USA PATRIOT Act: Glossary

A

Affiliate: The term affiliate has the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).

Appropriate Federal banking agency: On and after the transfer date, the term appropriate Federal banking agency has the same meaning as in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), as amended by title III..

 

B

Bank Secrecy: This prohibits banks to disclose information about an account without the consent of the consumer.

Basle Principles: These refer to the Core Principles for Effective Banking Supervision issued by the Basle Committee on Banking Supervision in recognition of the vulnerability of the financial sector to misuse by criminals. First issued in 1988.

Beneficial Owner: The person(s) entitled to the benefits of ownership even though another party such as a broker or bank – the nominal owner – actually has possession and title to the security.

BIS: Bank of International Settlements.

Black List: These countries are labeled as non-cooperative countries and territories (NCCT) on the list issued by the FATF. It points to those countries that lack adequate ML controls or are an impediment in the efforts of the fight against ML

BMPE: Black Market Peso Exchange. It refers to the principal money laundering system of the Columbian drug cartels.

Bureau de Change: Money Exchange Office

Board of governors: The term Board of Governors means the Board of Governors of the Federal Reserve System.

Bureau: The term Bureau means the Bureau of Consumer Financial Protection established under title X.

 

C

CDPC: European Committee on Crime Problems – Council of Europe CICP The Center for International Crime Prevention

CICAD: Inter-American Drug Abuse Control Commission. It is an agency of the Organization of American States.

CIP: Customer Identification Program. A requirement for companies to check their customers against list of know money launderers.

CFATF: The Caribbean Financial action Task force on Money laundering

CFT: Countering Financing of Terrorism

Confiscation: See ‘Forfeiture’ below.
Commission: The term Commission means the Securities and Exchange Commission, except in the context of the Commodity Futures Trading Commission.

Commodity futures terms: The terms futures commission merchant, swap, swap dealer, swap execution facility, derivatives clearing organization, “board of trade”, commodity trading advisor, commodity pool, and commodity pool operator have the same meanings as given the terms in section 1a of the Commodity Exchange Act (7 U.S.C. 1 et seq.).

Corporation: The term Corporation means the Federal Deposit Insurance Corporation.

Council: The term “Council” means the Financial Stability Oversight Council established under title I.

Credit union: The term credit union means a Federal credit union, State credit union, or State-chartered credit union, as those terms are defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

 

D

Downstream Correspondent Clearer: A correspondent banking client who receives banking services from an institution and itself provides correspondent banking services to other financial institutions in the same currency as the account it maintains with the institution as described by Wolfsberg AML principles

 

E

E-cash: Digital or Electronic Money

EDD: Enhanced Due Diligence

EFT: Electronic Funds Transfer

Egmont Group: Egmont Group of Financial Intelligence Units: a number of financial Intelligence units in 1995 began working together in an informal organization known as Egmont group. Their agenda is to provide a platform for the FIUs to improve support to their respective national AML programs and liaison for the sharing of information.

ESAAMLG: Eastern and Southern African Anti-Money Laundering Group.

Extradition: Legal surrender of a person to the jurisdiction of another state, country, or government for trial according to terms of extradition treaty.

 

F

FATF: The Financial action Task Force, founded at the 1989 OECD Economic Summit, to deal with the problem of ML

FATF Recommendations: The FATF have issued 40 general and 9 special recommendations to combat ML and Terrorist Financing and are to be of universal application. These are the measures the FATF has agreed to implement and which all countries are encouraged to adopt.

FINCEN: Financial Crimes Enforcement Network of the department of the treasury, which is the financial intelligence unit of the United States.

FIU: Financial Intelligence Unit. It is a central agency formed/nominated to collect, analyze, disseminate and create/maintain database for suspicious transaction reports.

Foreign Shell Bank: A foreign Bank without a physical presence in any country and has no employees.

Forfeiture: When the government or a regulatory authority confiscates property or assets due to failure to comply with law.

Front Company: It is the company used by the money launderer for the purpose of concealing the true identity of the owner

Federal banking agency: The term— Federal banking agency means, (A) individually, the Board of Governors, the Office of the Comptroller of the Currency, and the Corporation; and (B) Federal banking agencies means all of the agencies referred to in subparagraph (A), collectively.

Functionally regulated subsidiary: The term functionally regulated subsidiary has the same meaning as in section 5(c)(5) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(5)).

FSA: financial Services Authority of the United Kingdom

 

G

GAFI: Grupo de Accion Financiera Internacional, Spanish term for Financial action Task Force.

Gate Keepers: Gate Keepers is a term that is being applied to qualified professionals such as layers, accountants etc that can facilitate the laundering of money or assets to enable the conversion and ultimate inclusion of the assents in legitimate financial circles.

G-7 :The Group of Seven industrialized nations: U.S, Japan, Germany, France, Italy, the U.K and Canada.

 

H

Hawala: Also known as hundi. See ARS above.

Holding Companies : The term— (i)”bank holding company ” has the same meaning as in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841); (ii) “financial holding company” has the same meaning as in section 2(p) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(p)); and (iii)”savings and loan holding company” has the same meaning as in section 10 of the Home Owners’ Loan Act (12 U.S.C. 1467a(a)).

 

I

IMF: International Monetary fund

INTERPOL: International Police Organization, based in France

Integration: It is the third stage of money laundering process in which the funds are moved back into the country of origin at which stage the ‘black money’ is whitened. Other two stages are Placement and Layering.

 

J

JMLSG: Joint Money Laundering Steering Group. U.K

 

K

KYB: Know Your Business

KYC: Know Your Customer/Client.

KYCB: Know Your Correspondent Bank

KYCC: Know Your Customer’s Customer

KYE: Know Your Employee

 

L

Layering: It is the second stage of money laundering process in which funds are either transferred to another account somewhere around the world on a false pretext or are used to buy securities/instruments so as to move the funds away from the source.

 

M

MLAT: Mutual Legal Assistance Treaty

MLCA: Money Laundering Control Act of 1986. United States.

MLRO: Money Laundering Reporting Officer

MSB: Money Services Business. This include non-bank financial institutions, currency dealers, exchange companies and travelers cheque issuers.

 

N

NCCTs: Non-Cooperative Countries andTerritories. See ‘Black List’ above.

NCIS: National Crime Intelligence Service of the United Kingdom

NFBP: Non-Financial Businesses and Professionals: These include casinos, real estate agents, dealers in precious metals, precious stones, lawyers, notaries and other legal professionals, accountants, trust and company service providers.

 

O

ODCCP: United Nation’s Office for Drug Control and Crime Prevention

OFAC: The Office of Foreign Asets Control of the United States

OFC: Offshore Financial Centre

OGBS: Offshore Group of Banking Supervisors

 

P

Palermo Convention: A UN Convention against Transnational Organized Crime, 2000.

PEP: Politically Exposed Persons: Individuals who are prominent public functionaries.

Placement: It is the first stage of money laundering process in which the money is introduced through various channels e.g., it is deposited into a bank account after the larger amount is fragmented and made to appear less obvious. The other two stages are Layering and Integration.

Predicate Offences: Crimes underlying money laundering or terrorist financing activity. These may include drug trafficking, gambling and prostitution rings, arms trade, smuggling, and even embezzlement, insider trading, bribery etc.

Primary financial regulatory agency: The term primary financial regulatory agency means—(A) the appropriate Federal banking agency, with respect to institutions described in section 3(q) of the Federal Deposit Insurance Act, except to the extent that an institution is or the activities of an institution are otherwise described in subparagraph (B), (C), (D), or (E).

Prudential standards: The term prudential standards means enhanced supervision and regulatory standards developed by the Board of Governors under section 165.

 

R

Red: Flag A potentially suspicious or money laundering situation raises a Red Flag, a warning signal

 

S

Safe Harbor: A provision in law that provide protection to financial institutions, NFBP and their officers from civil or criminal liability for disclosing/furnishing information, suspicious transaction reporting etc

STR/SAR: Suspicious Transaction Report/ Suspicious activity Report

Shell Bank: A bank that exists merely on paper. It does not have a physical presence in any country

Smurfing: This entails a process whereby many individuals deposit cash or purchase bank drafts in amounts just under the reporting threshold.

SWIFT: Society for Worldwide Inter-bank Financial Telecommunication

 

T

Tax Haven: Countries, which offer special tax incentives/avoidance to foreign investors and depositors

Typology: A term used by FATF and APG to refer t

Transfer date: The term “transfer date” means the date established under section 311.

 

U

UNODC: United Nation Office on Drugs and Crime

 

V

Vienna convention: UN Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988

 

W

Wolsberg Group: The Wolfsberg Group is an association of twelve global banks, which aims to develop financial services industry standards, and related products, for Know Your Customer, Anti-Money Laundering and Counter Terrorist Financing policies. This Group came together in 2000 at Switzerland. The Wolfsberg Anti-Money Laundering Principles are recommended as effective anti-money laundering procedures for private banking. These were published in October 2000 (and revised in May 2002). The Group has also published a Statement on the Financing of Terrorism in January 2002, and also released the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking in November 2002.