Glossary

The Agent Trust Agreement is the contract between the principal MSB and a company agreeing on terms of being an agent for MSB services.

An Agent Verification letter is a formal document that confirms an individual or business entity is authorized to act on behalf of another party.

The Anti-Money Laundering Act of 2020 (AMLA) is the most comprehensive update to the U.S. Bank Secrecy Act (BSA) in decades. It overhauls the nation's financial regulatory architecture to combat money laundering, terrorist financing, and illicit financial activity by modernizing compliance programs and increasing transparency.

An AML/CFT program is a comprehensive risk-based BSA policies and procedures that financial institutions and regulated businesses use to prevent, detect, and report illicit financial activity.

Anti-Money Laundering (AML) is the framework of laws, regulations, and controls designed to prevent criminals from disguising illegally obtained funds as legitimate income.

The Bank Secrecy Act (BSA), enacted in 1970, is a federal law that requires financial institutions and certain businesses to maintain records and report specific transactions to the U.S. Department of the Treasury. These requirements help law enforcement detect, investigate, and prevent money laundering, terrorist financing, and other financial crimes.

The California Consumer Privacy Act (CCPA) is a state privacy law that provides California residents with rights over their personal information and requires covered businesses to be transparent about how they collect, use, share, and protect consumer data. The law helps safeguard consumer privacy and promotes responsible data management practices.

A Compliance Management System (CMS) is a structured program designed to help an organization comply with regulatory requirements, including AML/CFT, BSA, OFAC, consumer protection, and state licensing regulations. The CMS establishes the controls, processes, and oversight necessary to identify compliance risks, monitor activities, train employees, and maintain ongoing regulatory compliance.

A Compliance Officer or BSA/AML Compliance Officer is the individual responsible for overseeing and managing an organization's AML/CFT program.

A Compliance Resource Officer (CRO) is a compliance professional who supports the implementation, administration, and ongoing effectiveness of an organization's AML/CFT compliance program. Working under the direction of the BSA/AML Compliance Officer or Compliance Manager, the Compliance Resource Officer helps ensure regulatory requirements are met by assisting with customer due diligence, transaction monitoring, sanctions screening, regulatory reporting, recordkeeping, employee training, and compliance documentation.

The Consolidated Canadian Autonomous Sanctions List is Canada's official list of sanctioned persons and organizations that businesses must screen against to avoid engaging in prohibited transactions or activities.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law enacted in 1985 that allows eligible employees, former employees, spouses, former spouses, and dependent children to temporarily continue their employer-sponsored health insurance coverage after certain qualifying events, such as job loss, reduction in work hours, divorce, or the death of a covered employee.

Countering the Financing of Terrorism (CFT) is the framework of laws, regulations, and controls designed to prevent terrorists and terrorist organizations from raising, moving, storing, or using funds to support their activities.

A Currency Transaction Report (CTR) is a report filed by a financial institution for cash transactions exceeding $10,000 in a single business day. CTRs help government agencies monitor large cash transactions and combat money laundering and other financial crimes.

Customer Due Diligence (CDD) is the process financial institutions use to identify and verify the identity of customers, understand the nature and purpose of customer relationships, and assess the risk that customers may pose for money laundering, terrorist financing, or other illicit activities. CDD helps institutions develop a risk profile for each customer and apply appropriate monitoring and controls throughout the relationship.

A Customer Identification Program (CIP) is the process used to verify a customer's identity before providing financial services, helping institutions know who their customers are and preventing money laundering, terrorist financing, and other financial crimes.

The individual assigned responsibility for day-to-day oversight of an MSB's AML program.

The process of gathering and evaluating information necessary to understand and manage customer, agent, counterparty, product, or geographic risk.

The Electronic Funds Transfer Act (EFTA) is a federal law that establishes the rights, responsibilities, and protections of consumers who use electronic methods to transfer funds. Enacted in 1978 and implemented through Regulation E, the EFTA governs electronic transactions such as debit card purchases, ATM withdrawals, direct deposits, electronic bill payments, and other electronic fund transfers.

The Electronic Signatures in Global and National Commerce Act (E-SIGN Act) is a federal law enacted in 2000 that gives electronic signatures and electronic records the same legal validity and enforceability as handwritten signatures and paper documents in most business and consumer transactions.

Enhanced Due Diligence (EDD is the process of taking additional and more in-depth measures to identify, verify, and understand a customer and the risks they may pose for money laundering, terrorist financing, or other financial crimes.

The Equal Credit Opportunity Act (ECOA) is a federal law that prohibits creditors from discriminating against applicants in any aspect of a credit transaction. Under the ECOA, lenders must evaluate credit applicants based on their creditworthiness and ability to repay, rather than on protected characteristics.

The Expedited Funds Availability Act (EFAA) is a federal law that establishes rules for how quickly banks must make deposited funds available to customers. The law was enacted to ensure consumers have timely access to funds deposited into transaction accounts and to promote consistency in funds availability practices among financial institutions. Implemented through Regulation CC, the EFAA sets maximum hold periods for certain types of deposits, outlines when banks may delay the availability of funds, and requires financial institutions to disclose their funds availability policies to customers.

The Fair and Accurate Credit Transactions Act (FACTA) helps protect consumers from identity theft and inaccurate credit reporting by strengthening credit reporting rules and requiring businesses to safeguard consumer information.

The Fair Credit Reporting Act (FCRA) is a federal law that regulates how consumer reporting agencies collect, use, and share consumer credit information. The law is designed to promote the accuracy, fairness, and privacy of information contained in consumer reports and to ensure that consumer information is used only for legitimate purposes.

The Fair Debt Collection Practices Act (FDCPA) is a federal law that regulates the conduct of third-party debt collectors and protects consumers from abusive, deceptive, and unfair debt collection practices. The law establishes standards for how and when debt collectors may communicate with consumers and prohibits harassment, false statements, threats, and other improper collection tactics.

The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards for employees in the private sector and in federal, state, and local governments. The law is designed to protect workers by setting basic employment standards related to wages and hours worked.

The Family and Medical Leave Act (FMLA) is a federal law that provides eligible employees of covered employers with up to 12 weeks of unpaid, job-protected leave in a 12-month period for certain family and medical reasons. Qualifying reasons may include the birth or adoption of a child, caring for a spouse, child, or parent with a serious health condition, or the employee’s own serious health condition.

The Financial Crimes Enforcement Network (FinCEN) is the bureau of the U.S. Department of the Treasury responsible for safeguarding the financial system from money laundering, terrorist financing, and other financial crimes. FinCEN accomplishes this through the administration of the Bank Secrecy Act (BSA) and the collection, analysis, and dissemination of financial intelligence.

FINTRAC is Canada's national financial intelligence unit, established to help detect, prevent, and deter money laundering, terrorist activity financing, and other threats to the security of the country.

The Foreign Corrupt Practices Act (FCPA) is a federal law that prohibits U.S. companies, individuals, and certain foreign issuers from bribing foreign government officials to obtain or retain business or secure an improper advantage. The law also requires certain companies to maintain accurate books and records and implement internal accounting controls to help prevent corruption and concealment of improper payments.

A Fractional Compliance Officer is an experienced compliance professional who provides part-time, outsourced, or contract-based oversight and management of an organization's AML/CFT compliance program. Rather than serving as a full-time employee, a Fractional Compliance Officer performs the duties of a Compliance Officer on a flexible basis, helping organizations meet regulatory requirements while controlling costs.

A Gap Analysis is a review of an organization’s AML/CFT program to identify weaknesses, missing controls, or areas where current practices do not fully meet regulatory requirements, industry standards, or the organization’s risk profile. The purpose of a gap analysis is to compare the institution’s existing AML/CFT program against applicable laws, regulations, guidance, and best practices in order to determine where improvements are needed.

The General Data Protection Regulation (GDPR) is an European Union (EU) privacy law that gives individuals more control over their personal data and requires organizations to handle that data lawfully, transparently, and securely.

The Gramm-Leach-Bliley Act (GLBA) is a federal law that requires financial institutions to protect the privacy and security of consumers’ nonpublic personal information. The law also requires covered institutions to explain their information-sharing practices and provide customers with certain privacy notices and the opportunity to opt out of certain information sharing with nonaffiliated third parties.

The Health Insurance Portability and Accountability Act (HIPAA) is a law that protects the privacy and security of medical and health information and sets rules for how that information must be handled and safeguarded.

The independent review assesses the level of money laundering risk for an organization and provides a fair and unbiased opinion of the AML/CFT program. The objective is to ensure the program meets all requirements of the BSA.

Risk arising from conducting transactions involving countries, states, territories, or regions associated with elevated financial-crime, sanctions, corruption, or regulatory concerns.

Know Your Customer (KYC) is the process financial institutions use to verify the identity of their customers, understand the nature and purpose of the customer relationship, and assess the risk that the customer may pose for money laundering, terrorist financing, fraud, or other illicit activity. KYC is a foundational part of an organization’s AML/CFT program and helps ensure that institutions know who they are doing business with and can identify unusual or suspicious activity.

A Large Cash Transaction Report (LCTR) is a report that certain Canadian reporting entities must submit to FINTRAC when they receive CAD $10,000 or more in cash in a single transaction, or when they receive multiple cash transactions totaling CAD $10,000 or more within a 24-hour period that are conducted by, on behalf of, or for the same person or entity.

The Military Lending Act (MLA) is a federal law that provides financial protections to active-duty service members, their spouses, and certain dependents when they obtain consumer credit. The law is designed to protect military families from unfair or abusive lending practices and to ensure that covered loans are offered on fair and transparent terms.

Ministerial Directive Requirements are obligations issued by the Canadian Minister of Finance under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) that require reporting entities to apply specific countermeasures to financial transactions involving designated foreign jurisdictions or entities that present heightened money laundering or terrorist financing risk.

The Model Money Transmission Modernization Act (MTMA) is a model state law developed by the Conference of State Bank Supervisors (CSBS) to create a more uniform and modern regulatory framework for licensing, supervising, and regulating money transmitters across the United States. The MTMA establishes a consistent set of standards for areas such as licensing, net worth, surety bonds, permissible investments, and other prudential and compliance requirements applicable to money transmission businesses.

The Money Laundering Control Act of 1986 (MLCA) is a federal law that made money laundering a distinct federal crime in the United States. The law prohibits knowingly engaging in financial transactions involving proceeds derived from criminal activity, particularly when the purpose is to conceal the source, ownership, or nature of those funds or to promote further unlawful activity.

A Money Services Business (MSB) is legal classification for a non-bank financial institution that facilitates the transmission, exchange, or conversion of money.

A system used by many U.S. states to administer money transmitter and other financial-services licenses.

The Office of Foreign Assets Control (OFAC) administers and enforces U.S. economic and trade sanctions against targeted countries, organizations, and individuals, including terrorists, narcotics traffickers, and other threats to national security. These sanctions may be broad-based or targeted and often involve asset blocking, transaction prohibitions, and trade restrictions designed to support U.S. foreign policy and national security objectives.

The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to protect cardholder data and reduce the risk of payment card fraud. It applies to organizations that store, process, or transmit credit card or debit card information and establishes requirements for securing payment systems, networks, and sensitive account data.

Principal MSB is the primary organization that directly holds the license, registration, and regulatory obligations. It is responsible for a network of authorized "agents" who process transactions on its behalf.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) is Canada’s primary anti-money laundering and anti-terrorist financing law. It establishes the legal framework for detecting, deterring, and investigating money laundering and terrorist financing by requiring certain businesses and financial institutions to maintain records, verify client identity, monitor transactions, and report specified activities to FINTRAC, Canada’s financial intelligence unit.

A risk-assessment methodology that evaluates risk using categories or professional judgment rather than relying exclusively on numerical scoring.

The Restore Online Shoppers’ Confidence Act (ROSCA) is a federal law that protects consumers from deceptive online sales practices, particularly those involving negative option features such as automatic renewals, recurring charges, or trial offers that convert into paid subscriptions.

The Right to Financial Privacy Act (RFPA) is a federal law that protects the confidentiality of a customer’s financial records held by financial institutions. It establishes procedures that federal government agencies must follow before obtaining access to a customer’s financial information from a financial institution, generally requiring customer notice, consent, or legal process such as a subpoena, summons, or search warrant, unless an exception applies.

An Risk Assessment is the process an organization uses to identify, evaluate, and understand its exposure to money laundering, terrorist financing, and other financial crime risks. It helps the institution determine where its highest risks exist so it can apply appropriate controls, monitoring, and resources to manage those risks effectively and put the correct policies and procedures in place to develop the institutions AML/CFT program.

The Servicemembers Civil Relief Act (SCRA) is a federal law that provides legal and financial protections to active-duty members of the U.S. military, helping them focus on their military responsibilities without certain civil obligations creating undue hardship. The SCRA provides protections related to areas such as interest rates on certain loans, rental and housing agreements, civil court proceedings, and other financial and contractual obligations.

A Suspicious Activity Report (SAR) is a report that financial institutions must file when they detect transactions or activities that may involve money laundering, terrorist financing, fraud, tax evasion, or other criminal conduct. SARs help law enforcement and regulatory agencies identify, investigate, and prevent financial crimes.

In Canada, reporting entities are required to file Suspicious Transaction Reports (STRs) with FINTRAC as soon as practicable after determining that there are reasonable grounds to suspect a transaction or attempted transaction is connected to money laundering or terrorist financing. An STR may be triggered by unusual transaction patterns, inconsistent customer behavior, attempts to conceal the source of funds, or other indicators of suspicious activity.

The Telephone Consumer Protection Act (TCPA) is a federal law that regulates telemarketing calls, text messages, prerecorded or artificial voice calls, and the use of automated telephone dialing systems. The law is designed to protect consumers from unwanted and intrusive communications by requiring businesses to obtain appropriate consent before making certain types of calls or sending marketing text messages.

The Truth in Lending Act (TILA) is a federal law that promotes the informed use of consumer credit by requiring lenders to provide clear, accurate, and standardized disclosures about the terms and costs of credit. The law helps consumers compare credit products and make informed borrowing decisions.

Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) refers to conduct by financial institutions or service providers that harms consumers through unfair treatment, misleading representations, or abusive practices. UDAAP is prohibited under federal consumer financial protection laws and is enforced by the Consumer Financial Protection Bureau and other regulatory agencies.

The USA PATRIOT Act is a federal law passed shortly after the 9/11 terrorist attacks. Its main goal was to give law enforcement and intelligence agencies the necessary tools to detect, investigate, and prevent future terrorist attacks within the United States.

A digital representation of value that may function as a medium of exchange but does not necessarily have legal-tender status.

Comparing parties against sanctions, government, internal, or other risk-related lists.

A violation involving the level of intent or recklessness necessary to satisfy applicable statutory or regulatory standards, potentially resulting in significant civil or criminal consequences.

An electronic transfer of funds between financial institutions or parties.

Analytical approaches used to identify changes or anomalies in customer or agent activity over time.

System activity that may not itself transfer funds, but can still provide relevant information for fraud, AML, or account-monitoring investigations.

An internal compliance term describing activity prohibited by an institution's policies regardless of transaction value or customer risk rating.