or other assets. Confiscation or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated or forfeited property is determined to have been derived from or intended for use in a violation of the law.

Source: Glossary of the FATF Recommendations

 

Core Principles

Core Principles refers to the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision, the Objectives and Principles for Securities Regulation issued by the International Organization of Securities Commissions, and the Insurance Supervisory Principles issued by the International Association of Insurance Supervisors.

Source: Glossary of the FATF Recommendations

 

Correspondent banking

Correspondent banking is the provision of banking services by one bank (the “correspondent bank”) to another bank (the “respondent bank”). Large international banks typically act as correspondents for thousands of other banks around the world. Respondent banks may be provided with a wide range of services, including cash management (e.g. interest-bearing accounts in a variety of currencies), international wire transfers, cheque clearing, payable-through accounts and foreign exchange services.

Source: Glossary of the FATF Recommendations

 

Country

All references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions.

Source: Glossary of the FATF Recommendations

 

Cover Payment

refers to a wire transfer that combines a payment message sent directly by the ordering financial institution to the beneficiary financial institution with the routing of the funding instruction (the cover) from the ordering financial institution to the beneficiary financial institution through one or more intermediary financial institutions (as this term is used in the Interpretive Note to Recommendation 16).

Source: Glossary of the FATF Recommendations

 

Criminal activity

Criminal activity refers to: (a) all criminal acts that would constitute a predicate offence for money laundering in the country; or (b) at a minimum to those offences that would constitute a predicate offence as required by Recommendation 3.

Source: Glossary of the FATF Recommendations

 

Cross-border Wire Transfer

refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country (as this term is used in the Interpretive Note to Recommendation 16).

Source: Glossary of the FATF Recommendations

 

Currency

Currency refers to banknotes and coins that are in circulation as a medium of exchange.

Source: Glossary of the FATF Recommendations

 

DNFBP

Designated Non-Financial Business or Profession