AML
Anti-Money Laundering: the framework of laws, controls and operational measures used to prevent, detect and report money laundering and related financial crime.
Financial Crime Risk Glossary
Clear terms for complex Financial Crime controls.
A practical reference for Financial Crime, AML, KYC, monitoring, investigations, data, crypto and AI terminology — including modern fraud threat vectors, model governance and regulatory control concepts. Definitions are concise and intended for advisory context rather than as substitutes for jurisdiction-specific legal definitions.
50 terms
CDD
Customer Due Diligence: measures used to identify and understand a customer, relevant ownership and the nature of the relationship.
EDD
Enhanced Due Diligence: additional scrutiny applied where customer, product, geography, ownership or activity presents higher risk.
ODD
Ongoing Due Diligence: continuing review of customer information, risk and activity through the life of the relationship.
KYC
Know Your Customer: the operational processes used to establish and maintain sufficient understanding of a customer.
KYB
Know Your Business: due diligence focused on legal entities, business activity, ownership and control.
UBO
Ultimate Beneficial Owner: the natural person or persons who ultimately own or control a legal entity or arrangement.
PEP
Politically Exposed Person: a person entrusted with a prominent public function, whose position may create higher exposure to bribery or corruption risk.
RCA
Relative or Close Associate: a family member or close associate of a PEP who may require enhanced treatment under applicable rules or policy.
Domestic PEP
A PEP who holds or held a prominent public function domestically.
Foreign PEP
A PEP who holds or held a prominent public function in another country.
International-organisation PEP
A person entrusted with a prominent function by an international organisation.
Business-Wide Risk Assessment (BWRA)
A documented assessment of the Financial Crime risks to which the business is exposed, used to inform proportionate policies, controls, procedures, resource allocation and customer-risk treatment. In UK AML regulation, relevant persons must identify and assess money-laundering and terrorist-financing risks and keep the assessment current and documented.
Reference: FCA Financial Crime Guide · FCA risk-assessment findings
Customer Risk Assessment
The structured assessment of risk factors used to determine the customer’s Financial Crime risk profile and control treatment.
Adverse Media
Relevant negative information from credible public sources that may indicate Financial Crime, misconduct or heightened customer risk.
Sanctions Screening
The process of comparing customers, counterparties, transactions or other relevant data against sanctions and restriction lists.
Name Screening
Screening of names and identifiers against sanctions, PEP, watchlist or other risk datasets.
Transaction Monitoring
Rules, scenarios, analytics or models used to identify transactional behaviour that may require investigation.
Scenario
A defined detection logic intended to identify a particular risk pattern, behaviour or typology.
Typology
A recurring method or pattern through which Financial Crime may be committed or concealed.
Alert
A system-generated or manually generated signal that requires review because defined risk criteria have been met.
False Positive
An alert or match that appears potentially relevant but is determined not to represent the risk originally indicated.
False Negative
Relevant suspicious or risky activity that a monitoring, screening or analytical control fails to identify or alert on.
Reference: DNB — From recovery to balance
Investigation
The structured review of information and evidence to determine whether activity is explainable, suspicious or requires escalation.
Quality Assurance
Independent or secondary review used to assess whether cases, decisions or controls meet defined quality standards.
SAR / STR
Suspicious Activity Report / Suspicious Transaction Report: a report to the competent authority when legal or regulatory suspicion thresholds are met.
MLRO
Money Laundering Reporting Officer: the senior role responsible for relevant AML governance and, in many jurisdictions, decisions on suspicious-activity escalation and reporting.
Correspondent Banking
A banking relationship in which one institution provides services to another financial institution, often creating complex cross-border Financial Crime risks.
Nested Relationship
Indirect access to a correspondent account by another financial institution through the direct respondent bank.
Payable-Through Account
An account arrangement that may allow customers of a respondent institution to transact more directly through a correspondent relationship.
Trade-Based Money Laundering (TBML)
The use of trade transactions to disguise proceeds of crime and move value, including through misrepresentation of the price, quantity or quality of imports or exports.
Reference: FATF — Trade-Based Money Laundering
Money Mule
A person or account used to receive, move or transfer illicit funds, sometimes knowingly and sometimes through deception or coercion.
Synthetic Identity Fraud
Fraud in which an identity is constructed from real and/or fabricated information and used to obtain accounts, credit, services or other financial benefit.
Reference: Federal Reserve Financial Services
Deepfake-enabled Identity Fraud
Fraud or impersonation using AI-generated or manipulated voice, image or video to misrepresent identity, defeat authentication, or facilitate onboarding, account access or social-engineering attacks.
Reference: UK Fraud Strategy 2026–2029
VASP
Virtual Asset Service Provider: an entity providing specified virtual-asset services such as exchange, transfer or custody.
Travel Rule — Virtual Assets / Crypto-Assets
The FATF standard requiring relevant virtual-asset transfers to be accompanied by specified originator and beneficiary information, with jurisdiction-specific implementation. In the EU, Regulation (EU) 2023/1113 applies equivalent information requirements to in-scope crypto-asset transfers.
Reference: FATF — 2026 VA/VASP implementation update · EUR-Lex — Regulation (EU) 2023/1113
Cryptocurrency AML Risk
Money-laundering or related Financial Crime risk arising from cryptocurrency, digital-asset products, providers, channels or typologies.
Blockchain Analytics
Analytical techniques and tools used to examine public blockchain activity and identify addresses, flows or risk indicators.
Data Lineage
The documented path showing where data originated, how it moved and how it was transformed.
Reconciliation
A control comparing data sets or flows to identify missing, duplicated, altered or otherwise inconsistent records.
Control Testing
Testing designed to determine whether a control is appropriately designed and operating as intended.
Perpetual KYC
An operating approach that uses material changes and events to trigger customer review rather than relying only on fixed periodic refresh cycles.
Responsible AI in Financial Crime
A governance approach to AI and machine learning in Financial Crime that combines effective risk coverage with accountability, human oversight, reliable data, explainability, fairness, validation and ongoing performance monitoring.
Reference: DNB — From recovery to balance · NVB — Models in Alert and Event Generation
Model Governance
The framework of ownership, accountability, approval, validation, performance monitoring, change control and risk acceptance applied across a model’s lifecycle.
Reference: NVB — Models in Alert and Event Generation · NIST AI Risk Management Framework
Technical Model Documentation
Controlled documentation of a model’s purpose, source data and data quality, preprocessing, design, validation, stability and performance, explainability, limitations, implementation and production monitoring.
Reference: NVB — Technical Model Documentation
Model Validation
Independent or appropriately segregated assessment of whether a model’s design, data, implementation and performance are suitable for its intended Financial Crime purpose and whether material limitations are understood and controlled.
Reference: NVB — Models in Alert and Event Generation · NVB — Technical Model Documentation
Algorithmic Bias
Systemic, computational/statistical or human-cognitive bias that can influence AI outputs and create unfair or distorted treatment. In Financial Crime use cases, harmful bias should be identified and managed across the AI lifecycle.
Reference: NIST — Managing harmful bias in AI · DNB — From recovery to balance
AI Model Drift
A deterioration or change in model behaviour because data, patterns, environments or relationships have changed over time.
Explainable AI (XAI)
AI whose outputs can be accompanied by reasons or evidence that are meaningful to relevant users and appropriately reflect the process that produced the result. In Financial Crime controls, explainability supports challenge, governance and evidencing of AI-assisted decisions.
Reference: NIST — Four Principles of Explainable AI
Human-in-the-Loop
An operating design in which accountable human judgement, review or approval remains embedded in automated or AI-supported Financial Crime decisions, including escalation or override where the consequence or uncertainty requires it.
Reference: DNB — From recovery to balance · NVB — Technical Model Documentation
Authoritative source families
Jurisdiction-specific definitions should always be checked against the applicable law, regulator and institutional policy. Useful source families include FATF, national regulators, FIUs and official corporate-registry guidance.
FATF
International standards, recommendations, guidance and Financial Crime terminology.
fatf-gafi.org →FCA / UK Handbook
UK regulatory material, including Financial Crime guidance and handbook provisions.
FCA Financial Crime Guide →