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 countering terrorism financing (or “CTF”). As the name indicates, CTF 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 CTF tools can support broad and effective deterrence efforts against a wide range of criminal activities, including the financing of terrorism.

AML and CTF concepts are riddled with jargon, and comprehending the numerous acronyms might be a hard task. One AML is committed to making your AML CTF 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 ML is 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 As mentioned above, AML refers to the tools, laws, regulations and procedures intended to prevent criminals from carrying out money laundering.

• CTF – Countering Terrorism Financing Broadly, CTF tools are the practices that prevent, detect and punish illegal funds entering the financial system and subsequently funding terrorist activities. This term is also occasionally expanded to Combatting Terrorist Financing.

• FI – Financial Institutions An FI is a company that deals with financial and monetary transactions such as deposits, loans, investments, and currency exchange.

• FIU – Financial Intelligence Unit An FIU is a central national agency responsible for receiving, analysing and disseminating to the competent authorities disclosures of financial information concerning suspected proceeds of crime and potential financing of terrorism. Australia’s FIU is called AUSTRAC.

• AUSTRAC – Australian Transaction Reports and Analysis Centre AUSTRAC is the Australian Government’s agency charged with detecting, preventing and disrupting criminal abuse of the financial system to protect the community from serious and organised crime.

• FATF – The Financial Action Task Force The FATF isan independent inter-governmental body that develops policies to protect the global financial system against money laundering, terrorist financing and the financing proliferation of weapons of mass destruction. The Recommendations formulated by the FATF are recognised globally as the AML and CTF standard.

• CFR – Council of Financial Regulators CFR is the coordinating body for Australia’s main financial regulatory agencies, RBA, APRA, ASIC and the Australian Treasury. The role of the CFR is to contribute to the efficiency and effectiveness of regulation and to promote the stability of the Australian financial system.

• RBA – Reserve Bank of Australia The RBA is Australia’s central bank and banknote issuing authority.

• APRA –  Australian Prudential  Regulation Authority APRA is a statutory authority of the Australian Government and the prudential regulator of the Australian financial services industry.

• ASIC – Australian Securities and Investments Commission ASIC is an independent commission of the Australian Government. The role of this commission is to regulate companies and financial services and enforce laws to protect Australian consumers, investors and creditors.

• KYC – Know Your Customer A set list of procedures to verify a customer’s identity and their financial dealings to effectively manage risk. A cornerstone of AML.

• CDD – Customer Due Diligence Customer Due Diligence is 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. Although similar to KYC, the difference is that KYC is about performing customer due diligence CDD. Simply put – CDD is a fundamental step in the KYC process.

• ECDD – Enhanced Customer Due Diligence An ECDD is a program that records the actions taken when the money laundering or terrorism financing risk is high; ECDD involves carrying out extra or enhanced checks on a customer’s identification, additional information, and additional verification.

• EDD – Employee Due Diligence An EDD is a program that records the procedures one uses to screen employees. EDD allows organisations to identify and minimise their organisation’s exposure to the risk of money laundering and terrorism financing

• PEP – Politically Exposed Person A PEP is someone who, through their prominent position or influence, is more susceptible to being involved in bribery or corruption.

• TTRs – Threshold Transaction Reports A TTR is the transfer of physical currency of A$10,000 or more as part of providing a designated service. A transfer can include receiving or paying cash. By providing a designated service that involves a threshold transaction, one must report these transfers to AUSTRAC in a TTR within ten (10) business days.

• IFTI – International Funds Transfer Instruction An IFTI is an instruction to transfer funds or property to either Australia from another country or another country from Australia. There are two types of IFTIs viz. IFTI-E and IFTI-DRA.

• IFTI–E This IFTI is an electronic funds transfer instruction that is sent to or received from another country.

• IFTI–DRA This IFTI is an instruction to transfer money or property to or from another country under a designated remittance arrangement (“DRA”) where either the entity accepting the instruction from the customer or the entity making the money or property available is not a financial institution.

• RNP – Remittance Network Provider Remittance Network Providers are individuals, businesses or organisations that accept instructions from customers to transfer money or property to a recipient. Simply put, they are money transfer businesses.

• SMR – Suspicious Matter Report An SMR is a piece of information that one must submit to AUSTRAC if they suspect that a person or transaction is linked to a crime.

With the frequent changes to the legislation, keeping up with the most recent obligations is important for you as a responsible business. Further, carrying out an AML/CTF review is recommended to avoid penalties for non-compliance. Still, need convincing? Head on to our blog posts, where we talk about why your company needs an AML/CTF review.

Now, we understand that learning about the AML and CTF landscape by yourself while making a compliance checklist for your organisation 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 audit today!

Disclaimer: This information is only to serve as a reference and guide for those living and doing business in Australia. It is not a substitute for the provisions or information in the “ Anti-Money Laundering and Counter-Terrorism Financing Act 2006.” (AML CTF Act) or any of its 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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