Anti Money Laundering (AML) Glossary
AML (Anti Money Laundering)
Laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income.
AML/CTF Act
The Anti Money Laundering and Counter Terrorism Financing Act 2006, which governs AML obligations in Australia.
AUSTRAC
The Australian Transaction Reports and Analysis Centre, Australia’s financial intelligence agency and AML/CTF regulator.
Beneficial Owner
The individual who ultimately owns or controls a customer, company, or trust, even if another name appears on official documents.
CDD (Customer Due Diligence)
The process of identifying and verifying a customer’s identity and assessing potential risks before providing services.
Compliance Program
A documented framework outlining how a business manages AML obligations, monitors risks, and ensures regulatory compliance.
Counter Terrorism Financing (CTF)
Measures designed to prevent funds from being used to support terrorist activities or organisations.
Enhanced Due Diligence (EDD)
Additional verification and monitoring procedures applied to higher risk customers or transactions.
Independent Review
An external or internal assessment of a business’s AML compliance program to ensure effectiveness and compliance.
Know Your Customer (KYC)
The process of collecting and verifying customer information to confirm identity and assess risk.
Money Laundering
The process of concealing the origins of illegally obtained money to make it appear legitimate.
Ongoing Customer Due Diligence
The continuous monitoring of customer activities and transactions to identify unusual or suspicious behaviour.
PEP (Politically Exposed Person)
An individual who holds a prominent public position and may present a higher corruption or bribery risk.
Reporting Entity
A business or organisation required to comply with AML/CTF legislation and reporting obligations.
Risk Assessment
The process of identifying and evaluating potential AML and financial crime risks within a business.
Sanctions Screening
Checking individuals and entities against government sanctions lists to ensure compliance with international laws.
SMR (Suspicious Matter Report)
A report submitted to AUSTRAC when suspicious activity or transactions are identified.
Source of Funds
Information explaining where a customer’s money originated from for a particular transaction.
Source of Wealth
Information explaining how a customer accumulated their overall wealth.
Suspicious Activity
Any customer behaviour, transaction, or conduct that appears unusual or inconsistent with expected patterns.
Threshold Transaction
A transaction that exceeds a legislated monetary limit and must be reported to AUSTRAC.
Transaction Monitoring
The process of reviewing customer transactions to detect suspicious or unusual activity.
Ultimate Beneficial Owner (UBO)
The person who ultimately owns or controls a legal entity or arrangement.
Verification
The process of confirming the accuracy of customer identity information using reliable and independent documentation.