Beginner AML/KYC Glossary
Common AML/KYC/KYB terms, written for readers who need the vocabulary before they enter the deeper control pages.
AML#
Plain meaning: controls that stop criminal money from being hidden, moved or made to look legitimate.
Why it matters: AML is the umbrella concept. KYC, sanctions screening, transaction monitoring, red flags and suspicious reporting all sit inside or beside the AML control system.
Related pages: Core Concepts, CDD / KYC.
KYC#
Plain meaning: know who the customer is before doing business with them.
Why it matters: a business cannot assess risk if it does not know who it is dealing with.
Common evidence: identity document, proof of address, company documents, verification record, relationship purpose.
KYB#
Plain meaning: KYC for companies and other legal entities.
Why it matters: a company can hide its real owners, controllers, activity or links to other parties. KYB tries to understand the company as a real-world actor, not just a registration number.
Related pages: Corporate Registry Data Sources, Beneficial Ownership.
CDD#
Plain meaning: customer due diligence. The normal process of identifying, verifying and understanding a customer.
Why it matters: CDD is the foundation before risk rating, onboarding, monitoring or escalation.
EDD#
Plain meaning: enhanced due diligence. Deeper review when risk is higher.
Why it matters: not every customer needs the same level of review. Higher-risk situations need more evidence and more careful review.
Related page: Enhanced Due Diligence.
UBO#
Plain meaning: ultimate beneficial owner. The real natural person who ultimately owns or controls a company or legal arrangement.
Why it matters: a company may be registered in one name while another person benefits from or controls it.
Related pages: Beneficial Ownership, Beneficial Ownership Data Standard.
PEP#
Plain meaning: politically exposed person. A person with a prominent public function, plus relevant family members and close associates.
Why it matters: PEP status is not a crime. It means corruption, bribery or misuse-of-office risk may need closer review.
Related page: PEP.
Sanctions#
Plain meaning: legal restrictions against certain people, entities, vessels, goods, sectors, countries or activities.
Why it matters: sanctions are different from normal reputational risk. A possible sanctions match can require immediate specialist review under local law and policy.
Related pages: Sanctions / TFS / CPF, Sanctions Data Sources.
TFS#
Plain meaning: targeted financial sanctions. These usually focus on freezing assets and preventing funds from being made available to listed persons or entities.
Why it matters: TFS controls are central to terrorist financing and proliferation financing risk management.
CPF / PF#
Plain meaning: countering proliferation financing / proliferation financing. This relates to financing connected to weapons proliferation risks and sanctions evasion.
Why it matters: CPF is especially important where goods, technology, end users, shipping routes or counterparties could be connected to restricted programmes.
Adverse media#
Plain meaning: negative public information that may be relevant to financial crime risk.
Why it matters: adverse media can reveal risk that is not visible in documents. But it must be assessed carefully: source quality, identity match, relevance and recency matter.
Related page: Adverse Media.
Source of funds#
Plain meaning: where the money for a specific transaction comes from.
Example: salary savings used for a payment, proceeds from a property sale, business revenue, investment liquidation.
Source of wealth#
Plain meaning: how a person accumulated their overall wealth.
Example: business ownership, professional income, inheritance, investment returns, sale of assets.
Red flag#
Plain meaning: a warning sign that something may need closer review.
Important: a red flag is not proof of wrongdoing. It is a reason to check, document or escalate according to policy.
Related page: Red Flags Library.
STR / SAR#
Plain meaning: suspicious transaction report / suspicious activity report.
Why it matters: these are suspicious reporting concepts. Exact filing rules, deadlines, forms and FIU portals are local-law matters and should not be inferred from general AML Bible materials.
Related page: SAR / STR Source Guidance.
Tipping-off#
Plain meaning: alerting a customer or other party that a suspicious report, investigation or certain internal review may be happening.
Why it matters: many jurisdictions restrict tipping-off. Local law and internal policy must control customer communication.
Risk-based approach#
Plain meaning: apply more attention where risk is higher and simpler controls where risk is lower, within legal and policy boundaries.
Why it matters: AML is not meant to be one-size-fits-all. The same customer facts may require different depth depending on product, geography, activity, ownership and other risk factors.
Country risk#
Plain meaning: risk connected to a jurisdiction or territory.
Important: country risk should not be based only on blacklists or nationality. It should consider FATF status, mutual evaluation findings, national risk context, sector exposure, transaction routes and the customer’s own facts.
Related pages: Geographic Risk, FATF Mutual Evaluations and Country Risk.
Predicate offence#
Plain meaning: the underlying crime that generated the money being laundered.
Examples: fraud, corruption, drug trafficking, tax crimes, human trafficking, environmental crime or other serious offences depending on the legal system.
FIU#
Plain meaning: financial intelligence unit. A national authority that receives and analyses suspicious reports and financial intelligence.
Why it matters: FIUs are central to suspicious reporting systems, but exact submission procedures are domestic and not universal.
Official source#
Plain meaning: data published by a competent public authority or official registry.
Why it matters: official sources usually carry stronger evidence weight than media, aggregators or leak databases, but still need identity matching and context.
Aggregator#
Plain meaning: a platform that combines data from multiple sources.
Why it matters: aggregators are useful for discovery and enrichment, but the original source and evidence trail should still be checked where possible.
Investigative source#
Plain meaning: a source created from journalism, leaks, document analysis or investigative research.
Why it matters: investigative sources can create valuable leads, but inclusion in a leak or investigation database should not be treated as automatic proof of wrongdoing.
Evidence weight#
Plain meaning: how much confidence a source should receive in a case file.
Why it matters: an official sanctions list, a company registry, an aggregator match and an anonymous forum post should not be treated as equal evidence.
Related page: Open Source Limitations and Evidence Weight.