AML Glossary

AML Glossary

A structured reference of key anti-money laundering, counter-terrorist financing, compliance, and virtual asset terminology.

This AML Glossary provides a structured reference of key anti-money laundering (AML), counter-terrorist financing (CTF), compliance, and virtual asset-related terminology. It is designed to support regulated entities, compliance professionals, and Virtual Asset Service Providers (VASPs) in understanding core regulatory concepts and financial crime typologies.

The definitions provided are intended for informational purposes and reflect commonly accepted interpretations within global AML and regulatory frameworks. They do not constitute legal advice and may vary depending on jurisdictional application.

A–Z AML & Compliance Definitions

Key terminology

ABCDEFGHIKLMNPRSTUVW
A
AML
Anti-Money Laundering. A framework of laws, regulations, and procedures designed to prevent the concealment of illicit funds as legitimate income.
Adverse Media
Negative information about a person or entity indicating potential involvement in financial crime or misconduct.
Account Takeover
Unauthorised access to a user account through stolen credentials or compromise.
AML Screening
The process of checking individuals and transactions against AML risk databases.
Asset Tracing
The process of identifying and following the movement of funds or assets.
B
Blockchain Analytics
The use of data analysis tools to trace, monitor, and assess activity on blockchain networks for compliance and investigative purposes.
Behavioural Analytics
Analysis of user behaviour patterns to detect anomalies or fraud indicators.
Block Explorer
A tool used to view and analyse blockchain transactions.
C
CDD
Customer Due Diligence. The process of identifying and verifying a customer’s identity and assessing associated financial crime risk.
Chain Hopping
The movement of crypto assets across multiple blockchains to obscure transaction traceability.
Cold Wallet
An offline cryptocurrency wallet used for secure storage of digital assets.
Custodial Wallet
A wallet where a third party controls private keys on behalf of the user.
Compliance Monitoring
Ongoing supervision of systems, processes, and transactions to ensure regulatory adherence.
Compliance Officer
An individual responsible for ensuring adherence to regulatory requirements.
Cross-Border Transaction
A transaction involving entities or accounts in different jurisdictions.
D
Darknet
Encrypted online networks used to facilitate anonymous or illicit activity.
DeFi
Decentralised Finance. Financial services built on blockchain technology without traditional intermediaries.
Deepfake
Synthetic media used to impersonate individuals for fraudulent purposes.
Device Fingerprinting
Technology used to identify and track devices accessing a platform.
Digital Identity
An electronic representation of an individual’s identity used in online systems.
E
EDD
Enhanced Due Diligence. Heightened investigative measures applied to higher-risk customers or transactions.
F
Fiat On-Ramp
A service that enables conversion of fiat currency into cryptocurrency.
Fiat Off-Ramp
A service that enables conversion of cryptocurrency into fiat currency.
FATF Grey List
Countries subject to increased monitoring due to strategic AML deficiencies.
FATF Blacklist
Jurisdictions subject to high-risk classification and countermeasures.
Financial Crime
A broad category encompassing fraud, money laundering, bribery, and related offences.
False Positive
A flagged alert that does not ultimately relate to suspicious or illicit activity.
Forensic Analysis
Detailed examination of financial data to identify illicit activity patterns.
G
Gas Fee
Transaction fee required to process operations on blockchain networks.
H
Hot Wallet
A cryptocurrency wallet connected to the internet.
High-Risk Jurisdiction
A country identified as having elevated AML/CTF risk or regulatory deficiencies.
Hash
A cryptographic identifier representing a transaction or block.
I
Identity Verification
The process of confirming a customer’s identity using official documents and data sources.
Investigative Freeze
Temporary restriction of assets pending compliance or law enforcement review.
K
KYC
Know Your Customer. The process of verifying customer identity and assessing risk at onboarding and throughout the business relationship.
KYB
Know Your Business. Corporate due diligence process used to verify legal entities, ownership structures, and business activities.
L
Layering
A money laundering stage involving the movement of funds through multiple transactions to obscure their origin.
Liveness Detection
Biometric verification method ensuring a real person is present during identity checks.
M
Money Mule
An individual who knowingly or unknowingly transfers illicit funds on behalf of criminals.
Mixer
A service used to obscure the origin of cryptocurrency transactions by pooling and redistributing funds.
N
Non-Custodial Wallet
A wallet where the user retains full control of private keys.
NFT
Non-Fungible Token. A unique digital asset recorded on a blockchain.
Node
A device that participates in maintaining and validating a blockchain network.
P
PEP
Politically Exposed Person. An individual who holds or has held a prominent public function, presenting elevated financial crime risk.
Pump and Dump
A scheme involving artificial inflation of asset prices followed by rapid sell-off.
Phishing
Fraudulent attempts to obtain sensitive information such as passwords or private keys.
Peer-to-Peer (P2P) Transfer
Direct transfer of assets between individuals without intermediaries.
R
Risk-Based Approach
A compliance methodology that allocates resources based on assessed financial crime risk levels.
Rug Pull
A fraudulent scheme where developers abandon a project after collecting investor funds.
RegTech
Regulatory Technology. Software solutions used to enhance compliance efficiency.
Risk Scoring
A methodology used to quantify financial crime risk using defined criteria.
Regulatory Reporting
The submission of required information to competent authorities under AML laws.
S
SAR
Suspicious Activity Report. A formal report submitted to authorities when suspicious behaviour indicative of financial crime is detected.
STR
Suspicious Transaction Report. A report filed in relation to a specific transaction suspected of being linked to illicit activity.
Sanctions Screening
The process of checking individuals, entities, and transactions against global sanctions lists issued by regulatory authorities.
Structuring
The deliberate splitting of transactions to avoid reporting thresholds or detection.
Smurfing
A form of structuring involving multiple small-value transactions carried out by different individuals.
Source of Funds (SOF)
The origin of funds used in a specific transaction or business relationship.
Source of Wealth (SOW)
The origin of a customer’s overall accumulated wealth.
Sanctions Evasion
Activities designed to circumvent international sanctions restrictions.
Smart Contract
Self-executing code on a blockchain that automates transactions.
T
Travel Rule
A regulatory requirement under FATF Recommendation 16 mandating that originator and beneficiary information accompanies transfers of value.
Tumbler
Another term for a mixer, used to break transaction traceability on blockchain networks.
Transaction Monitoring
The continuous surveillance of customer transactions to detect unusual or suspicious activity.
Terrorist Financing
The provision or collection of funds intended to support terrorist activities.
Threshold Monitoring
Tracking transactions against predefined limits to identify suspicious activity.
True Positive
A confirmed instance of suspicious or illicit activity identified through monitoring.
Token
A digital asset issued on a blockchain representing value or utility.
U
UBO
Ultimate Beneficial Owner. The natural person who ultimately owns or controls a legal entity.
V
VASP
Virtual Asset Service Provider. Any entity that facilitates the exchange, transfer, custody, or administration of virtual assets.
Virtual Asset
A digital representation of value that can be transferred or traded digitally.
W
Wallet Address
A unique identifier used to send and receive cryptocurrency on a blockchain network.
Wash Trading
Artificial trading activity designed to create misleading market volume or price signals.