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. See www.cfatf.org.
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 firms, 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.
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.
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 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:
  • Corporations:
    • Private limited companies and public limited companies whose shares are not traded on a stock exchange.
    • International business companies/exempt companies.
  • Trusts.
  • Foundations.
  • 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 has several recommendations that deal with customer due diligence on corporate vehicles and the transparency and beneficial ownership of legal persons and arrangements.
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.
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.
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.
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.