Supervision Department - AML/CFT Training
Definitions GlosSTRy
2
A
Account Monitoring Order
In the United Kingdom and several other countries, an order from a government authority requiring a
financial institution to provide transaction information on a suspect account for a specified time period.
Affidavit
A written statement given under oath before an officer of the court, notary public, or other authorized
person. It is commonly used as the factual basis for an application for a search, arrest or seizure warrant.
Alternative Remittance System (ARS)
Underground banking or informal value transfer systems. Often associated with ethnic groups from the
Middle East, Africa or Asia, and commonly involves the transfer of values among countries outside of the
formal banking system. The remittance entity can be an ordinary shop selling goods that has an
arrangement with a correspondent business in another country. There is usually no physical movement of
currency and a lack of formality with regard to verification and record- keeping. The money transfer takes
place by coded information that is passed through chits, couriers, letters or faxes, followed by telephone
confinancial institutionations. Almost any document that carries an identifiable number can be used by the
receiver to pick up the values in the other country. The systems are referred to by different names
depending upon the country: Hawala (an Arabic word meaning ―change‖ or ―transform‖), Hundi (a Hindi
word meaning ―collect‖), Chiti banking (referring to the way the system operates), Chop Shop banking
(China), and Poey Kuan (Thailand).
Anti-Money Laundering International Database (AMLID)
A compendium of analyses of anti-money laundering laws
and regulations, including two general classes of money laundering control measures domestic laws and
international cooperation—as well as information on national contacts and authorities. A secure,
multilingual database, AMLID is an important reference tool for law enforcement officers involved in
cross-jurisdictional work.
Anti-Money Laundering International Database (AMLID)
A compendium of analyses of anti-money laundering laws
and regulations, including two general classes of money laundering control measures—domestic laws and
international cooperation as well as information on national contacts and authorities. A secure, multilingual
database, AMLID is an important reference tool for law enforcement officers involved in cross-
jurisdictional work.
Supervision Department - AML/CFT Training
Definitions GlosSTRy
2
At a minimum, the anti-money laundering program should include:
1.
Written internal policies, procedures and controls;
2.
A designated AML compliance officer;
3.
On-going employee training; and
4.
Independent review to test the program.
Arrest Warrant
A court order directing a law enforcement officer to seize and detain a particular person and require them to
provide an answer to a complaint or otherwise appear in court.
Asia/Pacific Group on Money Laundering (APG)
A Financial Action Task Force (FATF)-style regional body consisting of jurisdictions in the Asia/Pacific
Region.
Asset Manager
A person appointed through a written contract by a company
or trust to direct the entity‘s investment program. The program can be a fully discretionary account, or the
contract can impose limitations on it. Fees to the asset manager can be based on performance achieved,
trading commissions or a percentage of the valuation of the estate under his or her management. High fees
and a close relationship with the owners or beneficiaries can expose the asset manager to potential conflicts
between a duty to report unusual or suspicious activity and the fiduciary duty to the client.
Asset Protection
A process that includes reorganizing how assets are held so as to make them less vulnerable should a claim
be made against a person. Asset protection is also a term used by tax planners for measures taken to protect
assets from taxation in other jurisdictions.
Asset Protection Trusts (APTs)
A special form of irrevocable trust usually created (i.e., settled) offshore for the principal purposes of
preserving and protecting part of one‘s wealth from creditors. Title to the asset is transferred to a person
named the trustee. APTs are generally used for asset protection and are usually tax neutral. Their ultimate
function is to provide for the beneficiaries. Some proponents advertise APTs as allowing foreign trustees to
ignore U.S. court orders and to simply transfer the trust to another jurisdiction in response to legal action
threatening the trust‘s assets (so-called ―flying trusts‖).
Supervision Department - AML/CFT Training
Definitions GlosSTRy
2
Automated Clearing House (ACH)
An electronic banking network that processes large volumes of both credit and debit transactions that
originate in batches. ACH credit transfers include direct deposit payroll payments and payments to
contractors and vendors. ACH debit transfers include consumer payments on insurance premiums,
mortgage loans and other kinds of expenses. The system is used for bulk orders made days in advance—for
example, a large corporation‘s entire payroll. Both governments and commercial sectors can use the ACH
system. The ACH system was designed to transfer a high volume of low-dollar domestic transactions,
which pose lower money laundering risks. Nevertheless, the ability to send high-dollar and international
transactions through the ACH may expose financial institutions to higher money laundering risks. Financial
Institutions without a robust AML monitoring system may be exposed to additional risk, particularly when
accounts are opened over the Internet without face-to-face contact.
B
Bank Draft
Vulnerable to money laundering because it represents a reputable international monetary instrument drawn
on a reputable institution, and is often made payable, in cash, upon presentation and at the issuing
institution‘s account in another country.
Bank for International Settlements (BIS)
An international organization that serves as a bank for central banks and which fosters international
monetary and financial cooperation with the purpose of attaining stability in the world economy. It hosts the
Secretariat of the Basel Committee on Banking Supervision. The Committee has formulated broad
supervisory standards and guidelines on Know Your Customer issues.
Bank Secrecy
Refers to laws and regulations in countries that prohibit banks from disclosing information about an
account—or even revealing its existence—without the consent of the account holder. Impedes the flow of
information across national borders among financial institutions and their supervisors. Recommendation 4
of FATF‘s 40 Recommendations of 2003 states that countries should ensure that secrecy laws do not inhibit
the implementation of the FATF Recommendations.
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