For the uninitiated, money laundering is the process of making the proceeds of criminal activity appear to have been legally obtained. Simply put – it takes money that was made illegally and makes it appear legal.

It is important to acquaint a business with the implications of money laundering as this financial crime negatively impacts society, as well as legitimate business interests by allowing harmful criminal activity to thrive.

To combat money laundering, anti-money laundering (“AML”) controls aim to stop financial criminals from disguising these illegally obtained funds as legitimate ones.

In a similar vein, most conversations about AML also include mentions of the countering of financing terrorism (or “CFT”). As the name indicates, CFT tools work to combat terrorist organisations from acquiring financing to carry out their aims. While financing for these aims could come from legitimate sources, they may also be acquired through illegal activities such as trafficking in weapons.

When implemented properly, both AML and CFT tools can support broad and effective deterrence efforts against a wide range of criminal activities, including the financing of terrorism.

AML and CFT concepts are riddled with jargon, and comprehending the numerous acronyms might be a hard task. One AML is committed to making your AML CFT Compliance worries go away. Allow us to help you – In the following paragraphs, we have collated a handy list of some of the most commonly used acronyms in the field. Dive in and refresh your memory in no time at all!

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Some key acronyms to acquaint yourself with are:

• ML – Money Laundering: A financial crime that involves disguising financial assets so they can be used without detection of the illegal activity that produced them.
• AML – Anti-Money Laundering: Refers to the tools, laws, regulations, and procedures intended to prevent criminals from carrying out money laundering.
• CFT – Countering the Financing of Terrorism: Practices that prevent, detect, and punish illegal funds entering the financial system and subsequently funding terrorist activities. This term is interchangeably used with CTF, which stands for Combating or Countering Terrorist Financing.
• FCA – Financial Conduct Authority: The UK’s financial regulatory body responsible for overseeing the conduct of financial firms and protecting consumers. It plays a key role in enforcing AML and CFT regulations.
• HMRC – Her Majesty's Revenue and Customs: Plays a significant role in the administration of AML regulations for certain sectors in the UK, ensuring businesses comply with their obligations under the Money Laundering Regulations.
• NCA – National Crime Agency: The UK agency responsible for fighting serious and organized crime, including money laundering and terrorist financing. The NCA receives reports of suspicious activities and can investigate cases of financial crime.
• POCA – Proceeds of Crime Act 2002: A key piece of legislation in the UK that provides for the confiscation or civil recovery of the proceeds from crime and contains the principal money laundering legislation.
• MLR 2017 – The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017: The primary legislation in the UK aimed at preventing money laundering and terrorist financing, setting out the detailed requirements for AML/CFT compliance by businesses.
• KYC – Know Your Customer: A set of procedures to verify a customer’s identity, and their financial dealings to effectively manage risks. A cornerstone of AML.
• CDD – Customer Due Diligence: The process of performing due diligence on a customer to confirm they are who they say they are, and that they aren’t acting on behalf of somebody else. KYC involves performing CDD.
• EDD – Enhanced Due Diligence: Required in situations with a higher risk of money laundering or terrorist financing, as outlined by UK legislation.
• PEP – Politically Exposed Person: Individuals who, through their prominent position or influence, are more susceptible to being involved in bribery or corruption.
• SAR – Suspicious Activity Report: A document that financial institutions, and those associated with their business, must file with the NCA whenever there is a suspected case of money laundering or fraud.
• ‍TBML – Trade-Based Money Laundering: is a type of global money laundering strategy. In it, criminals take advantage of the complexity of trade systems to transfer money between parties and evade authorities. We have covered some material on Trade-Based Money Laundering in our Resource Section, head on over to read more.

With the frequent changes to the legislation, keeping up to date with the newest additions and regulations is crucial for you as a responsible business and to avoid penalties for non-compliance.

Now, we understand that learning about the AML and CFT landscape by yourself while making a compliance checklist for your organization can feel overwhelming.  Allow us to help! One AML is a team of specialised analysts here to guide you through the provisions. Book a free 15-minute consultation today!

Disclaimer: This information serves as a guide for those living and doing business in the United Kingdom and is not a substitute for the provisions or information in the Proceeds of Crime Act 2002 (POCA), The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), or any of their allied statutes and provisions. The above information is not a substitute for independent, professional legal advice and is meant for general information only.

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