Affiliate refers to entities or individuals connected through ownership, control, or familial ties, such as subsidiaries or parent companies. These relationships can pose risks like conflicts of interest, impacting organizational transparency and fairness.
B
Bribery
Bribery involves offering, giving, receiving, or soliciting something of value, such as money, gifts, or favors, to influence the actions or decisions of someone in a position of authority. This practice aims to gain an unfair advantage, potentially compromising integrity, fairness, and transparency in decision-making.
C
Corruption
Confiscation, including forfeiture, refers to the permanent loss of assets ordered by a competent authority or court. These orders are typically issued following a criminal conviction or court ruling, where the property is determined to be derived from or intended for use in unlawful activity.
D
Disputes
Disputes involve identifying and assessing potential legal issues or reputation risks arising from past business interactions. This process evaluates whether previous dealings could lead to conflicts, legal challenges, or a negative impact on the organization's reputation, potentially affecting its integrity or future operations.
E
Embargo
An embargo refers to an official government order that bans trade or commercial activity with a specific country or entity. It may target all goods or specific products, such as oil or grain, and is typically imposed for political, economic, or security reasons.
F
Front Companies
Front companies are businesses that appear legitimate but are used to hide illegal activities like money laundering, tax evasion, or illicit trade. While they may engage in lawful operations, their main purpose is to obscure the true sources of funds, or the identities of individuals involved in criminal activities.
G
Global Sanctions
Global sanctions are restrictive measures imposed by countries or international organizations to influence the behavior of individuals, entities, or governments. They aim to address violations of international laws, human rights, or security norms by targeting economic, political, or military activities.
H
High-Risk Customers
High-risk customers are individuals or entities that, due to certain characteristics, present a higher risk to businesses or financial institutions. These customers are more likely to be involved in activities such as money laundering, financial crimes, or other illicit conduct.
I
Illicit Financial Flows
Illicit financial flows (IFFs) refer to illegal cross-border money transfers linked to corruption, crime, or tax evasion. They harm economies, weaken governments, and fuel instability. Examples include trade-based money laundering by drug cartels, price misreporting by importers, or corrupt officials hiding funds in shell companies.
J
Jurisdictional Risk
Jurisdictional risk arises from financial, legal, or operational challenges in specific countries, especially those flagged by FATF or the U.S. Treasury for money laundering or terrorism concerns. Unstable tax laws, corruption, and political unrest add to the complexity of doing business in these regions.
K
Key Identifiers
Key identifiers are essential data points that uniquely identify individuals, entities, or transactions. They play a critical role in verifying and distinguishing parties or activities, in legal, financial, and compliance contexts. Examples include names, addresses, Legal Entity Identifier, company registration numbers, ID codes and transaction reference codes.
L
Litigation
Litigation is a legal process where one party files a lawsuit against another to seek remedies like compensation or enforcement of rights. It can involve cases like businesses suing over contract violations, individuals seeking compensation for negligence, or companies challenging regulatory fines.
M
Modern Slavery
Modern slavery is the exploitation of individuals through forced labour, human trafficking, and debt bondage. Victims are deprived of freedom and subjected to harsh conditions in industries like agriculture and construction. It violates human rights and undermines economies, fuelling inequality and instability.
N
Negative News
Negative news refers to information that highlights adverse, distressing, or harmful events. This encompasses topics such as accidents, scandals, criminal activity, economic recessions, political instability, and natural disasters- essentially, any development that underscores problems, risks, or challenges.
O
Offshore Leaks
Offshore leaks is the unauthorized disclosure of financial information related to offshore accounts or entities, often used to evade taxes or launder money. These leaks, which can result from hacking or whistleblowing, pose significant risks to organizations, highlighting compliance failures and potential reputational damage.
P
Politically Exposed Persons
Politically Exposed Person (PEP) is an individual holding a prominent public role, such as a senior government official, politician, or international organization executive. Due to their position and influence, PEPs are considered higher risk for potential involvement in bribery and corruption.
Q
Qualitative Risk Assessment
Qualitative Risk Assessment is the process of evaluating potential risks, such as legal, regulatory, or reputational, using non-numerical criteria. It helps prioritize issues based on likelihood and impact to guide further investigation or mitigation.
R
Red Flags
Red flags are warning signs or indicators that suggest a potential risk, such as fraud, corruption, or regulatory non-compliance. They signal the need for deeper investigation or enhanced scrutiny before proceeding with a business relationship or transaction.
S
Social Profiles
Social profiles are digital footprints of individuals or entities on online platforms, reflecting their public persona, affiliations, behavior, and networks. They serve as valuable sources for identifying inconsistencies, reputational risks, undisclosed relationships, or indicators of misconduct that may not appear in official records.
T
Transaction Monitoring
Transaction monitoring is the process of continuously reviewing financial transactions to detect suspicious activity that may indicate money laundering, fraud, terrorist financing, or other financial crimes. It involves analyzing patterns, behaviors, and anomalies in real-time, often using rule-based systems or AI-driven tools, to flag transactions for further investigation.
U
Ultimate Beneficial Owner
Ultimate Beneficial Ownership refers to the natural person(s) who ultimately own or control a company or legal entity, even if the ownership is held indirectly through layers of other entities or nominees. It is crucial to uncover hidden ownership, prevent financial crimes, and ensure compliance with anti-money laundering regulations.
V
Vendor Due Diligence
Vendor Due Diligence is the process of assessing third-party vendors or service providers to identify potential risks before or during a business relationship. It typically involves evaluating the vendor’s financial health, compliance with laws and regulations, data security practices, operational capabilities, and reputation to ensure they meet the company’s standards and do not pose legal, operational, or reputational risks.
W
Whistleblower
A whistleblower is an individual, often an employee or insider, who reports misconduct, illegal activities, or ethical violations within an organization to internal authorities or external regulators. Whistleblowers play a critical role in exposing fraud, corruption, or regulatory breaches, and are typically protected by laws to prevent retaliation.
