Reference

Glossary

The complete VERITAS terminology — every key term across four levels, aggregated and linked back to source lessons.

Compiled by Dr. Collen Lediga, Ruhr-Universität Bochum · 252 entries

A

Accountable institution (FIC Act)

South African term designating entities, including estate agents, subject to customer due diligence and suspicious-transaction reporting obligations.

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Accrual quality

A measure of how closely reported earnings are backed by actual operating cash flow, as opposed to accounting accruals.

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Accurately delineate

The OECD's requirement to characterise a related-party transaction by its actual substance and conduct, not merely its contractual label.

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Administrative FIU model

An FIU institutional design placing the unit within public administration but outside police and prosecution services, as with South Africa's Financial Intelligence Centre.

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Agent-level KYC failure

Breakdown of identity verification at the point of account registration or transaction, typically at commission-incentivised retail agents rather than at the operator's head office.

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Aggressive tax avoidance

Technically lawful arrangements exploiting gaps or mismatches against the law's evident purpose; civilly, not criminally, remediated.

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All-crimes approach

A predicate-offence model treating any criminal conduct, domestic or foreign, as capable of generating launderable proceeds.

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Alliance for Financial Inclusion (AFI)

A policy network of financial regulators, including many African central banks, addressing financial inclusion and de-risking impacts.

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AMLA

The EU Anti-Money Laundering Authority, established by Regulation (EU) 2024/1620, headquartered in Frankfurt, with the AML Package applying from 2027.

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AMLR (Reg. (EU) 2024/1624)

The EU's directly applicable Anti-Money Laundering Regulation extending CDD obligations to high-value goods dealers and imposing an EU-wide EUR 10,000 cash payment cap.

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Arm's length principle

The requirement that related-party transactions be priced as if between independent parties dealing at market terms.

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Asset Recovery Office

A national body, mandated under EU law, with real-time cross-registry access to accelerate tracing and cooperation on confiscated and frozen assets.

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Assumption disclosure

The requirement that an expert flag, rather than silently embed, every factual assumption underlying a finding.

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Attribution database

A commercial analytics vendor's proprietary mapping of address clusters to named real-world entities, probabilistic and not independently auditable in most cases.

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Automated decision-making fairness obligation

Legal constraints, under instruments such as POPIA or GDPR, requiring meaningful information and human review for automated decisions with significant effect on individuals.

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B

Balance of probabilities

The civil standard of proof requiring only that a proposition be more likely true than not, applicable to non-conviction-based forfeiture.

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Beneficial Owner

The natural person who ultimately owns or controls a customer or an asset (typically defined as ≥25% ownership or effective control).

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Beneish M-score

A probabilistic model combining eight financial-statement variables to flag elevated risk of earnings manipulation.

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Benford's Law

The empirical regularity that leading digits in many natural datasets follow a predictable logarithmic distribution, deviations from which can flag fabrication.

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BEPS

Base Erosion and Profit Shifting — OECD term for aggressive tax structures that shift profit to low-tax jurisdictions.

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Berger-Nitsch method

Detection method based on gaps between reported exports from country A and reported imports into country B for the same trade flow.

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Betweenness centrality

A graph measure identifying entities on the shortest path between otherwise unconnected clusters, often flagging professional enablers.

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Beyond reasonable doubt

The criminal standard of proof requiring the fact-finder to be satisfied to a near-certain degree, applicable to criminal laundering convictions.

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Bid rotation

A cartel takes turns winning tenders across a series of procurements, only visible when award data is aggregated across time.

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Big bath

Recognising all discretionary impairments and provisions in one depressed period, often at a change of leadership, to flatter future comparatives.

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Bill-and-hold

Recognising revenue on goods sold but retained in the seller's possession at the customer's purported request.

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Border interdiction analytics

The combination of travel-pattern, customs-declaration and FIU data used to risk-score travellers for targeted physical search rather than random selection.

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Build sequence

The deliberate order in which layers of a corporate structure are formed, typically most opaque/upstream first, operating entity last.

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Bulk cash smuggling

The physical cross-border movement of large cash sums, typically by courier, to move illicit proceeds beyond the reach of the originating jurisdiction's financial controls.

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C

Capacity check

An indirect audit method reconstructing plausible turnover from a business's physical inputs (space, stock, staff-hours) to test declared revenue.

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Capture of the enforcement function

The corruption of AML/CFT institutions themselves such that they provide legitimating cover for, rather than genuine prevention of, illicit conduct.

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CARF

Crypto-Asset Reporting Framework, the OECD's 2022/23 automatic-exchange standard for crypto-asset transactions, first exchanges scheduled for 2027.

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CARF / DAC8

The OECD Crypto-Asset Reporting Framework and its EU implementing directive, extending automatic tax-information exchange to crypto-asset transactions from 2026-2027.

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Cash threshold report (CTR)

A mandatory report filed by an accountable institution under the FIC Act for cash transactions above a prescribed value, regardless of suspicion.

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Cash-in/cash-out (CICO)

The agent-mediated conversion between physical cash and electronic mobile money value that anchors the entire mobile money model.

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Central authority

The designated national body (typically within a Ministry of Justice) that receives, vets and transmits formal mutual legal assistance requests.

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Chain of custody

The documented sequence of possession and handling of evidence from seizure to court presentation.

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Chain-hopping

Converting value across multiple blockchains, often via privacy coins or bridges, to break traceability.

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Change-address heuristic

A less reliable technique distinguishing a transaction's payment output from its change output returned to the sender.

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Channel stuffing

Shipping product to distributors ahead of genuine demand to recognise revenue prematurely.

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Characterisation challenge

A defence argument that the expert has assumed a transaction is illicit rather than testing an innocent explanation.

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Charge-allocation code (field 71A)

OUR/SHA/BEN codes determining which party absorbs correspondent fees, explaining amount variance across a payment chain.

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Civil (non-conviction-based) forfeiture

An in rem proceeding against property itself, on the civil standard of proof, independent of any criminal conviction, POCA Chapter 6.

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Civil asset forfeiture (POCA Chapter 6)

Non-conviction-based recovery proceedings whose founding affidavits provide a public record of the state's own transaction-chain reconstruction.

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CJEU C-37/20 & C-601/20

The 22 November 2022 ruling striking down unrestricted public access to EU beneficial-ownership registers as disproportionate.

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Client (trust) account

A segregated bank account held by a law firm on behalf of clients, historically treated by banks as lower-risk than the firm's own commercial account.

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CoinJoin

A non-custodial technique combining multiple users' transactions into one, obscuring which input funded which output.

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Commingling

Mixing illicit cash with a legitimate business's genuine takings so the two streams become indistinguishable once banked.

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Common Reporting Standard (CRS)

The OECD's automatic-exchange standard under which financial institutions report non-resident account data annually to the account-holder's residence state.

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Common-input-ownership heuristic

The inference that all addresses spending inputs within a single transaction share common control, since each requires the same signer's private key.

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Comparability adjustment

A quantified adjustment made to a comparable transaction or company to account for material differences from the tested transaction.

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Compound-question decomposition

Cross-examination defence technique — refusing to accept multi-part premises without addressing each part separately.

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Confirmatory on-site visit

A targeted ICRG visit conducted before delisting to verify that legislated reforms are actually being implemented in practice.

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Consultancy invoice scheme

A fraudulent advisory or facilitation invoice used to move a portion of contract value to a PEP-controlled entity as concealed bribery.

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Consulting-contract legitimisation

The use of internationally reputable advisory or audit firm contracts to make large fee flows to intermediary entities appear presumptively legitimate.

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Correspondent bank

A bank in Country A that holds an account for a respondent bank in Country B, providing access to Country A's payment system.

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Correspondent exit / de-risking

A correspondent bank's decision to terminate relationships with an entire category or region of respondents rather than manage individual client risk.

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Cover bidding

Competitors submit deliberately uncompetitive or non-compliant bids to create the appearance of competition around a pre-arranged winner.

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Crime-fraud exception

The doctrine that privilege does not attach to communications made in furtherance of an ongoing or contemplated crime or fraud.

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Cross-chain bridge

A protocol locking an asset on one blockchain and minting a wrapped equivalent on another, creating a formal ledger discontinuity.

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CRS

Common Reporting Standard, automatic exchange of financial account info between tax authorities.

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CSP

Corporate Service Provider, professional firm that incorporates and administers companies for clients.

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D

DAC6

The EU's mandatory disclosure regime for cross-border tax arrangements bearing specified hallmarks, requiring intermediary reporting.

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Data minimisation / purpose limitation

POPIA and GDPR principles requiring that only data necessary for a defined purpose be processed, constraining even domestic analytical use of customer data.

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Data pooling

The collective analysis of data contributed by multiple institutions or jurisdictions, requiring a clear legal basis and embedded proportionality safeguards under FATF guidance.

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De-risking

The wholesale exit by a correspondent bank from an entire respondent-country market judged high-risk.

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Declaration system

A cross-border cash control model requiring travellers to proactively declare amounts above a threshold regardless of whether asked, producing a record for every above-threshold movement.

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Defensive filing

Reporting driven by fear of regulatory sanction rather than genuine risk assessment, inflating volume while diluting evidentiary value.

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Degree centrality

A graph measure counting an entity's direct connections, useful for identifying transactional hub accounts.

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Delisting

The FATF plenary decision removing a jurisdiction from increased monitoring once its action plan is substantially and verifiably complete.

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Demonstrative evidence

A visual exhibit, such as a flow-of-funds diagram, that simplifies underlying schedules for a fact-finder without distorting them.

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DEMPE functions

Development, Enhancement, Maintenance, Protection and Exploitation of an intangible — the OECD's test for which entity in a group is entitled to the IP return.

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Designated categories of offences

FATF's glossary list of offence types every jurisdiction must cover, through an all-crimes or schedule-based approach, as launderable predicates.

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Direct proof of predicate

Establishing a specific identified predicate offence and tracing property to it, typically via a prior or parallel conviction.

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Directive (EU) 2024/1260

The EU's consolidated asset-recovery and confiscation Directive, strengthening Asset Recovery Offices, third-party confiscation, and interim asset management across member states.

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Disclosure obligation

The prosecution's duty to disclose material capable of assisting the defence, not only material it intends to rely on.

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Disclosure system

A cross-border cash control model requiring travellers to state carried amounts only when directly questioned by customs, relying on officer-initiated interdiction.

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Disproportionate asset accumulation

Wealth or income materially exceeding any lawful, declared source, used as an inferential marker of criminal origin.

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Disseminable intelligence product

The FIU's finished analytical output, chronology, entity mapping, typology classification and identified gaps; provided to law enforcement or prosecutors.

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DMCC

Dubai Multi Commodities Centre, a major gold trading and refining hub subject to sustained scrutiny over provenance due diligence adequacy.

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Dual criminality

The requirement, in extradition and mutual legal assistance, that the conduct alleged be a crime in both the requesting and requested states.

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Duration mismatch

The structural gap between multi-year, sometimes multi-decade recovery timelines and the much shorter political attention span of the governments pursuing them.

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Duty to the court

The expert's overriding obligation to assist the court impartially, superseding loyalty to the instructing party.

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E

EDD

Enhanced Due Diligence — heightened checks for higher-risk customers.

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Effectiveness

The assessment of whether a country's AML/CFT system actually achieves real-world results, measured against eleven Immediate Outcomes.

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Egmont Secure Web

The Egmont Group's secure FIU-to-FIU information-exchange platform.

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Enhanced follow-up

A more intensive post-evaluation reporting track for countries with significant technical compliance or effectiveness deficiencies, requiring regular progress reports to the FSRB plenary.

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Entity resolution

The process of determining when records from different sources refer to the same real-world person or legal entity, using probabilistic or deterministic matching.

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EOIR

Exchange of Information on Request; a treaty partner responds to a specific request about a named taxpayer, assessed via Global Forum peer review.

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Examination-in-chief

The initial questioning of a witness by the party that called them, used to establish qualifications, methodology and findings.

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Exhibit indexing

The convention linking every figure on a summary schedule back to a specific, numbered source document and page.

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Explainability

The capacity to articulate, at least at a high level, why a model produced a given output, particularly where the output materially affects a customer.

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F

False merge/false split

Entity-resolution errors that either wrongly combine distinct entities or wrongly separate a single entity into apparent duplicates.

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False-positive economics

The operational cost trade-off between conservative thresholds generating high manual-review volume and tighter thresholds risking missed true positives.

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FATF (Financial Action Task Force)

The Paris-based intergovernmental standard-setting body that issues and revises the 40 Recommendations on AML/CFT/CPF.

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FATF 40 Recommendations

The global AML/CFT technical standard against which countries are evaluated.

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FATF grey list (increased monitoring)

FATF's public list of jurisdictions with strategic AML/CFT deficiencies under an agreed action plan, distinct from the more severe 'Call for Action' black list.

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FATF greylisting (increased monitoring)

Public FATF designation of a jurisdiction with strategic AML/CFT deficiencies, raising perceived correspondent risk; South Africa was listed 2023 and delisted 2025.

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FATF Immediate Outcomes (IOs)

The 11 effectiveness measures used in FATF Mutual Evaluations to assess whether an AML/CFT system produces real-world outcomes, rated High/Substantial/Moderate/Low.

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FATF R.24 / R.25

FATF Recommendations on beneficial ownership of legal persons (rev. March 2022) and legal arrangements (rev. February 2023).

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FATF Recommendation 12 (PEPs)

Requires enhanced due diligence, source-of-wealth/funds establishment and senior management approval for politically exposed persons.

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FATF Recommendation 32

The FATF standard requiring jurisdictions to implement a declaration or disclosure regime for cross-border cash and bearer negotiable instrument movements above a threshold.

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Field 72 (sender-to-receiver information)

A free-text SWIFT MT field used for additional context, often containing unintentionally revealing detail.

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Financial Intelligence Unit (FIU)

The national body that receives, analyses and disseminates suspicious transaction reports and other financial intelligence, without itself prosecuting or arresting.

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FinCEN March 2025 interim final rule

Narrowed US Corporate Transparency Act reporting to foreign-formed entities registered in the US, exempting most domestic companies.

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Fishing expedition

An overly broad request lacking sufficient particularisation, commonly a ground for refusal or clarification demands under MLA law.

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Flag of convenience

Registering a vessel in a jurisdiction offering favourable regulatory and disclosure terms, often unrelated to the beneficial owner's residence.

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Following vs tracing

Following tracks the same asset through successive hands; tracing in the strict sense follows value into a substitute asset after exchange or conversion.

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Foreign Illicit Assets Act (Switzerland)

Swiss legislation in force since 2016 enabling administrative freezing and restitution of assets of foreign politically exposed persons, including where the origin state cannot itself pursue confiscation.

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Forensic image

A bit-for-bit copy of digital media taken at the point of seizure and hashed to prove it has not been altered.

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Front business

An operating enterprise, often with genuine trade, used principally to give illicit cash a plausible declared source.

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FSRB (FATF-style regional body)

An autonomous regional membership organisation, such as ESAAMLG, GABAC, GIABA or MENAFATF, that adopts the FATF standard and conducts mutual evaluations of its own members.

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FTZ

Free Trade Zone; customs-privileged area typically outside standard customs oversight.

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Functional analysis

The process of identifying which party to a transaction actually performs functions, bears risks, and controls risk-mitigation decisions.

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G

GAAR

General anti-avoidance rule empowering a revenue authority to re-characterise or disregard a transaction lacking commercial substance.

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General Laws (AML/CTF) Amendment Act 22 of 2022

South African legislation introducing beneficial-ownership register requirements and closing technical gaps ahead of the 2023 grey-listing.

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Global Forum on Asset Recovery (GFAR)

A UK/US-convened, StAR-supported initiative producing principles for transparent, accountable disposition of confiscated stolen assets returned to states of origin.

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GloBE rules

Global Anti-Base Erosion rules under OECD Pillar Two, imposing a 15% minimum effective tax rate on large MNE groups, in force from 2024.

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GTO

Geographic Targeting Order — a U.S. FinCEN instrument requiring UBO identification for high-value cash real-estate purchases in specified markets.

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H

Hawala

An informal value-transfer network based on trust and settlement between brokers, leaving no traditional bank trail.

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HS code

Harmonized System code — the international commodity classification used in customs declarations.

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Hub-node contamination

The analytical fallacy of treating shared use of common infrastructure (utilities, payment aggregators) as evidence of a substantive relationship.

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I

IAS 24

The IFRS standard requiring disclosure of related-party relationships, transactions and balances.

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ICRG (International Co-operation Review Group)

The FATF working group responsible for reviewing jurisdictions with strategic deficiencies and recommending grey-list or black-list status.

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Identity resolution

The data-quality process of reliably matching records referring to the same individual or entity across disparate datasets and registries.

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IFF

Illicit Financial Flows — cross-border money that is illegally earned, transferred or used.

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IFRS 10

The IFRS consolidation standard, effective 2013, replacing voting-control tests with a broader power-and-variable-returns control test.

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Immediate Outcome

One of FATF's 11 effectiveness measures, rated High/Substantial/Moderate/Low.

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Immediate Outcomes (IOs)

Eleven defined effectiveness goals, spanning risk understanding, operational enforcement and preventive measures, against which mutual evaluations assess real-world performance.

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Independence challenge

A cross-examination line probing fee arrangements and repeat instruction to suggest bias in an expert's conclusions.

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Inference-based proof of unlawful origin

Establishing that property is proceeds of crime through a constellation of circumstantial markers, without proving a specific predicate offence.

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Information-sharing gateway

A statutory legal basis permitting reporting institutions to exchange customer or typology information that ordinary confidentiality or data-protection law would otherwise restrict.

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Instrumentality

Property used to commit or facilitate an offence, forfeitable regardless of whether it embodies criminal value itself.

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ISO 20022 / pacs.008

The structured, tagged messaging standard replacing legacy SWIFT MT formats for customer credit transfers, with full cutover completed November 2025.

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J

Joint Investigation Team (JIT)

A team of investigators/prosecutors from two or more states operating under a single agreement, sharing evidence directly without sequential mutual-assistance requests.

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Jurisdictional arbitrage

The deliberate selection of jurisdictions offering the weakest current practical discoverability for a given fact pattern.

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Jurisdictions under Increased Monitoring

FATF's formal name for the grey list, denoting countries with strategic AML/CFT deficiencies that have committed to a time-bound action plan.

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K

Key audit matters

Disclosures under ISA 701 requiring auditors to describe the matters of most significance in the audit of the current period's financial statements.

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KYCC

Know Your Customer's Customer, a correspondent's due diligence on a respondent bank's own downstream customer base.

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L

Land registry

The public record of real-estate title, mortgages and encumbrances.

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Layering architect

The professional (often a lawyer or accountant) who designs the overall multi-jurisdictional structure of a layering scheme.

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Ledger reconstruction

The forensic process of decoding a hawaladar's compressed transaction notation to identify counterparties, balances and settlement events.

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Letter of wishes

A non-binding document from the settlor to the trustee expressing intended treatment of the trust — often the most probative single document.

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Lowest intermediate balance rule

A tracing doctrine limiting a claim against a mixed account to its lowest balance between the tainting deposit and the claim date.

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M

MAP

Mutual Agreement Procedure — a treaty mechanism for resolving double taxation disputes between two states' competent authorities.

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McMafia case

The unsuccessful NCA UWO against Zamira Hajiyeva, defeated on appeal in 2020, which chilled subsequent UWO applications until later legislative reform.

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MER

Mutual Evaluation Report; the FATF/FSRB assessment of a jurisdiction's AML/CFT regime.

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MiCA (Regulation (EU) 2023/1114)

The EU's comprehensive crypto-asset market regulation, with CASP licensing provisions applicable from December 2024.

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Mirror trade

Simultaneous matched buy/sell across jurisdictions and currencies enabling opaque cross-border value transfer.

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Mixer / tumbler

Service that pools crypto deposits and issues withdrawals whose linkage to the deposit is obscured.

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MLAT

Mutual Legal Assistance Treaty, formal instrument for cross-border evidence gathering.

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Model risk governance

A framework requiring independent validation, ongoing monitoring, documented inventory and accountable ownership for analytical models used in compliance.

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Money or value transfer service (MVTS)

The FATF Recommendation 14 category covering both formal money transfer operators and informal value transfer networks like hawala.

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Monitored/trust-fund return

A return modality directing confiscated value to a specific, independently audited use rather than an undifferentiated treasury deposit.

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Mule account

An account, often registered by or coerced from an unwitting individual, used to receive and rapidly disperse illicit funds across several transaction hops.

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N

National risk assessment (NRA)

A structured, evidence-based, whole-of-government exercise ranking a country's money-laundering and terrorist-financing risks to guide resource allocation.

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NCB confiscation

Non-conviction-based confiscation; civil, in rem, or unexplained-wealth proceedings.

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Nested correspondent

A downstream bank using another bank's correspondent access, hidden from the correspondent's view.

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Nested correspondent account

A downstream bank uses another bank's correspondent access, hiding the true originator from the correspondent.

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Nesting

A downstream respondent bank routes payments through an intermediate correspondent that presents itself as the ordering institution, hiding the true originating bank from the ultimate clearer.

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Net settlement

The periodic reconciliation of reciprocal obligations between two hawaladars, often via trade invoices, compensating bank transfers or bulk cash.

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Net worth method

A quantification technique comparing the increase in a subject's net assets over a period to known legitimate income.

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Nominee director

Registered director who acts on the undisclosed instructions of a principal.

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Non-conviction-based (NCB) confiscation

Confiscation of assets on a civil, balance-of-probabilities standard, without requiring a criminal conviction of a specific individual.

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Nostro/vostro account

The same correspondent account viewed from each bank's own books; 'our account with you' versus 'your account with us'.

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O

Obliged entity

A professional or business category subject to AML customer due diligence and reporting obligations under a given regime, as comprehensively listed in EU Regulation (EU) 2024/1624.

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OECD Due Diligence Guidance (minerals)

The primary international standard for supply-chain due diligence on minerals from conflict-affected and high-risk areas, including gold.

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On-site visit

The one-to-two-week in-country phase of a mutual evaluation during which assessors meet the FIU, supervisors, prosecutors, industry and civil society.

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OSINT

Open-Source Intelligence — investigation using publicly available information.

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Over-valued transfer

A property sale priced above fair market value to move illicit value into the formal property market disguised as a commercial transaction.

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Overfitting to known typologies

A model's weakness in detecting genuinely novel schemes because it was trained only on previously identified and caught patterns.

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P

Pass-through account

Account whose sole function is to receive and immediately forward funds, holding no meaningful balance.

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Payable-through account (PTA)

An account through which the respondent's clients transact directly, using the correspondent's payment infrastructure.

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Peel chain

A repeated pattern of spending a small amount while returning the bulk of value to a new self-controlled change address, common in laundering and ransomware payment flows.

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People with Significant Control (PSC)

The UK's domestic beneficial-ownership disclosure regime for UK-incorporated companies, extended in equivalent form to overseas entities owning UK land.

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PEP

Politically Exposed Person, an individual entrusted with prominent public functions, and their close associates and family.

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Percentage-of-completion

Recognising revenue on a long-term contract in proportion to work performed or costs incurred to date.

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Predicate offence

The underlying crime whose proceeds are being laundered.

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Privacy-enhancing technology (PET)

Technical methods such as secure multi-party computation, federated learning or homomorphic encryption enabling joint analysis without exposing raw underlying data.

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Proceeds of crime

Property or economic advantage derived directly or indirectly from the commission of an offence.

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Procurement policy manipulation

Systemic misuse of thresholds, single-source justifications or localisation requirements to steer major contracts toward a captured network.

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Proportionality test (suitability, necessity, proportionality stricto sensu)

The CJEU's three-part analytical framework for assessing whether an interference with a fundamental right is lawful.

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Protector

A person with reserve powers over a trust — often to veto distributions or replace the trustee.

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Provenance fraud

Falsifying an artwork's ownership history to give looted, stolen or illicit cultural property an apparently legitimate paper trail.

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Provisional-measures request

An expedited parallel request seeking to freeze or preserve assets pending the outcome of the substantive evidence request.

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Public statement (blacklist)

FATF's most severe designation, reserved for a small number of jurisdictions with the most serious, unaddressed strategic deficiencies.

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Public-private partnership (AML)

A structured, ongoing collaboration embedding law enforcement, FIU and private-sector analysts on thematic financial-crime operations, exemplified by the UK's JMLIT.

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Q

QDMTT

Qualified Domestic Minimum Top-up Tax — allows a low-tax jurisdiction to collect the Pillar Two top-up tax itself rather than ceding it to another jurisdiction.

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Quotational period

The period around shipment date over which a commodity's exchange-quoted price is averaged to set the settlement price.

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R

Register of Overseas Entities

UK register, introduced by ECTEA 2022, requiring overseas entities owning UK land to disclose their beneficial owners to Companies House.

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Restraint (freezing)

A court order preventing dissipation of an identified asset pending the outcome of confiscation or criminal proceedings, typically obtainable ex parte.

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Reversed-burden retaliation protection

A whistleblower-protection design in which the employer must justify any adverse action against a report-linked employee, rather than the employee bearing the burden of proving retaliation.

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Risk-based supervision

A supervisory approach under FATF R.26/IO.3 requiring higher-risk institutions to receive proportionately more intensive oversight than lower-risk ones.

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Rule-based scoring

A risk-scoring approach using explicit, legible indicators (e.g. structuring patterns, PEP status) that can be individually explained and audited.

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S

Scenario tuning

Evidence-based adjustment of transaction-monitoring rule thresholds and logic using historical alert-disposition data, documented with rationale.

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Scoring without capacity

The failure mode of generating more correctly flagged high-risk cases than an institution has resources to investigate, creating an accountability exposure.

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Self-laundering

The criminalisation of the original perpetrator of a predicate offence for subsequently laundering the proceeds of that same offence.

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Serious tax crime

A domestically defined category of tax offence, typically threshold-based, that FATF's 2012 revision requires jurisdictions to treat as a laundering predicate.

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Settlor

The person who creates a trust by transferring property to a trustee.

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Shell company

Legal entity with no significant operations, used as a holding or transaction vehicle.

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Shell subcontractor

A subcontracting entity that performs no genuine work, used to convert bribe payments or profit-skims into deductible business expense.

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Signature-only nominee

A nominee director or shareholder who exercises no independent judgment and may be named on thousands of entities simultaneously.

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SIM-swap fraud

Fraudulently obtaining a replacement SIM card for a victim's number to seize control of accounts and authentication channels tied to it.

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Simultaneous tax examination

Coordinated, parallel audits of the same taxpayer or group conducted independently by two or more revenue authorities on an agreed timetable.

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Sixth Method

A presumptive commodity-pricing method benchmarking export prices to quoted exchange prices on the shipment date, used widely in Latin America and referenced by ATAF.

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Source of wealth vs source of funds

Source of funds traces a specific transaction's origin; source of wealth explains the PEP's overall net-worth accumulation over time.

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Special purpose entity (SPE)

A legal entity created to hold specific assets or liabilities, sometimes structured to avoid consolidation despite retained economic exposure.

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Specification steering

Tender specifications are drafted, before publication, narrowly enough that only a pre-selected supplier can comply.

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Spine chart

A single high-level flow-of-money diagram supplemented by exhibit-level detail on request.

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Spontaneous exchange

The unprompted transmission of information by one state's authority to a foreign counterpart, without a prior formal request.

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Stablecoin

A crypto-asset pegged to a reference currency (typically USD), issued by a centralised entity capable of freezing specific addresses.

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StAR

Stolen Asset Recovery Initiative, joint World Bank / UNODC programme supporting asset recovery.

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State capture

Systemic manipulation of public institutions and procurement by private interests for illicit gain, documented in South Africa by the Zondo Commission.

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STR / SAR

Suspicious Transaction / Activity Report filed with the national Financial Intelligence Unit.

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Straight-through processing (STP)

Automated payment routing without manual review, screened only against structured fields, not beneficial ownership.

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Structuring (smurfing)

Breaking large cash sums into multiple deposits below reporting thresholds, often across several accounts or depositors, to avoid triggering mandatory reports.

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Structuring / Smurfing

Breaking a cash deposit into amounts below the mandatory reporting threshold.

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Successor-government legitimacy problem

The genuine governance-risk dilemma facing asset-holding states when the current government of the victim state includes figures linked to the original theft or has weak public financial management.

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Sunrise issue

The uneven timing and quality of travel-rule implementation across jurisdictions, complicating counterparty data exchange.

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Suspicious transaction/activity report (STR/SAR)

A mandatory filing by an accountable institution flagging a transaction or activity inconsistent with expected customer behaviour or risk profile.

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T

Tax Inspectors Without Borders (TIWB)

The ATAF/OECD/UNDP programme seconding experienced auditors to work alongside domestic auditors on live international tax cases.

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TBML

Trade-Based Money Laundering, moving illicit value under cover of trade transactions.

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TCSP (Trust and Company Service Provider)

A DNFBP-category professional providing company formation, registered office, nominee director/shareholder and trust administration services.

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Technical compliance

The assessment of whether a country's laws and regulations formally meet the requirements of each FATF Recommendation, rated on a four-point scale.

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Technical Compliance vs. Effectiveness

The two distinct FATF assessment scales; whether laws match the standards on paper, versus whether the system actually works in practice.

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Ten Global Principles

The OECD's maturity-model framework (2017, periodically updated) for effective tax-crime investigation and inter-agency cooperation.

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The 40 Recommendations

FATF's core technical standard, organised into seven thematic groups covering policy, criminalisation, preventive measures, transparency, institutions and cooperation.

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The Ikarian Reefer principles

A widely cited statement of expert independence, disclosure of assumptions, and willingness to revise opinions on new evidence.

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Thin capitalisation

Funding a subsidiary disproportionately with related-party debt rather than equity to maximise deductible interest.

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Tiered KYC

A regulatory design permitting minimal identification for low-value accounts and progressively fuller verification as balance or transaction limits rise.

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TNMM

Transactional Net Margin Method, tests a tested party's net profit indicator against a range derived from comparable independent companies.

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Tracing

The forensic-accounting and legal process of establishing the current location of specific assets derived from a predicate offence, to a standard sufficient for a court restraint application.

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Trade-based settlement

Using mispriced or fictitious trade invoices between associated trading entities to transfer the net settlement value owed between hawaladars.

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Travel rule

FATF R.15 obligation requiring VASPs to collect, hold and transmit originator/beneficiary data for virtual-asset transfers above a threshold.

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Triage model

A scoring methodology that prioritises incoming reports for analyst attention based on reliability, typology match and existing intelligence links.

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U

UBO

Ultimate Beneficial Owner — the natural person who ultimately owns or controls an entity.

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UNCAC Article 20 (illicit enrichment)

Encourages states to criminalise a significant, unexplained increase in a public official's assets relative to their lawful income.

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UNCAC Article 57

The article governing return of confiscated assets to the requesting state.

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UNCAC Chapter V

United Nations Convention against Corruption chapter on asset recovery.

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Unexplained Wealth Order (UWO)

A UK High Court order requiring a respondent to explain the lawful source of property exceeding GBP 50,000, on pain of presumed recoverability if unexplained.

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V

Variation order inflation

A sequence of individually small post-award change orders that cumulatively and improperly multiply contract value beyond re-tendering thresholds.

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VASP

Virtual Asset Service Provider — exchange, custodian, or other regulated crypto business subject to FATF Recommendation 15.

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VASP (Virtual Asset Service Provider)

The FATF's functional category covering exchanges, custodial wallet providers and certain DeFi front-ends performing exchange, transfer or custody services.

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W

Wire stripping

The deliberate deletion or truncation of originator/beneficiary data from a payment message to defeat sanctions or AML screening.

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Working papers

The intermediate analytical layer reconciling raw source documents into the summary schedules tendered at trial.

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Z

Zondo Commission

The Judicial Commission of Inquiry into Allegations of State Capture, chaired by Raymond Zondo, whose final report parts were published through 2022 and whose evidentiary record documents SOE-level capture.

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