BSA/AML Glossary

# A B C D E F G H I L N O P R S T U V



The USA PATRIOT Act added 31 USC 5318A to the BSA, which authorizes the Secretary of the Treasury to require domestic financial institutions and domestic financial agencies to take certain special measures against foreign jurisdictions, foreign financial institutions, classes of international transactions, or types of accounts of primary money laundering concern.


§1020.520 A federal, state, local, or foreign law enforcement agency investigating terrorist activity or money laundering may request that FinCEN solicit, on its behalf, certain information from a financial institution or a group of financial institutions. Banks must conduct a one-time search of their records to identify accounts or transactions of a named suspect.


§1020.540 A voluntary program encouraging financial institutions and associations of financial institutions located in the United States to share information in order to identify and report activities that may involve terrorist activity or money laundering.


ACH Operator

An ACH Operator processes all ACH transactions that flow between different depository financial institutions. There are currently two ACH Operators: FedACH and Electronic Payments Network (EPN).


Any company under common control with, or controlled by, the same depository institution.


§1020.313 - Multiple currency transactions totaling more than $10,000 during any one business day are treated as a single transaction if the bank has knowledge that they are by or on behalf of the same person. Transactions throughout the bank should be aggregated when determining multiple transactions.

Anti-money laundering program

§1020.210 Banks must have a written BSA/AML compliance program, approved by the board of directors, and noted in the board minutes. At a minimum, the program must include: a system of internal controls to ensure ongoing compliance, independent testing of BSA/AML compliance, a designated individual or individuals responsible for managing BSA compliance (BSA compliance officer), and training for appropriate personnel.

Automated Clearing House (ACH)

A batch-processed, value-dated, electronic funds transfer between an originating and a receiving bank with payment instructions to either credit or debit a deposit account.


Bankers Bank

A bank organized and chartered to do business with other banks.

Bearer Shares

An equity security wholly owned by whoever holds the physical stock certificate. The issuing firm neither registers the owner of the stock nor tracks transfers of ownership; the company disperses dividends when a physical coupon is presented to the firm.

Beneficial Owner

An individual who has a level of control over, or entitlement to, the funds or assets in the account that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the account. The ability to fund the account or the entitlement to the funds of the account alone, however, without any corresponding authority to control, manage or direct the account (such as in the case of a minor child beneficiary), does not cause the individual to be a beneficial owner.

Blocked Transactions

U.S. law requires that assets and accounts of an OFAC-specified country, entity, or individual be blocked when such property is located in the United States, is held by U.S. individuals or entities, or comes into the possession or control of U.S. individuals or entities.

Board of Governors of the Federal Reserve System (Federal Reserve, FRB)

A federal banking agency responsible for the oversight of state member banks (SMBs); Edge and Agreement Corporations; uninsured branches, agencies, or representative offices of foreign financial institutions operating in the United States; and bank holding companies and their nonbank subsidiaries.

BSA compliance officer

A qualified individual designated by the bank’s board of directors that is responsible for coordinating and monitoring day-to-day BSA/AML compliance. The BSA compliance officer is also charged with managing all aspects of the BSA/AML compliance program and with managing the bank’s adherence to the BSA and its implementing regulations.

BSA E-Filing

The system that supports electronic filing of BSA forms (CTR, SAR, DOEP, etc.), either individually or in batches, through a FinCEN secure network. BSA E-Filing provides a faster, more convenient, more secure, and more cost-effective method for submitting BSA forms.

BSA Identifier (BSA ID)

A unique, 14-character number that is assigned by BSA E-Filing to each individual report filed by a bank. The BSA ID can be used by banks to correct or amend filings and by regulators and law enforcement to search FinCEN Query.

Bulk Shipments of Currency

Sometimes referred to as wholesale cash, it entails the transportation of large volumes of U.S. or foreign bank notes. Bulk shipments of currency can be sent from sources either inside or outside the United States to a bank in the United States. Shipments are also made from a bank in the United States to a recipient in a foreign jurisdiction.


Cash-Intensive Businesses

Businesses that tend to deal heavily in receipts of cash, such as convenience stores, restaurants, retail stores, liquor stores, cigarette distributors, privately owned ATMs, vending machine operators, and parking garages.

Clearing House Interbank Payments System (CHIPS)

A privately operated, real-time, multilateral payments system typically used for large-dollar payments. CHIPS is owned by banks, and any banking organization with a regulated U.S. presence may become a participant in the system.

Close Associate

A person who is widely and publicly known to maintain an unusually close relationship with a senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.

Common Control

Another company directly or indirectly or acting through one or more other persons owns, controls, or has the power to vote 25 percent or more of any class of the voting securities of the company and the depository institution; or controls in any manner the election of a majority of the directors or trustees of the company and the depository institution.

Concentration Accounts

Internal accounts at a bank established to facilitate the processing and settlement of multiple or individual customer transactions within the bank, usually on the same day. These accounts may also be known as special-use, omnibus, suspense, settlement, intraday, sweep, or collection accounts and are frequently used to facilitate transactions for private banking, trust and custody accounts, funds transfers, and international affiliates.

Conference of State Bank Supervisors (CSBS)

CSBS supports state regulators in advancing the system of state financial supervision by ensuring safety, soundness and consumer protection; promoting economic growth; and fostering innovative, responsive supervision. CSBS represents the State Liaison Committee on the FFIEC Bank Secrecy Act Working Group.

Continuing Activity

Suspicious activity that continues over a period of time and should be made known to law enforcement and the federal banking agencies.

Continuous Linked Settlement Bank (CLS)

A private-sector, special-purpose bank that settles simultaneously both payment obligations that arise from a single foreign exchange transaction.

Controlled By

The depository institution directly or indirectly has the power to vote 25 percent or more of any class of the voting securities of the company; or controls in any manner the election of a majority of the directors or trustees of the company. See 12 USC 1841(a)(2).

Controlling Company

A bank holding company (BHC), as defined in section 2 of the BHC Act, a savings and loan holding company, as defined in section 10(a) of the Home Owners’ Loan Act, a company having the power, directly or indirectly, to direct the management policies of an industrial loan company or a parent company or to vote 25 percent or more of any class of voting shares of an industrial loan company or parent company.

Covered Financial Institution

Refers to Depository institutions, including insured banks, commercial banks, savings associations, federally-insured credit unions, federally-regulated trust companies, U.S. agencies and branches of a foreign bank, and Edge Act corporations; securities broker-dealers; mutual funds; and futures commission merchants and introducing brokers in commodities.

Cover Payments

A cover payment occurs when the originator’s bank and the beneficiary’s bank do not have a relationship that allows them to settle the payment directly. In that case, the originator’s bank instructs the beneficiary’s bank to effect the payment and advises that transmission of funds to “cover” the obligation created by the payment order has been arranged through correspondent accounts at one or more intermediary banks.

CSV File (CSV)

A Microsoft Excel-compatible comma separated value file no larger than one (1) megabyte may be included as an attachment as part of a SAR report

Currency Transaction Report (CTR)

§1020.310 - A bank must electronically file a Currency Transaction Report (CTR) for each transaction in currency (deposit, withdrawal, exchange, or other payment or transfer) of more than $10,000 by, through, or to the bank.

Currency Transaction Report Backfiling

If a bank has failed to file CTRs on reportable transactions, the bank should begin filing CTRs from that point forward and should contact FinCEN’s Regulatory Helpline to request a determination on whether the backfiling of unreported transactions is necessary.

Currency Transaction Report Exemption

§1020.315 - Recognition that the routine reporting of some types of large currency transactions does not necessarily aid law enforcement authorities and may place unreasonable burdens on banks. Consequently, a bank may exempt certain types of customers from currency transaction reporting.

Currency Transaction Report Timing and Retention

§1010.306(a)(1) and (2) A completed CTR must be electronically filed with FinCEN within 15 calendar days after the date of the transaction. The bank must retain copies of CTRs for five years from the date of the report. The bank can retain hard copies or copies in electronic format.

Customer Due Diligence (CDD)

Information collected on a customer that enables the bank to understand the nature and purpose of customer relationships, which may include understanding the types of transactions in which a customer is likely to engage. These processes also assist the bank in determining when transactions are potentially suspicious.

Customer Identification Program

§1020.220 Refers to the minimum information that a financial institution is required to obtain from an individual to form a reasonable belief that it knows the true identity of each customer.



Refers to entities formed or organized in the United States.

Domestic Correspondent Account

Accounts maintained by one domestic bank at another domestic bank to provide certain services that can be performed more economically or efficiently because of the other bank’s size, expertise in a specific line of business, or geographic location.


Enhanced Due Diligence (EDD)

§1020.610(b) Risk-based enhanced policies, procedures, and controls when establishing, maintaining, administering, or managing a correspondent account in the United States for certain foreign banks.


Federal Deposit Insurance Corporation (FDIC)

A federal banking agency responsible for the oversight of state non-member banks.

Federal Financial Institutions Examination Council (FFIEC)

The FFIEC was established in March 1979 to prescribe uniform principles, standards, and report forms and to promote uniformity in the supervision of financial institutions. The Council has six voting members: the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, and the State Liaison Committee. The Council’s activities are supported by interagency task forces and by an advisory State Liaison Committee, composed of five representatives of state agencies that supervise financial institutions.


A payment system operated by the Federal Reserve Banks that allows certain financial institution participants to transfer funds from its master account at the Federal Reserve Banks to the master account of any other bank.

Financial Action Task Force (FATF)

An inter-governmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

Financial Institution Letters (FIL)

Letters to FDIC-supervised banks that may announce new regulations and policies, new FDIC publications, and a variety of other matters of principal interest to those responsible for operating a bank or savings association.

Financial Crimes Enforcement Network (FinCEN)

A bureau of the U.S. Treasury Department and administrator of the BSA.

FinCEN Query

A web application that allows authorized users to access 11 years of FinCEN data. It has been designed and built using modern web search technology that allows users to easily access, query, and analyze FinCEN data across forms and years; apply filters and narrow search results; take advantage of enhanced data and address standardization; import lists of data; build and save complex queries for later use; apply advanced search logic; and manipulate search results via sorting and filtering.

Foreign Correspondent Account

§1020.630 and §1020.670 An account established by a bank for a foreign bank to receive deposits from, or to make payments or other disbursements on behalf of the foreign bank, or to handle other financial transactions related to the foreign bank.

Funds Transfers Recordkeeping

§1020.410 Requires each bank involved in funds transfers to collect and retain certain information in connection with funds transfers of $3,000 or more.


Gateway Operator (GO)

A financial institution, ACH Operator, or ODFI that acts as an entry or exit point to or from the United States.


High Intensity Drug Trafficking Areas (HIDTA)

Created by Congress with the Anti-Drug Abuse Act of 1988, provides assistance to Federal, state, local, and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States. There are currently 28 HIDTAs, which include approximately 18 percent of all counties in the United States and 66 percent of the U.S. population. HIDTA-designated counties are located in 49 states, as well as in Puerto Rico, the U.S. Virgin Islands, and the District of Columbia.

High Intensity Financial Crime Areas (HIFCA)

A program that concentrates law enforcement efforts at the federal, state, and local level to combat money laundering in designated high-intensity money laundering zones. In order to implement this goal, a money-laundering action team was created or identified within each HIFCA to spearhead a coordinated federal, state, and local anti-money laundering effort. Each action team is composed of all relevant federal, state, and local enforcement authorities, prosecutors, and financial regulators.


Identifying information

Name, date of birth for individuals, address, identification number

Independent Sales Organization (ISO)

An agent for merchants, including ATM owners, to process electronic transactions.

Independent testing

Should be conducted by the internal audit department, outside auditors, consultants, or other qualified independent parties. While the frequency of audit is not specifically defined in any statute, a sound practice is for the bank to conduct independent testing generally every 12 to 18 months, commensurate with the BSA/AML risk profile of the bank.

Ineligible Businesses

A business engaged primarily in: serving as a financial institution or as agents for a financial institution of any type; purchasing or selling motor vehicles of any kind, vessels, aircraft, farm equipment, or mobile homes; practicing law, accounting, or medicine; auctioning of goods; chartering or operation of ships, buses, or aircraft; operating a pawn brokerage; engaging in gaming of any kind (other than licensed pari-mutuel betting at race tracks); engaging in investment advisory services or investment banking services; operating a real estate brokerage; operating in title insurance activities and real estate closings; engaging in trade union activities; engaging in any other activity that may, from time to time, be specified by FinCEN, such as marijuana-related businesses.

Informal Value Transfer System (IVTS)

A term used to describe a currency or value transfer system that operates informally to transfer money as a business, such as hawalas. In countries lacking a stable financial sector or with large areas not served by formal banks, IVTS may be the only method for conducting financial transactions.

Internal controls

The bank’s policies, procedures, and processes designed to limit and control risks and to achieve compliance with the BSA. The level of sophistication of the internal controls should be commensurate with the size, structure, risks, and complexity of the bank.


The ultimate goal of the money laundering process is integration. Once the funds are in the financial system and insulated through the layering stage, the integration stage is used to create the appearance of legality through additional transactions. These transactions further shield the criminal from a recorded connection to the funds by providing a plausible explanation for the source of the funds. Examples include the purchase and resale of real estate, investment securities, foreign trusts, or other assets.

International ACH Transaction (IAT)

An IAT is an ACH entry that is part of a payment transaction involving a financial agency’s office that is not located in the territorial jurisdiction of the United States.

International Business Corporation (IBC)

Entities formed outside of a person’s country of residence that can be used to maintain confidentiality or hide assets. Ownership can, based on jurisdiction, be conveyed through registered or bearer shares.



The second stage of the money laundering process is layering, which involves moving funds around the financial system, often in a complex series of transactions to create confusion and complicate the paper trail. Examples of layering include exchanging monetary instruments for larger or smaller amounts, or wiring or transferring funds to and through numerous accounts in one or more financial institutions.

Letter of Credit

A letter issued by a bank to another bank (typically in a different country) to serve as a guarantee for payments made to a specified person under specified conditions.

Letters to Credit Unions (LCU)

LCUs are used by the NCUA to share information, announce new policies, and provide guidance for credit unions and credit union examination staff.


National Credit Union Administration (NCUA)

A federal banking agency responsible for the oversight of federally insured credit unions.

National Security Letters (NSL)

Written investigative demands that may be issued by the local FBI and other federal government authorities in counterintelligence and counterterrorism investigations.

Nationwide Multistate Licensing System & Registry (NMLS)

The system of record for non-depository, financial services licensing or registration in participating state agencies, including the District of Columbia and U.S. Territories of Puerto Rico, the U.S. Virgin Islands, and Guam.

Nested Accounts

When a foreign financial institution gains access to the U.S. financial system by operating through a U.S. correspondent account belonging to another foreign financial institution.

Nominee Incorporation Services (NIS)

Intermediaries that establish U.S. shell companies and bank accounts on behalf of foreign clients.

Nondeposit Investment Products (NDIP)

A wide array of investment products (e.g., securities, bonds, and fixed or variable annuities) or sales programs that include cash management sweep accounts to retail and commercial clients offered by the bank directly.

Non-listed Business

A commercial enterprise to the extent of its domestic operations.

Nonresident Alien

A non-U.S. citizen who: (i) is not a lawful permanent resident of the United States during the calendar year and who does not meet the substantial presence test, or (ii) has not been issued an alien registration receipt card, also known as a green card.


OCC Advisory Letters

Issuances published for OCC-supervised banks that contain information of continuing importance to bankers and examiners.

OCC Alerts

Issuances published for OCC-supervised banks with special urgency to notify bankers and examiners of matters of pressing concern, often suspicious or illegal banking practices.

OCC Bulletins

Issuances published for OCC-supervised banks that contain information of continuing importance to bankers and examiners.

Office of Foreign Assets Control (OFAC)

An office of the U.S. Treasury that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted individuals and entities such as foreign countries, regimes, terrorists, international narcotics traffickers, and those engaged in certain activities such as the proliferation of weapons of mass destruction or transnational organized crime.

Office of the Comptroller of the Currency (OCC)

A federal banking agency responsible for the oversight of national banks, federal branches and agencies of foreign banks licensed or chartered by the OCC, and savings associations.

Offshore Financial Centers (OFC)

A jurisdiction specializing in providing corporate and commercial services (such as establishing IBCs) that provide ownership privacy and impose few or no tax obligations. Many OFCs have limited organizational disclosure and recordkeeping requirements for establishing foreign business entities.

Open Loop Prepaid Cards

Cards that can be used for purchases at any merchant that accepts cards issued for use on the payment network associated with the card and to access cash at any automated teller machine (ATM) that connects to the affiliated ATM network.

Originating Depository Financial Institution (ODFI)

The Originator’s depository financial institution that forwards the ACH transaction into the national ACH network through an ACH Operator.


Parallel Banking

When at least one U.S. bank and one foreign financial institution are controlled either directly or indirectly by the same person or group of persons who are closely associated in their business dealings or otherwise acting together, but are not subject to consolidated supervision by a single home country supervisor.

Payable Through Accounts (PTA)

A way for a foreign financial institution to provide their customers with access to the U.S. banking system through the foreign financial institution’s account at a U.S. bank. The foreign financial institution provides its customers, commonly referred to as “subaccountholders,” with checks that allow them to draw funds from the foreign financial institution’s account at the U.S. bank. Also known as “pass-through” or “pass-by” accounts.

Payable Upon Proper Identification (PUPID)

Funds transfers for which there is no specific account to deposit the funds into and the beneficiary of the funds is not a bank customer. The beneficiary bank may place the incoming funds into a suspense account and ultimately release the funds when the individual provides proof of identity.

Payroll Customer

A customer who withdrawals for payroll purposes from existing exemptible accounts.


The first and most vulnerable stage of laundering money. The goal is to introduce the unlawful proceeds into the financial system without attracting the attention of financial institutions or law enforcement. Placement techniques include structuring currency deposits in amounts to evade reporting requirements or commingling currency deposits of legal and illegal enterprises. An example may include: dividing large amounts of currency into less-conspicuous smaller sums that are deposited directly into a bank account, depositing a refund check from a canceled vacation package or insurance policy, or purchasing a series of monetary instruments (e.g., cashier’s checks or money orders) that are then collected and deposited into accounts at another location or financial institution.

Politically exposed persons (PEPs)

See 1010.605(p)(1) and senior foreign political figure.

Pouch Activity

Use of a carrier, courier (either independent or common), or a referral agent employed by the courier, to transport currency, monetary instruments, and other documents from outside the United States to a bank in the United States.

Private Investment Company (PIC)

Essential a subset of an international business corporation. They are typically used to hold individual funds and investments, and ownership can be vested through bearer shares or registered shares.

Professional Service Provider

Lawyers, accountants, investment brokers, and other third parties that act as financial liaisons (or intermediaries) for their clients. These providers may conduct financial dealings for their clients.

Prohibited Transactions

In some cases, an underlying transaction may be prohibited, but there is no blockable interest in the transaction (i.e., the transaction should not be accepted, but there is no OFAC requirement to block the assets). In these cases, the transaction is simply rejected, (i.e., not processed).

Prohibition of SAR Disclosure

No bank, and no director, officer, employee, or agent of a bank that reports a suspicious transaction may notify any person involved in the transaction that the transaction has been reported. A SAR and any information that would reveal the existence of a SAR, are confidential, except as is necessary to fulfill BSA obligations and responsibilities.



An organization or person that authorizes the Originator to initiate an ACH transaction, either as a debit or credit to an account.

Receiving Depository Financial Institution (RDFI)

The Receiver’s depository institution that receives the ACH transaction from the ACH Operators and credits or debits funds from their receivers’ accounts.

Regulatory Alerts (RA)

RAs are used by the NCUA to share information, announce new policies, and provide guidance for credit unions and credit union examination staff.

Remote Deposit Capture (RDC)

A deposit transaction delivery system that allows a bank’s customers to scan a check or monetary instrument, and then transmit the scanned or digitized image to the institution.


SAR Filing on Continuing Activity

Continuing suspicious activity should be reported by filing a SAR after a 90 day review with the filing deadline being 120 calendar days after the date of the previously related SAR filing.

SAR Timing

SAR rules require that a SAR be electronically filed through the BSA E-Filing System no later than 30 calendar days from the date of the initial detection of facts that may constitute a basis for filing a SAR. If no suspect can be identified, the time period for filing a SAR is extended to 60 days.

Section 311

The USA PATRIOT Act added 31 USC 5318A to the BSA, which authorizes the Secretary of the Treasury to require domestic financial institutions and domestic financial agencies to take certain special measures against foreign jurisdictions, foreign financial institutions, classes of international transactions, or types of accounts of primary money laundering concern.

Secure Information Sharing System (SISS)

A web-based system used by FinCEN to post, and banks to retrieve, 314(a) subject lists every two weeks or more frequently if an emergency request is transmitted.

Shell Company

An entity without a physical presence in any country.

Society for Worldwide Interbank Financial Telecommunication (SWIFT)

A messaging infrastructure, not a payments system, which provides users with a private international communications link among themselves.

Specially Designated Nationals

As part of its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called "Specially Designated Nationals" or "SDNs." Their assets are blocked and U.S. persons are generally prohibited from dealing with them.

Standby Letter of Credit

A guarantee of payment issued by a bank on behalf of a client that is used as "payment of last resort" should the client fail to fulfill a contractual commitment with a third party.

Supervision and Regulation Letters (SR Letters)

Issued by the Board of Governors’ Division of Supervision and Regulation, SR Letters are an important means of disseminating information to banking supervision staff at the Board of Governors and the Reserve Banks and, in some instances, to supervised banking organizations. They often address significant policy and procedural matters related to the Federal Reserve System’s supervisory responsibilities.


Technical Violations

Isolated or limited instances of noncompliance with the BSA that occur within an otherwise adequate system of policies, procedures, and processes.

Terrorist Financing (TF)

The process by which terrorists fund their operations in order to perform terrorist acts. The motivation behind terrorist financing is ideological as opposed to profit-seeking.

Third-Party Payment Processors (TPPP)

Bank customers that provide payment-processing services to merchants and other business entities.

Trade Finance

Short-term financing to facilitate the import and export of goods.


Appropriate personnel must be trained in applicable aspects of the BSA. Training should include regulatory requirements and the bank’s internal BSA/AML policies, procedures, and processes. At a minimum, the bank’s training program must provide training for all personnel whose duties require knowledge of the BSA. The training should be tailored to the person’s specific responsibilities.

Transactions of Exempt Persons

§1020.315 - Recognition that the routine reporting of some types of large currency transactions does not necessarily aid law enforcement authorities and may place unreasonable burdens on banks. Consequently, a bank may exempt certain types of customers from currency transaction reporting.

Travel Rule

§1020.410(f) For fund transmittals of $3,000 or more, the transmittor’s financial institution must include certain information in the transmittal order at the time that a transmittal order is sent to a receiving financial institution.

Trust Accounts

A legal arrangement in which one party (the trustor or grantor) transfers ownership of assets to a person or bank (the trustee) to be held or used for the benefit of others. These arrangements include the broad categories of court-supervised accounts (e.g., executorships and guardianships), personal trusts (e.g., living trusts, trusts established under a will, and charitable trusts), and corporate trusts (e.g., bond trusteeships, ERISA trusts).



Uniting and Strengthening America by Providing Appropriate Tool Required to Intercept and Obstruct Terrorism Act of 2001.


Virtual Currency

A medium of exchange that operates like a currency in some environments, but does not have legal tender status in any jurisdiction. Virtual currency must be converted into U.S. dollars through the services of an administrator or exchanger prior to deposit into the banking system.