Risk and compliance glossary
Plain-language definitions of AML/CFT, sanctions screening, KYC, STR, goAML and enterprise risk management terms as used by institutions in Zambia.
- AML (anti-money laundering)
- AML is the set of laws, controls and procedures that stop criminals from disguising illegally obtained money as legitimate funds.
- Beneficial ownership
- Beneficial ownership means the natural person who ultimately owns or controls a customer or on whose behalf a transaction is conducted.
- CDD (customer due diligence)
- CDD is the set of identification, verification and risk-assessment steps an institution must complete for every customer under AML rules.
- CFT (combating the financing of terrorism)
- CFT covers the controls that detect and block funds intended to support terrorism, even when the money itself comes from legal sources.
- CTR (currency transaction report)
- A CTR is a routine report of cash transactions at or above a prescribed amount, filed with the FIC whether or not anything looks suspicious.
- EDD (enhanced due diligence)
- EDD is the deeper set of checks applied to higher-risk customers, such as PEPs, to understand the source of their wealth and funds.
- False positive (screening)
- A false positive is a screening hit where a customer or payment matches a watchlist entry by name but is not actually the listed person or entity.
- FIC (Financial Intelligence Centre)
- The FIC is Zambia's financial intelligence unit, which receives, analyses and disseminates suspicious and cash transaction reports from institutions.
- goAML
- goAML is the UNODC-developed software financial intelligence units use to receive STRs and CTRs from reporting institutions.
- Inherent risk
- Inherent risk is the level of risk that exists before any controls are applied, assessed from its likelihood and its potential impact.
- KRI (key risk indicator)
- A KRI is a measurable metric with a threshold that gives early warning that a particular risk is increasing or a control is weakening.
- KYC (know your customer)
- KYC is the process of verifying who a customer is and understanding their business before and during a relationship with them.
- Maker-checker (four-eyes principle)
- Maker-checker is a control where one person prepares an action and a different, authorised person must review and approve it before it takes effect.
- PEP (politically exposed person)
- A PEP is a person who holds or has held a prominent public function, whose position creates a higher risk of involvement in bribery or corruption.
- RCSA (risk and control self-assessment)
- RCSA is a structured exercise in which business units identify their own risks, rate the controls that manage them, and record the evidence.
- Residual risk
- Residual risk is the level of risk that remains after the existing controls have been applied and their effectiveness taken into account.
- Risk appetite
- Risk appetite is the amount and type of risk an organisation is willing to accept in pursuit of its objectives, as set by its board.
- Sanctions screening
- Sanctions screening is checking customers, counterparties and payments against official lists of sanctioned people, entities, vessels and countries.
- STR (suspicious transaction report)
- An STR is the report an institution files with the Financial Intelligence Centre when it suspects a transaction or activity is linked to crime.
- Three lines of defence
- The three lines of defence is a governance model that separates risk-taking business units, risk and compliance oversight, and independent internal audit.
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