Glossary AML/CFT according to FATF
19 January 2018, Bachir El Nakib (CAMS) Senior Consultant Compliance Alert LLC
Paris, 16 February 2012
Money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction are serious threats to security and the integrity of the financial system.
The FATF Standards have been revised to strengthen global safeguards and further protect the integrity of the financial system by providing governments with stronger tools to take action against financial crime. At the same time, these new standards will address new priority areas such as corruption and tax crimes.
The revision of the Recommendations aims at achieving a balance:
- On the one hand, the requirements have been specifically strengthened in areas which are higher risk or where implementation could be enhanced. They have been expanded to deal with new threats such as the financing of proliferation of weapons of mass destruction, and to be clearer on transparency and tougher on corruption.
- On the other, they are also better targeted – there is more flexibility for simplified measures to be applied in low risk areas. This risk-based approach will allow financial institutions and other designated sectors to apply their resources to higher risk areas.
The FATF Recommendations are the basis on which all countries should meet the shared objective of tackling money laundering, terrorist financing and the financing of proliferation. The FATF calls upon all countries to effectively implement these measures in their national systems.
FATF Recommendations 2012
A – AML/CFT POLICIES AND COORDINATION
1 - Assessing risks & applying a risk-based approach
B – MONEY LAUNDERING AND CONFISCATION
3 - Money laundering offence
C – TERRORIST FINANCING AND FINANCING OF PROLIFERATION
5 - SRII Terrorist financing offence
D – PREVENTIVE MEASURES
9 - Financial institution secrecy laws
Customer due diligence and record keeping
10 - Customer due diligence
Additional measures for specific customers and activities
12 - Politically exposed persons
Reliance, Controls and Financial Groups
17 - Reliance on third parties
Reporting of suspicious transactions
20 - Reporting of suspicious transactions
Designated non-financial Businesses and Professions (DNFBPs)
22 - DNFBPs: Customer due diligence
E – TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS
24 - Transparency and beneficial ownership of legal persons
F – POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURES
Regulation and Supervision
26 - Regulation and supervision of financial institutions
Operational and Law Enforcement
29 - Financial intelligence units
33 - Statistics
35 - Sanctions
G – INTERNATIONAL COOPERATION
36 - International instruments
This glossary includes definitions from the Glossary of the FATF Recommendations, as well as definitions and acronyms from other sources.
References to “accounts” should be read as including other similar business relationships between financial institutions and their customers.
Describes information that has been verified for accuracy (as this term is used in the Interpretive note to Recommendation 16).
For the purposes of Recommendations 14 and 16, agent means any natural or legal person providing Money or Value Transfer Service(s) (MVTS) on behalf of an MVTS provider, whether by contract with or under the direction of the MVTS provider.
Anti-Money Laundering / Countering the Financing of Terrorism (also used for Combating the financing of terrorism)
Refers to competent authorities, including accrediting institutions, and self-regulatory organisations(as this term is used in the Interpretive note to Recommendation 8).
Includes foreign branches of international Non-Profit Organisations (NPOs) (as this term is used in the Interpretive Note to Recommendation 8).
Is a transfer comprised of a number of individual wire transfers that are being sent to the same financial institutions, but may/may not be utlimately intended for different persons (as this term is used in the Interpretive Note to Recommendation 16).
Bearer negotiable instruments
Bearer negotiable instruments (BNIs) includes monetary instruments in bearer form such as: traveller’s cheques; negotiable instruments (including cheques, promissory notes and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery; incomplete instruments (including cheques, promissory notes and money orders) signed, but with the payee’s name omitted.
Bearer shares refers to negotiable instruments that accord ownership in a legal person to the person who possesses the bearer share certificate.
Beneficiary Financial Institution
refers to the financial institution which receives the wire transfer from the ordering financial institution directly or through an intermediary financial institution and makes the funds available to the beneficiary (as this term is used in the Interpretive Note to Recommendation 16).
Beneficial owner refers to the natural person(s) who ultimately1 owns or controls a customer2 and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.
 Reference to “ultimately owns or controls” and “ultimate effective control” refer to situations in which ownership/control is exercised through a chain of ownership or by means of control other than direct control.
The meaning of the term beneficiary in the FATF Recommendations depends on the context:
- In trust law, a beneficiary is the person or persons who are entitled to the benefit of any trust arrangement. A beneficiary can be a natural or legal person or arrangement. All trusts (other than charitable or statutory permitted non-charitable trusts) are required to have ascertainable beneficiaries. While trusts must always have some ultimately ascertainable beneficiary, trusts may have no defined existing beneficiaries but only objects of a power until some person becomes entitled as beneficiary to income or capital on the expiry of a defined period, known as the accumulation period. This period is normally co-extensive with the trust perpetuity period which is usually referred to in the trust deed as the trust period.
- In the context of life insurance or another investment linked insurance policy, a beneficiary is the natural or legal person, or a legal arrangement, or category of persons, who will be paid the policy proceeds when/if an insured event occurs, which is covered by the policy.
Please also refer to the Interpretive Notes to Recommendations 10 and 16.
Bearer Negotiable Instrument
Customer Due Diligence
Competent authorities refers to all public authorities1 with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities.
The term confiscation, which includes forfeiture where applicable, means the permanent deprivation of funds or other assets by order of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to be transferred to the State. In this case, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture loses all rights, in principle, to the confiscated or forfeited funds or other assets. Confiscation or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated or forfeited property is determined to have been derived from or intended for use in a violation of the law.
Core Principles refers to the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision, the Objectives and Principles for Securities Regulation issued by the International Organization of Securities Commissions, and the Insurance Supervisory Principles issued by the International Association of Insurance Supervisors.
Correspondent banking is the provision of banking services by one bank (the “correspondent bank”) to another bank (the “respondent bank”). Large international banks typically act as correspondents for thousands of other banks around the world. Respondent banks may be provided with a wide range of services, including cash management (e.g. interest-bearing accounts in a variety of currencies), international wire transfers, cheque clearing, payable-through accounts and foreign exchange services.
All references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions.
refers to a wire transfer that combines a payment message sent directly by the ordering financial institution to the beneficiary financial institution with the routing of the funding instruction (the cover) from the ordering financial institution to the beneficiary financial institution through one or more intermediary financial institutions (as this term is used in the Interpretive Note to Recommendation 16).
Criminal activity refers to: (a) all criminal acts that would constitute a predicate offence for money laundering in the country; or (b) at a minimum to those offences that would constitute a predicate offence as required by Recommendation 3.
Cross-border Wire Transfer
refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country (as this term is used in the Interpretive Note to Recommendation 16).
Currency refers to banknotes and coins that are in circulation as a medium of exchange.
Designated Non-Financial Business or Profession Designated categories of offences
Designated categories of offences means:
- participation in an organised criminal group and racketeering;
- terrorism, including terrorist financing;
- trafficking in human beings and migrant smuggling;
- sexual exploitation, including sexual exploitation of children;
- illicit trafficking in narcotic drugs and psychotropic substances;
- illicit arms trafficking;
- illicit trafficking in stolen and other goods;
- corruption and bribery;
- counterfeiting currency;
- counterfeiting and piracy of products;
- environmental crime;
- murder, grievous bodily injury;
- kidnapping, illegal restraint and hostage-taking;
- robbery or theft;
- smuggling; (including in relation to customs and excise duties and taxes);
- tax crimes (related to direct taxes and indirect taxes);
- piracy; and
- insider trading and market manipulation.
When deciding on the range of offences to be covered as predicate offences under each of the categories listed above, each country may decide, in accordance with its domestic law, how it will define those offences and the nature of any particular elements of those offences that make them serious offences.
Designated non-financial businesses and professions
Designated non-financial businesses and professions means:
b) Real estate agents.
c) Dealers in precious metals.
d) Dealers in precious stones.
e) Lawyers, notaries, other independent legal professionals and accountants – this refers to sole practitioners, partners or employed professionals within professional firms. It is not meant to refer to ‘internal’ professionals that are employees of other types of businesses, nor to professionals working for government agencies, who may already be subject to AML/CFT measures.
f) Trust and Company Service Providers refers to all persons or businesses that are not covered elsewhere under these Recommendations, and which as a business, provide any of the following services to third parties:
- acting as a formation agent of legal persons;
- acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;
- providing a registered office; business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;
- acting as (or arranging for another person to act as) a trustee of an express trust or performing the equivalent function for another form of legal arrangement;
- acting as (or arranging for another person to act as) a nominee shareholder for another person.
Designated person or entity
The term designated person or entity refers to:
(i) individual, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1267 (1999) (the 1267 Committee), as being individuals associated with Al-Qaida, or entities and other groups and undertakings associated with Al-Qaida;
(ii) individuals, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1988 (2011) (the 1988 Committee), as being associated with the Taliban in constituting a threat to the peace, stability and security of Afghanistan, or entities and other groups and undertakings associated with the Taliban;
(iii) any natural or legal person or entity designated by jurisdictions or a supra-national jurisdiction pursuant to Security Council resolution 1373 (2001);
(iv) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1718 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to resolution 1718 (2006) (the 1718 Sanctions Committee) pursuant to Security Council resolution 1718 (2006); and
(v) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1737 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to paragraph 18 of resolution 1737 (2006) (the 1737 Sanctions Committee) pursuant to resolution 1737 (2006) and its successor resolutions.
The term designation refers to the identification of a person1 or entity that is subject to targeted financial sanctions pursuant to:
- United Nations Security Council resolution 1267 (1999) and its successor resolutions;
- Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination;
- Security Council resolution1718 (2006) and its successor resolutions;
- Security Council resolution 1737 (2006) and its successor resolutions; and
- any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction.
Domestic Wire Transfer
Refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in the same country. This term therefore refers to any chain of wire transfer that takes place entirely within the borders of a single country, even though the system used to transfer the payment message may be located in another country. The term also refers to any chain of wire transfer that takes place entirely within the borders of the European Economic Area (EEA)1 (as this term is used in the Interpretive Note to Recommendation 16).
The term “Enforceable means” refers to regulations, guidelines, instructions or other documents or mechanisms that set out enforceable AML/CFT requirements in mandatory language with sanctions for non-compliance, and which are issued or approved by a competent authority. The sanctions for non-compliance should be effective, proportionate and dissuasive (see Recommendation 35) (as this term is used in the Note on the legal basis of requirements on financial institutions and DNFBPs).
The term ex parte means proceeding without prior notification and participation of the affected party.
Express trust refers to a trust clearly created by the settlor, usually in the form of a document e.g. a written deed of trust. They are to be contrasted with trusts which come into being through the operation of the law and which do not result from the clear intent or decision of a settlor to create a trust or similar legal arrangements (e.g. constructive trust).
Refers to a misrepresentation of the value of currency or BNIs being transported, or a misrepresentation of other relevant data which is required for submission in the declaration or otherwise requested by the authorities. This includes failing to make a declaration as required(as this term is used in the Interpretive Note to Recommendation 32).
Refers to a misrepresentation of the value of currency or BNIs being transported, or a misrepresentation of other relevant data which is asked for upon request in the disclosure or otherwise requested by the authorities. This includes failing to make a disclosure as required(as this term is used in the Interpretive Note to Recommendation 32).
Financial group means a group that consists of a parent company or of any other type of legal person exercising control and coordinating functions over the rest of the group for the application of group supervision under the Core Principles, together with branches and/or subsidiaries that are subject to AML/CFT policies and procedures at the group level.
Financial institutions means any natural or legal person who conducts as a business one or more of the following activities or operations for or on behalf of a customer:
1. Acceptance of deposits and other repayable funds from the public.1
3. Financial leasing.3
4. Money or value transfer services.4
5. Issuing and managing means of payment (e.g. credit and debit cards, cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
6. Financial guarantees and commitments.
7. Trading in:
(a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
(b) foreign exchange;
(c) exchange, interest rate and index instruments;
(d) transferable securities;
(e) commodity futures trading.
8. Participation in securities issues and the provision of financial services related to such issues.
9. Individual and collective portfolio management.
10. Safekeeping and administration of cash or liquid securities on behalf of other persons.
11. Otherwise investing, administering or managing funds or money on behalf of other persons.
12. Underwriting and placement of life insurance and other investment related insurance.5
13. Money and currency changing.
 It does not apply to any natural or legal person that provides financial institutions solely with message or other support systems for transmitting funds. See the Interpretive Note to Recommendation 16.
Financial Intelligence Unit
Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU).
In the context of confiscation and provisional measures (e.g., Recommendations 4, 32 and 38), the term freeze means to prohibit the transfer, conversion, disposition or movement of any property, equipment or other instrumentalities 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, or until a forfeiture or confiscation determination is made by a competent authority.
For the purposes of Recommendations 6 and 7 on the implementation of targeted financial sanctions, the term freeze means to prohibit the transfer, conversion, disposition or movement of any funds or other assets that are owned or controlled by designated persons or entities on the basis of, and for the duration of the validity of, an action initiated by the United Nations Security Council or in accordance with applicable Security Council resolutions by a competent authority or a court.
In all cases, the frozen property, equipment, instrumentalities, funds or other assets remain the property of the natural or legal person(s) that held an interest in them at the time of the freezing and may continue to be administered by third parties, or through other arrangements established by such natural or legal person(s) prior to the initiation of an action under a freezing mechanism, or in accordance with other national provisions. As part of the implementation of a freeze, countries may decide to take control of the property, equipment, instrumentalities, or funds or other assets as a means to protect against flight.
Fundamental principles of domestic law
This refers to the basic legal principles upon which national legal systems are based and which provide a framework within which national laws are made and powers are exercised. These fundamental principles are normally contained or expressed within a national Constitution or similar document, or through decisions of the highest level of court having the power to make binding interpretations or determinations of national law. Although it will vary from country to country, some examples of such fundamental principles include rights of due process, the presumption of innocence, and a person’s right to effective protection by the courts.
The term funds refers to assets of every kind, whether corporeal or incorporeal, tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such assets.
Funds or other assets
The term funds or other assets means any assets, including, but not limited to, financial assets, economic resources (including oil and other natural resources), property of every kind, whether tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such funds or other assets, including, but not limited to, bank credits, travellers cheques, bank cheques, money orders, shares, securities, bonds, drafts, or letters of credit, and any interest, dividends or other income on or value accruing from or generated by such funds or other assets, and any other assets which potentially may be used to obtain funds, goods, or services.
The term identification data refers to reliable, independent source documents, data or information.
Interpretive Note to the FATF Recommendations.
Intermediary financial institution
Refers to a financial institution in a serial or cover payment chain that receives and transmits a wire transfer on behalf of the ordering financial institution and the beneficiary financial institution, or another intermediary financial institution (as this term is used in the Interpretive Note to Recommendation 16).
International organisations are entities established by formal political agreements between their member States that have the status of international treaties; their existence is recognised by law in their member countries; and they are not treated as resident institutional units of the countries in which they are located. Examples of international organisations include the United Nations and affiliated international organisations such as the International Maritime Organisation; regional international organisations such as the Council of Europe, institutions of the European Union, the Organization for Security and Co-operation in Europe and the Organization of American States; military international organisations such as the North Atlantic Treaty Organization, and economic organisations such as the World Trade Organisation or the Association of Southeast Asian Nations, etc.
In Recommendations 10, 11 and 20, the term “law” refers to any legislation issued or approved through a Parliamentary process or other equivalent means provided for under the country’s constitutional framework, which imposes mandatory requirements with sanctions for non-compliance. The sanctions for non-compliance should be effective, proportionate and dissuasive (see Recommendation 35). The notion of law also encompasses judicial decisions that impose relevant requirements, and which are binding and authoritative in all parts of the country (as this term is used in the Note on the legal basis of requirements on financial institutions and DNFBPs).
Legal arrangements refers to express trusts or other similar legal arrangements. Examples of other similar arrangements (for AML/CFT purposes) include fiducie, treuhand and fideicomiso.
Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities.
Money laundering offence
References(except in Recommendation 3) to a money laundering offence refer not only to the primary offence or offences, but also to ancillary offences.
Money or value transfer service
Money or value transfer services (MVTS) refers to financial services that involve the acceptance of cash, cheques, other monetary instruments or other stores of value and the payment of a corresponding sum in cash or other form to a beneficiary by means of a communication, message, transfer, or through a clearing network to which the MVTS provider belongs. Transactions performed by such services can involve one or more intermediaries and a final payment to a third party, and may include any new payment methods. Sometimes these services have ties to particular geographic regions and are described using a variety of specific terms, including hawala, hundi, and fei-chen.
Money or Value Transfer Service(s) Non-conviction based confiscation
Non-conviction based confiscation means confiscation through judicial procedures related to a criminal offence for which a criminal conviction is not required.
Refers to a legal person or arrangement or organisation that primarily engages in raising or disbursing funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of “good works” (as this term is used in the Interpretive note to Recommendation 8).
Ordering financial institution
Refers to the financial institution which initiates the wire transfer and transfers the funds upon receiving the request for an wire transfer on behalf of the originator (as this term is used in the Interpretive note to Recommendation 16).
Refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer (as this term is used in the Interpretive note to Recommendation 16).
The United Nations Convention against Transnational Organized Crime 2000.
The term payable-through accounts refers to correspondent accounts that are used directly by third parties to transact business on their own behalf (as this term is used in the Interpretive note to Recommendation 13).
Physical cross-border transportation
refers to any in-bound or out-bound physical transportation of currency or BNIs from one country to another country. The term includes the following modes of transportation: (1) physical transportation by a natural person, or in that person’s accompanying luggage or vehicle; (2) shipment of currency or BNIs through containerised cargo or (3) the mailing of currency or BNIs by a natural or legal person (as this term is used in the Interpretive note to Recommendation 32).
Politically Exposed Persons (PEPs)
Foreign PEPs are individuals who are or have been entrusted with prominent public functions by a foreign country, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.
Domestic PEPs are individuals who are or have been entrusted domestically with prominent public functions, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.
Persons who are or have been entrusted with a prominent function by an international organisation refers to members of senior management, i.e. directors, deputy directors and members of the board or equivalent functions.
The definition of PEPs is not intended to cover middle ranking or more junior individuals in the foregoing categories.
Proceeds refers to any property derived from or obtained, directly or indirectly, through the commission of an offence.
Property means assets of every kind, whether corporeal or incorporeal, moveable or immoveable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in such assets.
Qualifying wire transfers
Means a cross-border wire transfer above any applicable threshold as described in paragraph 5 of the Interpretive Note to Recommendation 16 (as this term is used in the Interpretive note to Recommendation 16).
The term Reasonable Measures means: appropriate measures which are commensurate with the money laundering or terrorist financing risks.
Related to terrorist financing or money laundering
when used to describe currency or BNIs, refers to currency or BNIs that are: (i) the proceeds of, or used in, or intended or allocated for use in, the financing of terrorism, terrorist acts or terrorist organisations; or (ii) laundered, proceeds from money laundering or predicate offences, or instrumentalities used in or intended for use in the commission of these offences (as this term is used in the Interpretive note to Recommendation 32).
Is used to describe a situation in which all elements of required information are present. Subparagraphs 6(a), 6(b) and 6(c) set out the required originator information. Subparagraphs 6(d) and 6(e) set out the required beneficiary information (as this term is used in the Interpretive note to Recommendation 16).
All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1.
Where reference is made to a financial institution being satisfied as to a matter, that institution must be able to justify its assessment to competent authorities.
The term seize means to prohibit the transfer, conversion, disposition or movement of property on the basis of an action initiated by a competent authority or a court under a freezing mechanism. However, unlike a freezing action, a seizure is effected by a mechanism that allows the competent authority or court to take control of specified property. The seized property remains the property of the natural or legal person(s) that holds an interest in the specified property at the time of the seizure, although the competent authority or court will often take over possession, administration or management of the seized property.
Self-regulatory body (SRB)
A SRB is a body that represents a profession (e.g. lawyers, notaries, other independent legal professionals or accountants), and which is made up of members from the profession, has a role in regulating the persons that are qualified to enter and who practise in the profession, and also performs certain supervisory or monitoring type functions. Such bodies should enforce rules to ensure that high ethical and moral standards are maintained by those practising the profession.
Refers to a direct sequential chain of payment where the wire transfer and accompanying payment message travel together from the ordering financial institution to the beneficiary financial institution directly or through one or more intermediary financial institutions (e.g. correspondent banks) (as this term is used in the Interpretive note to Recommendation 16).
Settlors are natural or legal persons who transfer ownership of their assets to trustees by means of a trust deed or similar arrangement.
Shell bank means a bank that has no physical presence in the country in which it is incorporated and licensed, and which is unaffiliated with a regulated financial group that is subject to effective consolidated supervision.
Physical presence means meaningful mind and management located within a country. The existence simply of a local agent or low level staff does not constitute physical presence.
For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must.
Suspicious Transaction Report
Refers to payment transactions that are conducted electronically without the need for manual intervention (as this term is used in the Interpretive note to Recommendation 16).
Supervisors refers to the designated competent authorities or non-public bodies with responsibilities aimed at ensuring compliance by financial institutions (“financial supervisors”1) and/or DNFBPs with requirements to combat money laundering and terrorist financing. Non-public bodies (which could include certain types of SRBs) should have the power to supervise and sanction financial institutions or DNFBPs in relation to the AML/CFT requirements. These non-public bodies should also be empowered by law to exercise the functions they perform, and be supervised by a competent authority in relation to such functions.
Targeted financial sanctions
The term targeted financial sanctions means both asset freezing and prohibitions to prevent funds or other assets from being made available, directly or indirectly, for the benefit of designated persons and entities.
Trust and Company Service Provider
The term terrorist refers to any natural person who: (i) commits, or attempts to commit, terrorist acts by any means, directly or indirectly, unlawfully and wilfully; (ii) participates as an accomplice in terrorist acts ; (iii) organises or directs others to commit terrorist acts ; or (iv) contributes to the commission of terrorist acts by a group of persons acting with a common purpose where the contribution is made intentionally and with the aim of furthering the terrorist act or with the knowledge of the intention of the group to commit a terrorist act.
A terrorist act includes:
(a) an act which constitutes an offence within the scope of, and as defined in one of the following treaties:
(i) Convention for the Suppression of Unlawful Seizure of Aircraft (1970);
(ii) Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1971);
(iii) Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents (1973);
(iv) International Convention against the Taking of Hostages (1979);
(v) Convention on the Physical Protection of Nuclear Material (1980);
(vi) Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1988);
(vii) Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation ( 2005);
(viii) Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf (2005);
(ix) International Convention for the Suppression of Terrorist Bombings (1997); and
(x) International Convention for the Suppression of the Financing of Terrorism (1999).
(b) any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a Government or an international organisation to do or to abstain from doing any act.
Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations.
Terrorist Financing Convention
The International Convention for the Suppression of the Financing of Terrorism 1999
Terrorist financing offence
References (except in Recommendation 4) to a terrorist financing offence refer not only to the primary offence or offences, but also to ancillary offences.
The term terrorist organisation refers to any group of terrorists that:
(i) commits, or attempts to commit, terrorist acts by any means, directly or indirectly, unlawfully and wilfully;
(ii) participates as an accomplice in terrorist acts;
(iii) organises or directs others to commit terrorist acts; or
(iv) contributes to the commission of terrorist acts by a group of persons acting with a common purpose where the contribution is made intentionally and with the aim of furthering the terrorist act or with the knowledge of the intention of the group to commit a terrorist act.
For the purposes of Recommendations 6 and 7, the term third parties includes, but is not limited to, financial institutions and DNFBPs.
The term third parties means financial institutions or DNFBPs that are supervised or monitored and that meet the requirements under Recommendation 17 (as this term is used in the Interpretive note to Recommendation 17).
The terms trust and trustee should be understood as described in and consistent with Article 2 of the Hague Convention on the law applicable to trusts and their recognition1.
Trustees may be professional (e.g. depending on the jurisdiction, a lawyer or trust company) if they are paid to act as a trustee in the course of their business, or non-professional (e.g. a person acting without reward on behalf of family).
For the purposes of this Convention, the term "trust" refers to the legal relationships created – inter-vivos or on death - by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.
A trust has the following characteristics -
a) the assets constitute a separate fund and are not a part of the trustee's own estate;
b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee;
c) the trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law.
The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust.
Unique transaction reference number
Refers to a combination of letters, numbers or symbols, determined by the payment service provider, in accordance with the protocols of the payment and settlement system or messaging system used for the wire transfer (as this term is used in the Interpretive note to Recommendation 16).
The United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988
The phrase without delay means, ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, the 1988 Committee, the 1718 Sanctions Committee or the 1737 Sanctions Committee). For the purposes of S/RES/1373(2001), the phrase without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the phrase without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, those who finance terrorism, and to the financing of proliferation of weapons of mass destruction, and the need for global, concerted action to interdict and disrupt their flow swiftly.