LMS - Glossary

Anti-Money Laundering Authority (AMLA): The Anti-Money Laundering Authority (AMLA) is the body established under the The Money Laundering and Financing of Terrorism (Prevention and Control) Act Cap 129 of the Laws of Barbados, to supervise financial institutions in an effort to prevent money laundering.
Asset Purchases: A form of business purchase in which the buyer obtains the underlying assets of the business without assuming its liabilities. The purchase price is allocated among the business assets as part of the business Purchase Agreement.
Bank Secrecy
Basel II: Basel II was initiated in 2004 to create an international standard that banking regulators can use when creating regulations about how much capital banks need to put aside to guard against the types of financial and operational risks banks face.
Beneficial Owner: The person(s) entitled to the benefits of ownership even though another party, such as a broker or bank, has possession and title to
Beneficiary: A person named in a life insurance policy, annuity, will, trust, or other agreement to receive a financial benefit. A beneficiary can be an individual, a company, an organisation, or other type of entity.
Caribbean Financial Action Task Force (CFATF): The Caribbean Financial Action Task Force (CFATF) is an association of Caribbean states that have agreed to apply common measures to address the problem of money laundering. The CFATF created 19 Recommendations to complement the FATF’s 40 plus 9 Recommendations.
Cash Transaction: A transaction involving the physical transfer of currency from one person to another.
Central Bank of Barbados AML/CFT Guidelines: The Central Bank of Barbados created Anti-Money Laundering Guidelines that should be followed by financial institutions.
Co-mingling of Funds: Co-mingling of funds involves the purchase or investment in businesses that customarily handle a high cash transaction volume, allowing launderers to conceal illicit funds by mixing with funds from the legitimate business as well inserting criminal funds as false revenue mixed with income changing the form.
Compliance: An act or process of complying with a demand or recommendation.
Corporation: A corporation is a legal entity, which is established under the corporate laws of a particular country or jurisdiction.
Customer Due Diligence: Also known as Know Your Customer (KYC). Customer Due Diligence involves the verification of the identity of your customers to avoid opening accounts that could be for fictitious entities or be used to conduct transactions that may support either Money Laundering or Terrorist Financing activities. The basic steps of customer due diligence begin with the identification of a customer, the verification of the identity of the customer, the collection of information on the customer"s purpose and nature of the business relationship and the verification of the source of funds and wealth.
Egmont Group: A group of Financial Intelligence Units who meet regularly to find ways to cooperate, especially in the areas of information exchange, training and the sharing of expertise.
Electronic Funds Transfer: An Electronic Funds Transfer (ETF) is a telegraphic transfer or wire transfer that sends funds electronically from one city or country to another, avoiding the risk associated with transporting the currency.
Extortion: The use, or implicit threat of the use, of violence or other criminal means to cause harm to person, reputation, or property as a means to obtain property from someone else with his consent.
Fiduciary: A fiduciary is a person who acts, holds assets, or maintains accounts on behalf of (and for the benefit of), another person. A fiduciary has an obligation to take such action or manage such assets or accounts in the best interests of the other person.
Financial Action Task Force (FATF): The Financial Action Task Force (FATF) is a 33-member organisation responsible for developing a world-wide standard for anti-money laundering and combating the financing of terrorism. Forty recommendations have been issued by the FATF and adopted globally in the fight against Money Laundering.
Financial Intelligence Unit (FIU): The central government authority that is responsible for reviewing and initiating action on suspected illegal monetary transactions.
FinCEN: The Financial Crimes Enforcement Network in the US.
Flight Capital: Flight Capital is a term used to describe the outflow of capital from one country to another that is not part of normal commercial or private transactions. In many cases the funds do not return to the country of origin.
Gatekeepers: Gatekeepers are qualified professionals that may knowingly or unknowingly facilitate the laundering of money or assets into legitimate financial circles. Launderers will often try to use a client account through a gatekeeper to both place funds and to remain anonymous. Examples of gatekeepers are lawyers, notaries, accountants, insurance companies, trust companies, and real estate agents.
Global Tracking Lists: Global lists track persons, companies and countries with known affiliations to either Money Laundering or Terrorist Financing.
Grantor: The person from whom a grant is made or a trust is set up.
Hawala: Also known as Hundi.
A Hawala transfer is a system for remitting money, primarily in Islamic societies, in which a financial obligation between two parties is settled by transferring it to a third party. Often there is no physical movement of cash.
Hawala transactions are usually based on trust and leave no written record.
Hundi: Also known as Hawala.
A Hundi transfer is a system for remitting money, primarily in Islamic societies, in which a financial obligation between two parties is settled by transferring it to a third party.
Often there is no physical movement of cash.
Hundi transactions are usually based on trust and leave no written record.
Integration: Integration is often the third phase of money laundering. It occurs once the funds are distanced from their origins and are available to the criminal for use as legitimate funds. The criminal is then able to re-invest funds into the financial and business system.
Know Your Customer (KYC): Also known as customer due diligence. KYC involves the verification of the identity of your customers to avoid opening accounts that could be for fictitious entities or be used to conduct transactions that may support either Money Laundering or Terrorist Financing activities. The basic steps of customer due diligence begin with the identification of a customer, the verification of the identity of the customer, the collection of information on the customer's purpose and nature of the business relationship and the verification of the source of funds and wealth.
Layering: Layering is often the second phase of money laundering. It involves the movement and distancing of the placed funds to hide the trail of the original deposit and make the funds more useful so they can be moved or dispersed.
Loan Back: Using this method for money laundering, a criminal provides an associate with a sum of illegitimate money and the associate creates the paperwork for a loan or mortgage back to the criminal for the same amount, including all of the necessary documentation. This creates an illusion that the criminal"s funds are legitimate. The scheme's legitimacy is further reinforced through regularly scheduled loan payments made by the criminal, and providing another means to transfer money.
Money Laundering: Money Laundering is defined as the act or attempted act of concealing the source of money or assets that come from criminal activity.
Money Laundering Reporting Officer (MLRO): A Money Laundering Reporting Officer (MLRO) is the officer nominated within a financial institution to make disclosures to the Financial Intelligence Unit.
Money Services and Currency Exchange: The use of Money Services and Currency Exchange enables launderers to exchange foreign currency, by money orders or cashier/travelers cheques that can subsequently be transported out of the country. Money can also be wired to accounts in other countries.
NCCT List: Non-Cooperative Countries and Territories (NCCT). A list of non-cooperative countries and territories generated by the Financial Action Task Force (FATF).
Nominee: A person in whose name title to real estate or ownership of stock is held but who is not the actual proprietor or holder.
Office of Foreign Assets Control (OFAC): The Office of Foreign Assets Control (OFAC) is a division of the US Treasury Department which administers large sanction lists that are country-based. The lists identifies potential high risk money launderers, terrorist financers and drug traffickers country individuals. These country lists may also be covered under Non-Cooperative Countries and Territories (NCCT) lists.
Placement: Placement is the first stage of the money laundering process. It involves the process of placing illegitimate funds, through deposits or other means, into traditional financial institutions.
Politically Exposed Persons (PEPs): Politically Exposed Persons are individuals who are or who have been entrusted with prominent public functions and who can be high risk due to their ability to move from country to country without arousing suspicion and their access to very wealthy and powerful networks leading to corruption. Some examples include heads of government or state, members of the executive council of government and members of a legislature.
Private Banking: Private banking is defined as special banking services typically offered to high net worth clients with assets in excess of $1 million.
Red Flags: Red Flags are actions or patterns of transactions that may suggest illegal behaviour.
Refining: Refining is a money laundering method that involves the exchange of small denomination bills for larger ones. An individual may convert the bills at a number of different banks in order not to raise suspicion. This serves to decrease the bulk of large quantities of cash.
Specially Designated Nationals (SDNs) and Blocked Persons: Specially Designated Nationals (SDNs) and Blocked Persons. are individuals from all over the world whose property is subject to blocking (for example, restricted travel and monitoring of financial assets).
Structuring ("Smurfing"): Structuring or ‘smurfing’ is the deposit of small amounts of cash into any number of banks and/or bank accounts.
Suspicious Transaction: A suspicious transaction is a transaction whereby the last point of contact has reasonable grounds to suspect that the transaction may be linked to tax evasion, criminal offences or terrorist acts. It should be reported if there is a suspicion on the circumstances involved (the person or the transaction itself).
Suspicious Transaction Report: A suspicious transaction report is sent to the Financial Intelligence Unit (FIU) by financial institutions when transactions are deemed suspicious of being related to criminal or terrorist activity.
Tax Haven Countries: Tax Haven Countries offer special tax incentives/avoidance to foreign investors and depositors.
Terrorist Financing: Terrorist Financing is a broad term that is defined as the channels and methods used to provide financial support to individuals and groups who encourage, plan, commit or assist in acts of terrorism because of political, religious or ideological reasons.
The Money Laundering and Financing of Terrorism (Prevention and Control) Act Cap 129 of the Laws of Barbados: This act was created to help prevent and control Money Laundering and related matters in Barbados to bring the regulatory regime in line with international best practice.
Threshold Transaction (Barbados): A threshold transaction in Barbados is defined as the transfer of currency where the amount is $10,000 BDS or more.
Tipping: Tipping occurs when information or any other matter which might prejudice the investigation is disclosed to the suspect of the investigation (or anyone else) by someone who knows or suspects (or, in the case of terrorism, has reasonable cause to suspect) that: a police investigation into money laundering has begun or is about to begin, or the police have been informed of suspicious activities, or a disclosure has been made to another employee under internal reporting procedures.
Trustee: Trustee refers to a holder of property on behalf of a beneficiary. A trust can be set up either to benefit particular persons, or for charitable purposes.
Trusts: A trust is a legal entity or arrangement in which financial assets and securities are held by one person (the trustee) in trust for the benefit of another person or group of persons (the beneficiaries).
Unusual Activity: Transactions that fall 'outside the range of normal behaviour'. For example, deposits or withdrawals that fall just below the reporting threshold.
Value Tampering: Value tampering is the purchase of property from owners who agree to sell their property, on paper, at a price below its actual value and then accept the difference of the purchase price "under the table".
World Check

AML Glossary of Terms

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