Azərbaycan Respublikası Mərkəzi Bankı Banklara Nəzarət Departamenti

Batch Processing 
A type of data processing and data communications transmission in which related transactions are grouped 
together and transmitted for processing, usually by the same computer and under the same application. 
 
 

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Batch Transfer 
Transfer comprising a number of individual wire transfers that are sent to the same financial institution, and 
which may be ultimately intended for different persons. 
Bearer Form 
In relation to a certificate, share transfer or other document, a bearer form enables a designated investment 
or deposit to be sold, transferred, surrendered or addressed to a bearer without the need to obtain further 
written instructions. 
Bearer Negotiable Instruments 
Include monetary instruments in bearer form such as: negotiable instruments (including checks, promissory 
notes and money orders) that are either in bearer form, are endorsed without restriction, are made out to a 
fictitious payee, or are otherwise in such form that title thereto passes upon delivery. 
Bearer Share 
Negotiable instruments that accord ownership in a corporation to the person who is in physical possession 
of the bearer share certificate. 
Bearer Share Certificate 
A negotiable corporate share certificate made out to ―Bearer‖ and not in the name of an individual or 
organization. 
Benami Account 
Also called a nominee account. Held by one person or entity on behalf of another or others, Benami 
accounts are associated with the hawala underground banking system of the Indian subcontinent. A person 
in one jurisdiction seeking to move funds through a hawaladar to another jurisdiction may use a Benami 
account or Benami transaction to disguise his/her true identity or the identity of the recipient of the funds. 
Beneficial Owner 
The natural person who ultimately owns or controls an account through which a transaction is being 
conducted. It also incorporates those persons who exercise ultimate effective control over a legal person or 
arrangement. 
Beneficiary 
All trusts (other than charitable or statutory-permitted non- charitable trusts) must have beneficiaries, which 
may include the settlor. Trusts must also include a maximum time frame, known as the ―perpetuity period,‖ 
which normally extends up to 100 years. While trusts must always have some ultimately ascertainable 
beneficiary, they may have no defined existing beneficiaries. Trusts may only have objects of a power until   
 

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The latter period is normally co- extensive with the trust perpetuity period, which is usually referred to in 
the trust deed as the ―trust period.‖ 
Biometrics 
The science of identifying features that distinguish one person from another. Fingerprinting, voice 
recognition and iris (eye) scans are three forms of biometrics technology that may someday render pen-to-
paper signatures outdated. Certain institutions use biometrics to verify the identity of their customers. With 
the advent of customer identification regulations, biometric tools may become more common in financial 
institutions. 
Black Market Peso Exchange (BMPE) 
The Colombian Black Market Peso Exchange (BMPE) is 
an example of a complex method of trade-based money laundering. The BMPE originally was driven by 
Colombia‘s restrictive policies on currency exchange. To circumvent those policies, Colombian businesses 
bypassed the government levies by dealing with peso brokers that dealt in the black market or parallel 
financial market. Colombian drug traffickers took advantage of this method to receive Colombian pesos in 
Colombia in exchange for U.S. drug dollars located in the United States. According to the U.S. State 
Department‘s 2007 INCSR, similar black market exchange systems are found in Venezuela and in the tri-
border region of Argentina, Brazil, and Paraguay. Trade goods in Dubai, as well as Chinese and European 
manufactured trade items, are being purchased through narcotics-driven systems similar to the BMPE. The 
Black Market Peso Exchange system operates through brokers who purchase narcotics proceeds in the 
United States from the cartels and transfer pesos to the cartels from within Colombia. 
The dollars are placed, that is, ―laundered‖, into the United States financial system by the peso broker 
without attracting attention. The dollars are then ―sold‖ by the brokers to businessmen in Colombia (or 
other country) who need dollars to buy United States goods for export. 
Goods ready for export are often actually paid for by the peso broker, using the purchased narcotics dollars, 
on behalf of the Colombian (or other country‘s) importer. 
Blank Check Company 
A type of company designed to be used by private corporations intending to issue publicly traded shares 
through ―reverse mergers‖ without the high expenses involved in making their own initial public offering. 
Blank check companies often have few assets, engage in little business activity, and have no business plan 
or experienced management. 
Bookmaker 
A bookmaker accepts bets from individuals on a variety of matters, mostly sporting events. Bookmakers are 
vulnerable to money laundering, since launderers may offer their customers money for winning betting 
slips, often 7 to 10 percent above the value of the winnings. The launderer then collects clean money from 
the bookmaker. 
 
 
 

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Branch 
A place of business that forms a legally dependent part of a financial institution and carries out directly all 
or some of the transactions inherent in the business of that financial institution. 
Bureau de Change 
Also called ―casa de cambio‖ or ―exchange office,‖ a bureau de change offers a range of services that are 
attractive to money launderers: currency exchange and consolidation of small denomination bank notes into 
larger ones; exchange of financial instruments such as travelers checks, money orders and personal checks; 
and telegraphic transfer facilities. In some countries, such businesses are not as heavily scrutinized for 
money laundering as are traditional financial institutions. Also, their customers are often occasional, 
making it more difficult for these businesses to ―know their customers.‖ 
Bust-Out 
A scheme in which the use or extension of credit is obtained and is increased fraudulently while the 
perpetrators avoid having to pay back the illegally obtained credit or goods. Typically, a bust-out ring will 
operate a shell or front business that accepts credit purchases on stolen or fraudulently obtained credit cards. 
The criminals run the cards or numbers through credit card terminals, but either do not provide any goods 
or services or provide stolen or non-licensed goods. The innocent credit card company credits the account 
of the front business. Before the transactions can be reversed, the criminals have moved the funds from the 
accounts of the front business. 
The cardholders who knowingly participate in these bust-out schemes generally refuse to pay the credit card 
companies for their ―purchases.‖ These people have either obtained cards with fraudulent or stolen 
identification or otherwise cannot be found. Bust-out schemes have been very popular in creating large 
bankruptcy frauds in which business entities secure loans in excess of the actual value of the company or 
property and then disappear with the money, leaving the lender to take a substantial loss. 
C
 
Cardholder 
Person to whom a financial transaction card is issued, or an additional person authorized to use the card. 
Caribbean Financial Action Task Force (CFATF) 
A FATF-style regional body comprising Caribbean states, including Aruba, the Bahamas, the British Virgin 
Islands, the Cayman Islands and Jamaica. 
 

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Casa de Cambio 
See Bureau de Change. 
Cash-Based Business 
Any business in which customers usually pay with cash for the products or services provided, such as 
restaurants, pizza delivery services, taxi financial institutions, coin-operated machines or car washes. Some 
money launderers run or use cash-based businesses to commingle illegally obtained funds with cash 
actually generated by the business. 
Cash Collateralized Loans 
A cash collateralized loan has cash deposits as the loan‘s collateral. The cash deposits can sometimes reside 
in another jurisdiction. 
Cash Deposits 
Sums of money placed in a financial institution‘s accounts. Vulnerable to money laundering in the 
―placement phase,‖ as criminals move their cash into the non-cash economy by making deposits into 
accounts at financial institutions. 
Cashier’s Check 
Common monetary instrument often purchased with cash. Used for laundering purposes, cashier‘s checks 
provide an instrument drawn on a reputable institution, such as a bank or credit union. 
CDD 
See Customer Due Diligence. 
CDPC (French: Comité Européen pour les Problèmes Criminels) 
European Committee on Crime Problems of the Council of Europe. A subcommittee of the CDPC is 
MONEYVAL, formerly PC-R-EV, the select committee of experts on the evaluation of anti-money 
laundering measures in European countries that are not members of FATF. 
Certification 
A formal assertion in writing which, under the USA Patriot 
Act, is used by U.S. regulators in different contexts, including a written statement by a respondent bank 
signed by its duly authorized representative certifying that the bank does not do business with shell banks 
(under Section 313 of the USA Patriot Act). It can also be a written representation provided by a U.S. 
federal agent stating that the matter for which he or she is seeking information from financial institutions 
under Sec. 314(a) of the USA Patriot Act regulations is linked to money laundering or terrorist financing. 
 
 

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Chain Referral Scheme 
See Pyramid Scheme. 
Chiti Banking 
See Alternative Remittance System. 
Chop Shop Banking 
See Alternative Remittance System. 
CICAD (Spanish: Comisión Interamericana para el Control del Abuso de Drogas) 
See Organization of American States—Inter-American Drug Abuse Control Commission. 
Clearing Account 
Also called an ―omnibus‖ or ―concentration account.‖ Held by a financial institution in its name, a clearing 
account is used primarily for internal administrative or bank-to-bank transactions in which funds are 
transmitted and commingled without personally identifying the originators. The USA Patriot Act prohibits 
the use of such accounts for customer transactions. 
Collection Accounts 
Immigrants from foreign countries deposit many small amounts of currency into one account where they 
reside, and the collected sum is transferred to an account in their home country without documentation of 
the sources of the funds. Certain ethnic groups from Asia or Africa may use collection accounts to launder 
money. 
Collective Knowledge 
The sum of the knowledge held separately by a financial institution‘s directors, officers and employees 
regarding a certain issue, customer or account. The notion of collective knowledge can be used to suggest 
corporate responsibility for compliance and liability for non-compliance. 
For example, the financial 
institution‘s knowledge is the totality of what all of the employees know within the scope of their 
employment. So, if Employee A knows one facet of a customer‘s information, B knows another facet of it, 
and C a third facet of it, the institution knows all the facets of the customer‘s information.
 
Commission Rogatoire 
Also known as letters rogatory, commission rogatoires are written requests for legal or judicial assistance 
sent by the central authority of one country to the central authority of another when seeking evidence from 
the foreign jurisdiction. The letter typically specifies the nature of the request, the relevant criminal charges 
in the requesting country, the legal provision under which the request is made, and the information sought. 
 

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Concentration Account 
See Clearing Account. 
Concentration Risk 
Concentration risk primarily applies to the asset side of the balance sheet. As a common practice, 
supervisors not only require banks to have information systems to identify credit concentrations, but also set 
limits to restrict bank exposure 
to single borrowers or groups of related borrowers. Without knowing exactly who the customers are 
(through Know Your Customer policies) and their relationship with other customers, the bank is not able to 
measure its concentration risk, which 
is particularly relevant in the context of related counter-parties and connected lending. On the liability side, 
concentration risk is associated with funding risk, especially the risk of early and sudden withdrawal of 
funds by large depositors that could harm an institution‘s liquidity. 
Confidentiality 
Keeping certain facts, data and information out of public 
or unauthorized view. In the U.S., U.K. and many other jurisdictions, confidentiality is required when filing 
suspicious transaction or activity reports — the filing institution‘s employees cannot notify a customer that 
a report has been filed. In another context, a breach of confidentiality can occur when an institution 
discloses client information to enforcement agencies or a financial intelligence unit in violation of the 
jurisdiction‘s bank secrecy laws. 
Confiscation 
Includes forfeiture where applicable, and means the permanent deprivation of funds or other assets by order 
of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or 
administrative procedure that transfers the ownership of specified funds or other assets to the state. Upon 
transfer, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of 
the confiscation or forfeiture lose all rights, in principle, to the confiscated or forfeited assets. Confiscation 
or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated 
or forfeited property is determined to have been derived from or intended for use in a violation of the law. 
Confiscation is a central strategic tool that is required in order to take effective action against money 
laundering and terrorist financing. It is crucial 
that criminal justice systems make provisions for efficient and effective methods of tracing, freezing and 
eventually confiscating proceeds of criminal activity. Mutual legal assistance treaties can provide for 
confiscation of assets in one jurisdiction based upon prosecutions elsewhere. 
Constructive (Involuntary) Trust Liability 
The imposition of trustee obligations upon a financial institution deemed to ―know‖ that property in its 
possession belongs to a person other than its client. A financial institution can face the risk of breach
 
 
 
 

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of trust if it handles or transfers the funds in a manner detrimental to the interests of the rightful owner. 
Anti-money laundering specialists should be especially vigilant when there is suspicion that funds may have 
been derived from a victim of crime, resulting in the victim‘s loss of funds or property. 
Core Principles 
Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision, 
the Objectives and Principles for Securities Regulation issued by the International Organization of 
Securities Commissions, and the Insurance Supervisory Principles issued by the International Association 
of Insurance Supervisors. 
Corporate Vehicles 
Defined in FATF‘s Consultation Paper as: 
1.
 
Corporations:   
(a) Private limited companies and public limited companies whose shares are not traded on a stock 
exchange.   
(b)International business companies/exempt companies.   
2.
 
Trusts.   
3.
 
Foundations.   
4.
 
Limited partnerships and limited liability partnerships.   
Occasionally it is difficult to identify the persons who are the ultimate beneficial owners and controllers of 
corporate vehicles, which makes the vehicles vulnerable to money laundering. FATF gives such vehicles 
special focus in the revised 40 Recommendations on Money Laundering of 2003, under the section 
pertaining to CDD for legal persons and arrangements (Recommendation 5). 
Correspondent Banking 
The provision of banking services by one bank (the ―correspondent bank‖) to another bank (the ―respondent 
bank‖). Large international banks typically act as correspondents for thousands of other banks around the 
world. Respondent banks may be provided with a wide range of services, including cash management (e.g., 
interest-bearing accounts in a variety of currencies), international wire transfers of funds, check clearing 
services, payable-through accounts and foreign exchange services. 
Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds 
from Crime 
The Convention was adopted by the Committee of Ministers of the Council of Europe in September 1990, 
which addressed all types of criminal offenses and thereby has greater impact than the Vienna Convention. 
The offense of money laundering was extended to include money laundering associated with 
all serious offenses, not just drug trafficking. In May 2005, a revised convention was adopted. 
 
 

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Counter-Terrorism Committee (CTC) 
A United Nations Committee established in 2001 pursuant to Security Council Resolution 1373 (2001). 
Concerning counter- terrorism, the CTC consists of all 15 Security Council members. The committee 
monitors the implementation of UN Security Council Resolution 1373, and aims to increase the capacity of 
member states to fight terrorism financing. 
Credit Cards 
A plastic card with a credit limit used to purchase goods and services and to obtain cash advances on credit. 
The cardholder is subsequently billed by the issuer for repayment of the credit extended. Credit cards may 
be used to launder money when payments of the amounts owed on the card are made with criminal money. 
Credit Finance 
The use of credit to buy expensive items, and the subsequent payment of the borrowed credit with criminal 
funds. The criminal borrows funds to purchase a high value asset, such as a yacht, pays off the loan 
promptly with cash from illegal proceeds, sells the boat and starts all over again. By paying the credit loans 
off with illicit money, money launderers can use credit to finance criminal activity. 
Criminal Proceeds 
Any property derived from or obtained, directly or indirectly, through the commission of a crime. 
Cross Border 
Used in the context of activities that involve at least two countries, such as wiring money from one country 
to another or taking currency across a border. 
Cross-Border Transfer 
Any wire transfer in which the originator and beneficiary institutions are located in different jurisdictions. A 
cross-border transfer also refers to any chain of wire transfers that has at least one cross-border element. 
Cuckoo Smurfing 
A form of money laundering linked to alternative remittance systems in which criminal funds are 
transferred through the accounts of unwitting persons who are expecting genuine funds or payments from 
overseas. The term cuckoo smurfing first originated in investigations in the U.K., where it is a significant 
money laundering technique. 
Currency 
Banknotes and coins that are in circulation as a medium of exchange. 
Currency Smuggling 
The illicit movement of large quantities of cash across borders, often into countries with strict banking 
secrecy, poor exchange controls or poor anti-money laundering legislation. 
 
 

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Currency Transaction Report (CTR) 
A report that documents a currency transaction that exceeds a certain monetary threshold. A CTR can also 
be filed on multiple currency transactions that occur in one day that add up to or are greater than the 
required reporting amount. In some countries, including the U.S., currency transaction reports must be filed 
with government authorities under specific circumstances. 
Custodian 
A bank, financial institution or other entity that is responsible for managing or administering or safekeeping 
assets for other persons or institutions. Typically, custodians are not active, aggressive managers of the 
assets in question, but, instead, serve to passively conserve them. 
Custody 
The act or authority of safeguarding and administration of clients‘ investments or assets. 
Customer Due Diligence (CDD) 
In terms of money laundering controls, it means implementing adequate policies, practices and procedures 
that promote high ethical and professional standards for dealing with customers and are designed to prevent 
banks from being used, intentionally or unintentionally, by criminal elements. Customer due diligence 
includes not only establishing the identity of customers, but also monitoring account activity to identify 
those transactions that do not conform with the normal or expected transactions for that customer or type of 
account.