Azərbaycan Respublikası Mərkəzi Bankı Banklara Nəzarət Departamenti

Customer Identification Program (CIP) 
The policies and procedures of an institution that aim to identify and verify the identity of its customers. In 
general, the program must be in writing, have senior board approval and include procedures for customer 
notification. 
Customer Information Order 
Requires all financial institutions—or a targeted sample of banks and other financial institutions—to 
provide the details of any accounts held by the person under investigation, thus enabling an investigator to 
find out where the suspect‘s accounts are held. 
D
 
 
 

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Debit Card 
A card issued by a financial institution that permits an account- holder to draw funds from a pre-existing 
account in his or her name for the purpose of paying obligations or for making purchases in other locations 
or businesses. Debit cards have been found to be convenient tools to launder criminal proceeds, especially if 
they are issued by financial institutions in secrecy havens because they leave few, if any, traces of the 
debited sources of funds. 
Debit Transaction 
A transaction that involves the use of a bankcard to purchase goods and services or to obtain cash. The 
transaction automatically debits the cardholder‘s deposit account. 
Designated Categories of Offense 
In its 40 Recommendations of 2003, FATF issued for the first time a list of ―designated categories of 
offense‖ that enumerates crimes that may lead to money laundering prosecutions. Each country may decide 
how it will define those offenses and their elements. Many nations do not specify which crimes can serve as 
predicates for laundering prosecutions and merely state that all serious felonies may be predicates. Others, 
such as the U.S., specify long lists of crimes that must be present in order for a money laundering 
prosecution to proceed. Under the FATF definition, the designated categories are: 
- Participation in an organized criminal group and racketeering; 
- Terrorism, including terrorist financing; 
- Trafficking in human beings and migrant smuggling; 
- Sexual exploitation, including sexual exploitation of children; 
- Illicit trafficking in narcotic drugs and psychotropic substances; 
- Illicit arms trafficking; 
- Illicit trafficking in stolen and other goods; 
- Corruption and bribery; 
- Fraud; 
- Counterfeiting currency; 
- Counterfeiting and piracy of products; 
- Environmental crime; 
- Murder, grievous bodily injury; 
- Kidnapping, illegal restraint, and hostage-taking;   
- Robbery or theft; 
- Smuggling; 
- Extortion; 
- Forgery; 
- Piracy; and 
- Insider trading and market manipulation. 
 
 

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Designated Non-Financial Businesses and Professions 
According to FATF, the following businesses should comply with its 40 Recommendations of 2003: 
- Casinos (including Internet casinos).   
- Real estate agents. 
- Dealers in precious metals. 
- Dealers in precious stones. 
- Lawyers, notaries, other independent legal professionals and accountants. Refers to sole practitioners, 
partners and employed professionals within professional financial institutions. It 
is not meant to refer to ―internal‖ professionals who are employees of other types of businesses, or to 
professionals working for government agencies who may already be subject to measures that would combat 
money laundering. 
- Trust and company service providers. Refers to all persons or businesses that are not covered elsewhere 
under the Recommendations, and which provide any of the following services to third parties: 
- Acting as a formation agent of legal persons. 
- Acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a 
partnership, or a similar position in relation to other legal persons. 
- Providing a registered office, business address or accommodation, correspondence or administrative 
address for a company, a partnership or any other legal person or arrangement. 
- Acting as (or arranging for another person to act as) a trustee of an express trust. 
-
 
Acting as (or arranging for another person to act as) a nominee shareholder for another person. 
 
Disclosure Order 
A document that requires a person who has information relevant to an investigation to answer questions at 
an interview, to provide information, or to produce documentation. The order can be exercised not only 
against a person whose assets are under investigation, but also against a third party, such as a financial 
institution. 
Domestic Transfer 
Wire transfer in which the originator and beneficiary institutions are located in the same jurisdiction. A 
domestic transfer therefore refers to any chain of wire transfers that takes place entirely within the borders 
of a single jurisdiction, even though the system used to send the wire transfer may be located in another 
jurisdiction. 
Downstream Correspondent Clearer 
A correspondent banking client who receives correspondent banking services from one institution and 
provides correspondent banking services to other financial institutions in the same currency as the account 
it maintains with the institution. 
Dry Trust 
See Bare Trust. 
 

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E
 
Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) 
A FATF-style regional body comprising fourteen countries from the Eastern region of Africa down to the 
Southern tip of Africa. It was established in 1999. 
Egmont Group of Financial Intelligence Units 
In 1995, a number of national financial intelligence units (FIUs) began working together in an informal 
organization known as the Egmont Group, named for the site of its first meeting in the Egmont-Arenberg 
Palace in Brussels. The goal of the group is to provide a forum for FIUs to improve support to their national 
anti-money laundering programs and to develop protocols for information sharing. The FIUs‘ support 
includes expanding and systematizing the exchange of financial intelligence, improving expertise and 
capabilities of the personnel of such organizations, and fostering improved communications among FIUs 
through application of new technologies and sharing of information for financial crimes investigations. 
Electronic Banking 
A form of banking in which funds are transferred through an exchange of electronic signals among financial 
institutions rather than through an exchange of cash, checks or other negotiable instruments. 
Electronic Cash (E-Cash) 
A payment mechanism designed for the Internet, electronic cash represents a series of monetary value units 
electronically stored on the hard drive of a computer or microchip of a 
plastic card. It is anonymous like cash, and has immediate value. E-cash is attractive to money launderers 
because of its anonymity and the ease it provides in ―transporting‖ large sums quickly and easily via the 
Internet. It is also called ―e-money.‖ 
Electronic Funds Transfer (EFT) 
The movement of funds between financial institutions electronically. The two most common electronic 
funds transfer systems in the U.S. are FedWire and CHIPS. (SWIFT is often referred to as the third EFT 
system, but in reality it is an international messaging system that carries instructions for wire transfers 
between institutions, rather than the wire transfer system itself.) Other systems that facilitate funds 
movement, but are not technically EFT systems, include automated clearing houses (ACH), which are 
networks that conduct batch processing of messages for book transfers between institutions. 
 
 
 

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Electronic Money (E-Money) 
See Electronic Cash. 
Enhanced Due Diligence (EDD) 
Additional examination and cautionary measures aimed at identifying customers and confinancial 
institutioning that their activities and funds are legitimate. 
Eurasian Group on Combating Money Laundering and Terrorist Financing (EAG) 
A FATF-style regional body formed in October 2004 in Moscow. Member countries include Belarus, 
China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Turkmenistan and Uzbekistan.   
European Union (EU) 
The European Union is a family of democratic European countries. Its member states have set up common 
institutions to which they delegate part of their sovereignty so that decisions on specific matters of 
collective interest can be made democratically at the European level. 
European Union Directive on Prevention of the Use of the Financial System for the Purpose of Money 
Laundering and Terrorist Financing 
First adopted by the European Union in June 1991, the directive requires EU member states to achieve 
certain results by amending national laws, if necesSTRy, to prevent their domestic financial systems from 
being exploited for money laundering. The directive was confined to drug trafficking as defined in the 
Vienna Convention. The scope of the directive was also confined to credit and financial institutions as the 
most vulnerable to abuse by money launderers, but member states were encouraged to cover other sectors 
too that might become involved in laundering. The directive was revised in December 2001 by extending 
the money laundering offenses beyond credit and financial institutions to corporate service providers, 
casinos, lawyers and accountants. A third directive in September 2005 replaced the previous two. In line 
with the FATF money laundering recommendations, the Third EU Directive extended the scope of the 
earlier directives by: 
- Defining ―money laundering‖ and ―terrorist financing‖ as separate crimes. 
- Extending customer identification and suspicious transaction reporting obligations to trusts and company 
service providers, life insurance intermediaries and dealers selling goods for cash payments above a certain 
amount. 
-
 
Detailing a risk-based approach to customer due diligence.   
-
 
Protecting employees who report suspicions of money laundering or terrorist financing. 
- Obligating member states to keep comprehensive statistics regarding the use of and results obtained from 
suspicious transaction reports. 
- Requiring all financial institutions to identify and verify the ―beneficial owner‖ of all accounts held by 
legal entities or persons. 
 

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Europol 
European Law Enforcement Organization, which aims to improve the effectiveness and cooperation of 
competent authorities in member states in preventing and combating terrorism, unlawful drug trafficking 
and other serious forms of international organized crime. In the area of anti-money laundering, Europol 
provides European Union member states‘ law enforcement authorities with operational and analytical 
support via the ELOs (Europol Liaison Officers) and its analysts. 
Exchange Office 
See Bureau de Change. 
Exempt Account 
In some countries, a distinction is granted to certain customers of a financial institution permitting the 
institution to waive its responsibility to report certain transactions that are otherwise required. Exempt 
accounts must be documented and the financial institutions that secure the exemptions must still monitor 
their transactions. 
Express Trust 
A trust created by the settlor, usually in the form of a document such as a written deed of trust. An express 
trust contrasts with trusts that come into being through the operation of the law and do not result from the 
clear intent or decision of a settlor to create a trust or similar legal arrangements (e.g., constructive trust). 
Extradition 
The surrender by one country to another of an accused or convicted person under a bilateral agreement that 
specifies the terms of such exchanges, such as the persons subject to being exchanged and the crimes for 
which exchanges will be permitted. The 1988 Vienna Convention against Illicit Traffic in Narcotics and 
Psychotropic Substances makes money laundering an internationally extraditable offense. 
Extraterritorial Reach 
The extension of one country‘s policies and laws to the citizens and institutions of another. U.S. money 
laundering laws contain several provisions that extend its prohibitions and sanctions into other countries. 
For example, the ―extraterritorial jurisdiction‖ of the principal U.S. anti-money laundering law can apply to 
a non- U.S. citizen if the ―conduct‖ occurs ―in part‖ in the U.S. 
F
 

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Financial Action Task Force (FATF) 
FATF was chartered in 1989 by the Group of Seven industrial nations to foster the establishment of national 
and global measures to combat money laundering. It is an international policy-making body that sets anti-
money laundering standards and counter-terrorist financing measures worldwide. Its Recommendations do 
not have the force of law. In 2003, FATF revised its 40 Recommendations on Money Laundering. Among 
the organization‘s tasks is to promote the adoption and implementation of its recommendations by non-
member countries. It has also issued Special Recommendations on Terrorist Financing and develops annual 
typology reports showcasing current money laundering and terrorist financing trends and methods. 
Financial Action Task Force on Money Laundering in South America (GAFISUD - Grupo de Acción 
Financiera de Sudamérica) 
A FATF-style regional body for South America, established in 2000. Members include: Argentina, Bolivia, 
Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama, Paraguay, Peru, and Uruguay. 
Financial Action Task Force-Style Regional Body (FSRB) 
FSRBs have forms and functions similar to those of FATF. However, their efforts are targeted to specific 
regions. Examples include the Caribbean Financial Action Task Force, the Eastern and Southern African 
Anti-Money Laundering Group, and the Middle East North Africa Financial Action Task Force. 
Financial Institution 
According to the FATF‘s 40 Recommendations, a financial institution is any person or entity that conducts 
as a business one or more of the following activities or operations on behalf of customers: 
- Acceptance of deposits and other repayable funds from the public. 
- Lending. 
- Financial leasing. 
- The transfer of money or value. 
- Issuing and managing means of payment (e.g., credit and debit cards, checks, traveler‘s checks, money 
orders and bankers‘ drafts, electronic money). 
- Financial guarantees and commitments.   
- Trading in: 
 
a) money market instruments (checks, bills, CDs, derivatives etc.); 
 
b) foreign exchange; 
 
c) exchange, interest rate and index instruments;   
 
d) transferable securities and 
 
e) commodity futures trading. 
- Participation in securities issues and the provision of financial services related to such issues. 
- Individual and collective portfolio management. 
- Safekeeping and administration of cash or liquid securities on behalf of other persons. 
- Otherwise investing, administering or managing funds or money on behalf of other persons. 
- Underwriting and placement of life insurance and other investment-related insurance. 
- Money and currency changing. 
 
 

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Financial Intelligence Unit (FIU) 
A central governmental office that obtains information from financial reports, processes it and then 
discloses it to an appropriate government authority in support of a national anti- money laundering effort. 
The activities performed by an FIU include receiving, analyzing and disseminating information and, 
sometimes, investigating violations and prosecuting individuals indicated in the disclosures. 
Financial Sector Assessment Program (FSAP) 
Established in 1999 by the International Monetary Fund and the World Bank, the FSAP assesses 
jurisdictions for their financial systems‘ strengths and vulnerabilities with an aim to reducing the potential 
for crises. 
Forensic Accountant 
Specializes in analyzing financial evidence and testifying as an expert witness in cases of white-collar 
crime, including money laundering. 
Forfeiture 
The permanent loss of private property or assets as a result of legal action by a government authority. 
Generally, the owner of the property has failed to comply with the law or the property is linked to some sort 
of criminal activity. 
Freeze 
To prevent or restrict the exchange, withdrawal, liquidation, or use of assets or bank accounts by 
governmental action. As defined by FATF‘s ―Interpretative Note to Special Recommendation III: Freezing 
and Confiscating Terrorist Assets‖: To prohibit the transfer, conversion, disposition or movement of funds 
or other assets on the basis of, and for the duration of the validity of, an action initiated by a competent 
authority or a court under a freezing mechanism. The frozen funds or other assets remain the property of the 
person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the freezing 
and may continue to be administered by the financial institution or other arrangements designated by such 
person(s) or entity(ies) before initiation of the action under a freezing mechanism. 
Front Company 
A business that commingles illicit funds with revenue generated from the sale of legitimate products or 
services. Criminals use front companies to launder illicit money by giving the funds the appearance of 
legitimate origin. Organized crime has used pizza parlors to mask proceeds from heroin trafficking. Front 
companies may have access to substantial illicit funds, allowing them to subsidize front company products 
and services at levels well below market rates or even below manufacturing costs. Front companies have a 
competitive advantage over legitimate financial institutions that must borrow from financial markets, 
making it difficult for legitimate businesses to compete with front companies.   
 
 

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Futures 
Contracts that require delivery of a commodity of specified quality and quantity at a specified price on a 
specified future date. 
G
 
GAFISUD (Spanish: Grupo de Acción Financiera de Sudamérica) 
See Financial Action Task Force on Money Laundering in South America. 
Gatekeepers 
Professionals such as lawyers, notaries, accountants, investment advisors, and trust and company service 
providers who assist in transactions involving the movement of money, and are deemed to have a particular 
role in identifying, preventing and reporting money laundering. Their role is important because they can 
block or facilitate the entry of illicit money into the financial system. Some countries, such as the U.K. and 
the Cayman Islands, impose due diligence requirements on gatekeepers that are similar to those of financial 
institutions. Two critical milestones in international gatekeeper regulation have been the European Union‘s 
revised anti-money laundering directive of 2001 and the FATF 40 Recommendations of 2003, both 
containing anti-money laundering provisions for these professionals. 
Giro House 
See Remittance Services. 
Global Program against Money Laundering (GPML) 
Key instrument of the United Nations Office of Drug Control and Crime Prevention in its fight against 
organized crime. Through GPML, the UN helps member states introduce legislation against money 
laundering and helps the countries develop and maintain mechanisms that combat the crime. The program 
encourages anti-money laundering policy development, monitors and analyzes problems and responses, 
raises public awareness, and acts as a coordinator of joint anti-money laundering initiatives between the UN 
and other international organizations. 
Grantor 
Creator and fund provider of a trust, usually for the benefit of another.
 

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Group of Eight Industrialized Nations (G-8) 
Entity composed of the U.S., Japan, Germany, France, Italy, the U.K., Canada and Russia. 
Group of Eleven Industrialized Nations (G-10) 
The group is made up of the original G-7 group of industrialized nations, plus Sweden, Belgium, the 
Netherlands, and Switzerland, which was the 11th country to join in 1964. 
Although it now has 11 members, the group continues to be called the G-10. 
Group of Seven Industrialized Nations (G-7) 
Body made up of seven countries: U.S., Japan, Germany, France, Italy, the U.K. and Canada. 
Gulf Cooperation Council (GCC) 
Formed in 1981, the GCC promotes cooperation between its member states in the fields of economy and 
industry. These member states include Kuwait, Bahrain, Qatar, Saudi Arabia, Oman and the United Arab 
Emirates. The GCC is a member of FATF, although its individual members are not. 
H
 
Harmful or Preferential Tax Regimes 
The United Nations and the Organization for Economic Cooperation and Development have taken the 
controversial position that a country that has no or low tax rates to encourage foreign business development 
is engaged in ―harmful tax practices.‖ Their position is that offshore tax regimes are not maintained with the 
intent to attract real business and direct foreign investment, but to foster predatory tax policies that divert 
business from another country and encourage tax evasion.