Supervision Department - AML/CFT
Training
Definitions GlosSTRy
2
Europol
European Law Enforcement Organization, which aims to improve the effectiveness and cooperation of
competent authorities in member states in preventing and combating terrorism, unlawful drug trafficking
and other serious forms of international organized crime. In the area of anti-money laundering, Europol
provides European Union member states‘ law enforcement authorities with operational and analytical
support via the ELOs (Europol Liaison Officers) and its analysts.
Exchange Office
See Bureau de Change.
Exempt Account
In some countries, a distinction is granted to certain customers of a financial
institution permitting the
institution to waive its responsibility to report certain transactions that are otherwise required. Exempt
accounts must be documented and the financial institutions that secure the exemptions must still monitor
their transactions.
Express Trust
A trust created by the settlor, usually in the form of a document such as a written deed of trust. An express
trust contrasts with trusts that come into being through the operation of the law and do not result from the
clear intent or decision of a settlor to create a trust or similar legal arrangements (e.g., constructive trust).
Extradition
The surrender by one country to another of an accused or convicted person under a bilateral agreement that
specifies the terms of such exchanges, such as the persons subject to being exchanged
and the crimes for
which exchanges will be permitted. The 1988 Vienna Convention against Illicit Traffic in Narcotics and
Psychotropic Substances makes money laundering an internationally extraditable offense.
Extraterritorial Reach
The extension of one country‘s policies and laws to the citizens and institutions of another. U.S. money
laundering laws contain several provisions that extend its prohibitions and sanctions into other countries.
For example, the ―extraterritorial jurisdiction‖ of the principal U.S. anti-money laundering law can apply to
a non- U.S. citizen if the ―conduct‖ occurs ―in part‖ in the U.S.
F
Supervision Department - AML/CFT Training
Definitions GlosSTRy
2
Financial Action Task Force (FATF)
FATF was chartered in 1989 by the Group of Seven industrial nations to foster the establishment of national
and global measures to combat money laundering. It is an international policy-making body that sets anti-
money laundering standards and counter-terrorist financing measures worldwide. Its Recommendations do
not have the force of law. In 2003, FATF revised its 40 Recommendations on Money Laundering. Among
the organization‘s tasks is to promote the adoption and implementation of its recommendations by non-
member countries. It has also issued Special Recommendations on Terrorist Financing and
develops annual
typology reports showcasing current money laundering and terrorist financing trends and methods.
Financial Action Task Force on Money Laundering in South America (GAFISUD - Grupo de Acción
Financiera de Sudamérica)
A FATF-style regional body for South America, established in 2000. Members include: Argentina, Bolivia,
Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama, Paraguay, Peru, and Uruguay.
Financial Action Task Force-Style Regional Body (FSRB)
FSRBs have forms and functions similar to those of FATF. However, their efforts are targeted to specific
regions. Examples include the Caribbean Financial Action Task Force, the Eastern
and Southern African
Anti-Money Laundering Group, and the Middle East North Africa Financial Action Task Force.
Financial Institution
According to the FATF‘s 40 Recommendations, a financial institution is any person or entity that conducts
as a business one or more of the following activities or operations on behalf of customers:
- Acceptance of deposits and other repayable funds from the public.
- Lending.
- Financial leasing.
- The transfer of money or value.
- Issuing and managing means of payment (e.g., credit and debit cards, checks, traveler‘s checks, money
orders and bankers‘ drafts, electronic money).
- Financial guarantees and commitments.
- Trading in:
a) money market instruments (checks, bills, CDs, derivatives etc.);
b) foreign exchange;
c) exchange, interest rate and index instruments;
d) transferable securities and
e) commodity futures trading.
- Participation in securities issues and the provision of financial services related to such issues.
- Individual and collective portfolio management.
- Safekeeping and administration of cash or liquid securities on behalf of other persons.
- Otherwise
investing, administering or managing funds or money on behalf of other persons.
- Underwriting and placement of life insurance and other investment-related insurance.
- Money and currency changing.
Supervision Department - AML/CFT Training
Definitions GlosSTRy
2
Financial Intelligence Unit (FIU)
A central governmental office that obtains information from financial reports, processes it and then
discloses it to an appropriate government authority in support of a national anti- money laundering effort.
The activities performed by an FIU include receiving, analyzing and disseminating information and,
sometimes, investigating violations and prosecuting individuals indicated in the disclosures.
Financial Sector Assessment Program (FSAP)
Established in 1999 by the International Monetary Fund and the World Bank, the FSAP assesses
jurisdictions for their financial systems‘ strengths and vulnerabilities with an aim to reducing the potential
for crises.
Forensic Accountant
Specializes in analyzing financial evidence and testifying as an expert witness in cases of white-collar
crime, including money laundering.
Forfeiture
The permanent loss of private property or assets as a result of legal action by a government authority.
Generally, the owner of the property has failed to comply with the law or the property is linked to some sort
of criminal activity.
Freeze
To prevent or restrict the exchange, withdrawal, liquidation, or use of assets or bank accounts by
governmental action. As defined by FATF‘s ―Interpretative Note to Special Recommendation III: Freezing
and Confiscating Terrorist Assets‖: To prohibit the transfer,
conversion, disposition or movement of funds
or other assets on the basis of, and for the duration of the validity of, an action initiated by a competent
authority or a court under a freezing mechanism. The frozen funds or other assets remain the property of the
person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the freezing
and may continue to be administered by the financial institution or other arrangements designated by such
person(s) or entity(ies) before initiation of the action under a freezing mechanism.
Front Company
A business that commingles illicit funds with revenue generated from the sale of legitimate products or
services. Criminals use front companies to launder illicit money by giving the funds the appearance of
legitimate origin. Organized crime has used pizza parlors to mask proceeds from heroin trafficking. Front
companies may have access to substantial illicit funds, allowing them to subsidize front company products
and services at levels well below market rates or even below manufacturing costs. Front companies have a
competitive advantage over legitimate financial institutions that must borrow from financial markets,
making it difficult for legitimate businesses to compete with front companies.