Glossary
Financial crime, governance and AI terms, in plain English
Short, practical definitions written for boards and senior management. Each entry says why the term matters, what institutions get wrong, and where to find the source.
- AI governanceThe structures, policies, roles and controls that make sure AI is built, bought and used safely, lawfully and within the institution's risk...AI, models and digital
- AI inventoryA complete, maintained list of the AI systems an institution builds, buys, embeds or lets staff use, with an owner and a risk rating for...AI, models and digital
- Anti-money laundering AMLThe laws, controls and processes institutions use to stop criminals disguising the proceeds of crime as legitimate money, and to detect and...Financial crime and AML
- Countering the financing of terrorism CFTPreventing money, including small or lawfully earned sums, from reaching terrorists or terrorist organizations.Financial crime and AML
- Customer due diligence CDDIdentifying and verifying a customer and the people behind them, understanding the purpose of the relationship, and monitoring it over...Financial crime and AML
- DigitalizationUsing digital technology to change how a process or service works, rather than only turning paper into files.AI, models and digital
- Enterprise-wide risk assessment EWRAAn institution-wide assessment of the money laundering and terrorist financing risks arising from its customers, products, services...Financial crime and AML
- High-impact decisionA decision made or supported by AI that materially affects a person's access to a financial product or service, such as a loan application...AI, models and digital
- Human in the loop, on the loop and out of the loopThree ways of keeping a person involved when AI makes or supports a decision, depending on how much authority the AI has.AI, models and digital
- Know your customer KYCIdentifying a customer, verifying who they are and understanding the relationship, before it starts and for as long as it lasts.Financial crime and AML
- Model validationAn independent check that a model is sound, correctly built, performing as intended and used appropriately.AI, models and digital
- Politically exposed person PEPA person who holds, or has held, a prominent public function, and their family and close associates, who present a higher risk of...Financial crime and AML
- RemediationFixing the weaknesses that a review has found, and proving that they are fixed.Governance and regulatory
- Risk-based approachMatching the strength of controls to the level of risk, so that effort is concentrated where the risk is highest.Financial crime and AML
- Sanctions screeningChecking customers, related parties, counterparties and payments against sanctions lists, to avoid dealing with, or making funds available...Sanctions
- Skilled personAn independent expert appointed to review specific concerns about a regulated institution, or to help put them right.Governance and regulatory
- Suspicious transaction report STRA report an institution files with the national financial intelligence unit when it suspects that funds are the proceeds of crime or are...Financial crime and AML
- Three lines of defenseA way of dividing risk responsibilities between those who take risk, those who oversee it, and those who independently check both.Governance and regulatory
- Transaction monitoringReviewing customers' transactions and behavior on an ongoing basis to spot activity that may point to money laundering, terrorist financing...Financial crime and AML
- Ultimate beneficial owner UBOThe real person who ultimately owns or controls a customer, or on whose behalf a transaction is carried out.Financial crime and AML
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