AML & BSA Compliance Glossary

A written set of policies, procedures, and controls required by the Bank Secrecy Act. A compliant AML program must include five elements: internal controls, independent testing, a designated BSA officer, annual training, and customer due diligence.

The set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. AML obligations under the Bank Secrecy Act apply to a broad range of financial institutions.

The primary U.S. federal law governing AML compliance, enacted in 1970. The BSA requires financial institutions to maintain written AML programs, file Currency Transaction Reports and Suspicious Activity Reports, and keep specified records.

The natural person(s) who ultimately own or control a legal entity. Under FinCEN's CDD Rule, covered institutions must identify and verify any individual owning 25% or more of a legal entity customer, plus one controlling individual.

The designated individual responsible for managing and overseeing a financial institution's AML program. One of the five mandatory BSA program elements. Must have sufficient authority, knowledge, and dedicated time to fulfill the role effectively.

A report required for cash transactions exceeding $10,000 in a single business day, whether conducted in one transaction or multiple related transactions. Filed with FinCEN within 15 days of the transaction.

The process of collecting, verifying, and maintaining information about customers to understand who they are and whether their transactions make sense. Under FinCEN's CDD Rule, it includes customer identification, beneficial ownership, relationship understanding, and ongoing monitoring.

A required component of the AML program that establishes procedures for verifying the identity of customers. At minimum, must collect and verify name, date of birth, address, and identification number for individual customers.

An elevated level of customer due diligence applied to higher-risk customers, including Politically Exposed Persons, customers from high-risk jurisdictions, and those with complex ownership structures. Requires more information, more rigorous verification, and more frequent monitoring.

The U.S. Treasury bureau responsible for administering the Bank Secrecy Act, collecting and analyzing financial intelligence, and coordinating with law enforcement. FinCEN issues regulations, guidance, and geographic targeting orders.

An IRS/FinCEN form required when a business receives more than $10,000 in cash in a single transaction or related transactions. Required for non-financial businesses such as auto dealers, jewelers, and real estate professionals.

A structured comparison between a financial institution's current AML program and the requirements set by FinCEN under the Bank Secrecy Act. The output is a prioritized remediation roadmap identifying specific deficiencies and corrective actions.

A FinCEN order requiring title insurance companies to identify the natural persons behind shell companies used in all-cash real estate purchases above a specified threshold in targeted geographic areas. Active GTOs cover multiple major U.S. markets.

A mandatory BSA program element requiring periodic review of the AML program by a qualified party independent of the compliance function. For most businesses, this means an annual third-party review. Cannot be performed by the BSA officer.

The level of money laundering risk present in a financial institution's business before any mitigating controls are applied. Assessed across products, services, customers, and geography. Contrasted with residual risk, which accounts for the effect of controls.

The process of verifying the identity of customers and understanding the nature of their business activities. KYC is the practical implementation of Customer Due Diligence requirements and forms the foundation of effective transaction monitoring.

A formal finding issued by a regulator following an examination, identifying specific deficiencies in a financial institution's AML program. MRAs require written responses with corrective action plans within 30–60 days.

The process of making illegally obtained money appear legitimate by passing it through a complex sequence of banking transfers, commercial transactions, or other means. AML programs are designed to detect and prevent this activity.

A category of financial institution defined by FinCEN covering currency dealers, check cashers, money transmitters, issuers of money orders, and providers of prepaid access. MSBs must register with FinCEN every two years and maintain a full AML program.

A type of Money Services Business that accepts currency or funds from one person and transmits them to another location or person. Includes payment processors, peer-to-peer platforms, and cryptocurrency exchanges. Subject to both federal MSB registration and state money transmitter licensing.

Florida's state financial regulator, responsible for licensing and examining money services businesses, mortgage lenders, and other financial institutions operating in Florida. Coordinates closely with federal examiners.

The U.S. Treasury office that administers and enforces economic and trade sanctions. Financial institutions must screen customers and transactions against OFAC's Specially Designated Nationals (SDN) list as part of their compliance programs.

An individual who holds or has held a prominent public position, such as a head of state, senior government official, or senior executive of a state-owned enterprise. PEPs and their close associates present elevated money laundering risk and require Enhanced Due Diligence.

Access to funds or the value of funds that have been paid in advance and can be retrieved or transferred at some point in the future through an electronic device or vehicle. Providers of prepaid access are classified as MSBs under the BSA.

Indicators that a transaction or customer relationship may involve money laundering or other financial crimes. Red flags vary by industry; a cash-intensive business depositing large amounts may be normal in one context and suspicious in another.

A documented analysis of the money laundering risks specific to a financial institution's products, services, customers, and geographic locations. The foundation of a compliant AML program: every policy and control should flow from the risk assessment.

The illegal practice of breaking up financial transactions into smaller amounts to avoid triggering Currency Transaction Report requirements. Structuring is a federal crime under 31 U.S.C. § 5324, separate from any underlying money laundering offense.

A confidential report filed with FinCEN when a financial institution detects a transaction involving $5,000 or more that may involve money laundering, fraud, or other financial crimes. SARs must be filed within 30 days of initial detection.

The provision of funds to support terrorist activities or organizations. Unlike money laundering, terrorist financing may involve legitimate funds used for illegal purposes. AML programs must address both money laundering and terrorist financing risks.

The ongoing process of reviewing customer transactions to identify patterns or activities that may indicate money laundering or other financial crimes. A core internal control within the AML program, which can be manual or automated.

A business that exchanges, transfers, or safeguards virtual assets (cryptocurrencies) on behalf of customers. VASPs are subject to AML obligations under FinCEN guidance and must register as MSBs if they qualify as money transmitters.