Safe Harbor
Legal protection for financial institutions, their directors, officers and employees from criminal and civil liability for breach of any restriction on disclosing information imposed by contract or by any legislative, regulatory or administrative prohibition, if they report their suspicions in good faith to the Financial Investigation Unit (FIU), even if they did not know precisely what the underlying criminal activity was, and regardless of whether illegal activity actually occurred.
Safe Deposit Box
A secure box inside the vault of a bank that can be used to store anything of importance a customer wishes to protect, such as legal documents, jewelry, coins, wills, etc. Safe deposit boxes can also provide a useful storage place for the proceeds of crime.
To prohibit the transfer, conversion, disposition or movement of funds or other assets on the basis of an action initiated by a competent authority or a court under a freezing mechanism. However, unlike a freeze, a seizure allows the competent authority to take control of specified funds or other assets. The seized assets remain the property of the person(s) or entity(ies) that held an interest in them at the time of the seizure, although the competent authority will often take over possession, administration or management of the seized assets.
Self-Regulatory Organization (SRO)
A body that represents a profession (e.g., lawyers, notaries, other independent legal professionals or accountants), and which is made up of member professionals, has a role in regulating the persons who are qualified to enter and practice in the profession, and also performs supervisory or monitoring functions. For example, such a body would enforce rules to ensure that high ethical standards are maintained by those in the profession.
Senior Foreign Political Figure
U.S. term for foreign politically exposed persons. See Politically Exposed Persons.
Persons or companies who transfer ownership of their assets to trustees by means of a trust deed. Where the trustees have some discretion as to the investment and distribution of the trust’s assets, the deed may be accompanied by a non-legally binding letter setting out what the settlor wishes done with the assets.
Shell Bank
Bank that exists on paper only and that has no physical presence in the country where it is incorporated or licensed, and which is unaffiliated with a regulated financial services group that is subject to effective consolidated supervision. These banks are able to evade day-to-day regulation. Recommendation 13 of the FATF 40 Recommendations says that countries should not approve the establishment, and should not accept the continued operation, of shell banks. Financial institutions should refuse to enter into, or continue, correspondent banking relationships with shell banks, and should guard against establishing relations with respondent foreign financial institutions that permit their accounts to be used by shell banks.
Simple Trust
See Bare Trust.
Smart Card
Plastic card resembling traditional credit or debit cards that contains a computer chip capable of storing more information than a magnetic stripe, such as health insurance, e-cash, government identification and credit card data.
A commonly used money laundering method, smurfing involves the use of multiple individuals and/or multiple transactions for making cash deposits, buying monetary instruments or bank drafts in amounts under the reporting threshold. See Structuring.
Individuals hired by money launderers to go from financial institution to financial institution purchasing monetary instruments or depositing currency or monetary instruments in amounts under the reporting threshold.
Split Deposits
A series of deposits in which a customer splits a sum of money and makes smaller deposits into two or more accounts that add up to the original amount.
Sting Operation
Investigative tactic in which undercover officers pose as criminals, sometimes through a “front” business, to win the confidence of suspected or known criminals to gather information and to obtain evidence of criminal conduct. It is an effective means of identifying criminals, penetrating criminal organizations and identifying tainted property in money laundering and other cases.
Stored Value Card
Pre-paid payment card that stores a monetary value from which purchase amounts are deducted each time the card is used.
Illegal act of splitting cash deposits or withdrawals into smaller amounts, or purchasing monetary instruments, to stay under a currency reporting threshold. The practice might involve dividing a sum of money into lesser quantities and making two or more deposits or withdrawals that add up to the original amount. Money launderers use structuring to avoid triggering a filing by a financial institution. The technique is common in jurisdictions that have compulsory currency reporting requirements. See Smurfing.
Compulsory legal process issued by a court to compel the appearance of a witness at a judicial proceeding, sometimes requiring the witness to bring specified documents.
Suspicious Activity
Irregular or questionable customer behavior or activity that may be related to a money laundering or other criminal offense, or to the financing of a terrorist activity. May also refer to a transaction that is inconsistent with a customer’s known legitimate business, personal activities, or the normal level of activity for that kind of business or account.
Suspicious Activity Report (SAR)
See Suspicious Transaction Report.
Suspicious Transaction Report (STR)
A government form that includes a financial institution’s account of a questionable transaction. Many jurisdictions require financial institutions to report suspicious transactions to relevant government authorities on a suspicious transaction report, also known as a suspicious activity report or SAR.