Glossary

A glossary of 79 sanctions, export control, trade and financial crime terms, each defined in plain English and cross-referenced to the techniques that use it.

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Asset freeze: The prohibition on dealing with funds or economic resources owned, held or controlled by a designated person, and on making funds available to them.
Attestation: A signed statement by a party in a transaction confirming a fact that the recipient cannot itself observe, relied on as the basis for providing a service.
Automatic Identification System: A mandatory maritime transponder system that broadcasts a vessel's identity, position, course and speed to nearby vessels and shore stations. Also: AIS.
Beneficial owner: The natural person who ultimately owns or controls an entity, or on whose behalf a transaction is conducted, regardless of whose name appears on the register. Also: ultimate beneficial owner; UBO.
Bill of lading: A document issued by a carrier acknowledging receipt of cargo, stating its terms of carriage, and in negotiable form serving as a document of title to the goods. Also: B/L.
Blockchain analytics: The practice of clustering addresses and attributing them to real-world services or actors, using on-chain patterns and off-chain information.
Blocked property: Property in which a designated person has an interest, which has come within the jurisdiction and must be frozen, reported and held in a blocked account.
Blocking: Freezing property and interests in property of a designated person that come within a jurisdiction, so it cannot be transferred, paid, withdrawn or otherwise dealt in. Also: freezing.
Certificate of origin: A document certifying the country in which goods were produced, used to determine tariff treatment and whether origin-based restrictions apply.
Chain hopping: Moving value rapidly between different blockchains, usually through bridges or swap services, to interrupt tracing that works within a single chain. Also: cross-chain hopping; bridging.
Common High Priority List: A list of Harmonised System codes covering items assessed as most critical to a restricted military programme, published jointly by export control authorities. Also: CHPL; common high priority items list.
Corporate services provider: A firm that incorporates and administers companies for clients, supplying registered offices, directors, shareholders and company secretarial services. Also: TCSP; trust and company service provider.
Correspondent banking: An arrangement in which one bank holds an account for another and provides payment and other services on its behalf, usually to give it access to a foreign currency. Also: correspondent account; nostro/vostro.
Customer due diligence: The ongoing process of understanding a customer's identity, ownership, expected activity and risk, and checking that actual activity remains consistent with it. Also: CDD.
De minimis rule: The principle that a foreign-made item becomes subject to US export controls when more than a threshold percentage of its value is US-origin controlled content.
Deemed export: The release of controlled technology or source code to a foreign national inside the exporting country, treated in law as an export to that person's home country.
Designation: The formal act of adding a person, entity, vessel or aircraft to a sanctions list, which triggers the restrictions attached to that programme. Also: listing.
Designations feed: A rolling, machine-readable record of additions to and removals from sanctions lists, published by the issuing authority and republished by aggregators.
Dual-use goods: Items with legitimate civil applications that can also contribute to military or weapons programmes, and which are therefore export-controlled. Also: dual-use items.
End-user certificate: A document in which the stated recipient of a controlled item certifies who will use it, where, and for what purpose, relied on by exporters and licensing authorities. Also: EUC; end-use statement.
Enhanced due diligence: Additional scrutiny applied where risk is assessed as higher, including deeper enquiry into source of funds, ownership and the purpose of specific transactions. Also: EDD.
Entity List: A US Bureau of Industry and Security list of parties subject to specific export licence requirements because of activity contrary to national security or foreign policy interests.
Export control: A licensing regime that restricts the export, re-export or transfer of specified goods, software and technology by reference to the item, the destination and the end use.
Facilitation: Approving, financing, guaranteeing, brokering or otherwise assisting a transaction by a foreign person that the assisting party could not lawfully perform itself.
Financial intelligence unit: The national agency that receives suspicious activity reports, analyses them, and disseminates intelligence to law enforcement and to counterpart units abroad. Also: FIU.
Flag of convenience: Registration of a ship in a state with which its owners have no genuine connection, chosen for cost, tax or regulatory reasons. Also: FOC.
Flag state: The country in which a ship is registered, whose law governs the vessel and which is responsible for inspecting and certifying it.
Foreign direct product rule: A rule making a foreign-made item subject to US export controls because it is the direct product of US-origin technology, software or production equipment. Also: FDPR.
Free trade zone: A designated area where goods may be landed, stored, handled and re-exported without the customs formalities that would apply in the domestic territory. Also: FTZ; free zone; bonded warehouse.
Freight forwarder: An intermediary that arranges carriage on behalf of shippers, books space, prepares documentation and may consolidate cargo from several customers.
Front company: A company that carries on some real business but exists substantially to conceal the involvement of another party in its transactions.
Fuzzy matching: Name-matching that tolerates spelling, transliteration and word-order variation, scoring similarity rather than requiring an exact match.
General licence: A published authorisation permitting a defined category of otherwise prohibited transactions, available to anyone who meets its terms without applying. Also: GL.
Hawala: A value transfer arrangement in which brokers in different countries pay out to each other's customers and settle the resulting obligations between themselves later. Also: hundi; informal value transfer.
HS code: A six-digit commodity code from the World Customs Organization Harmonised System, extended nationally, that determines the tariff and the controls applied to goods. Also: Harmonised System code; tariff code; commodity code.
IMO number: A seven-digit identifier assigned to a ship's hull for life by the International Maritime Organization, which does not change with name, owner or flag.
Incoterms: Standard trade terms published by the International Chamber of Commerce that allocate cost, risk and responsibility for delivery between buyer and seller.
Informal value transfer system: Any arrangement that transfers value between parties without moving funds through the regulated banking system, settling obligations by netting or in kind. Also: IVTS.
Know your customer: The obligation on a regulated firm to identify its customer, verify that identity, and understand the purpose of the relationship before providing services. Also: KYC.
Layering: Inserting successive intermediate parties, transactions or jurisdictions between an asset and its owner so that the connection cannot be established from any single record.
Letter of credit: A bank undertaking to pay a seller against presentation of specified documents, substituting the bank's credit for the buyer's. Also: documentary credit; LC.
Mirror statistics: Comparing what one country reports exporting to a partner with what the partner reports importing from it, treating persistent gaps as evidence of misreporting. Also: mirror trade analysis; partner-country data comparison.
Mixer: A service that pools virtual currency from many users and redistributes it, so that outputs cannot be readily linked to the inputs that funded them. Also: tumbler; mixing service.
Nested account: The use of a bank's correspondent account by that bank's own respondent institutions, giving unnamed third banks indirect access to the correspondent. Also: downstream correspondent clearing.
Nominee director: A person who is formally appointed to a company board but who acts on the instructions of an undisclosed party rather than exercising independent judgement. Also: nominee shareholder; straw director.
Open registry: A ship registry that accepts vessels owned by foreign nationals without requiring a national ownership or crewing link.
Over-invoicing: Stating a price above the true value of goods on an invoice, so that the importer transfers more value to the exporter than the trade justifies.
Panel of Experts: A group of specialists appointed by the UN Security Council to monitor a sanctions regime and report publicly on violations and evasion methods. Also: UN Panel of Experts; PoE.
Phantom shipment: A trade transaction documented and paid for in full where no goods, or substantially fewer goods, were ever shipped. Also: fictitious trade; ghost shipment.
Price cap: A measure permitting specified services for seaborne oil only where the cargo was bought at or below a stated price, enforced through the service providers rather than at the border.
Professional enabler: A lawyer, accountant, formation agent, broker or similar professional whose services are essential to concealing ownership or moving restricted value.
Proliferation financing: The provision of funds or financial services used for the manufacture, acquisition or transfer of weapons of mass destruction or their delivery systems, contrary to international obligations. Also: PF.
Protection and indemnity club: A mutual association of shipowners that provides third-party liability cover, including for pollution, which ports and states generally require before a vessel may trade. Also: P&I club; P and I.
Re-export: The onward shipment of a controlled item from the country that first received it to a third country, which may itself require a licence from the original exporting state.
Red-flag indicator: A published, attributable observation that a transaction or relationship warrants further enquiry, drawn from patterns seen in past cases. Also: red flag; risk indicator.
Respondent bank: The bank that holds an account with a correspondent and relies on it to make payments or provide services in a currency or market it cannot reach directly.
Sanctions: Restrictions imposed by a state or international body on dealings with a named person, entity, sector or country, enforced against anyone within that authority's jurisdiction.
Screening: Automated comparison of names, identifiers and other transaction data against sanctions lists and internal watchlists, at onboarding and on each payment.
Secondary sanctions: Measures that threaten non-US persons with loss of access to the US market or financial system if they engage in specified dealings with sanctioned parties.
Secrecy jurisdiction: A jurisdiction whose company, banking or trust law limits the information available about ownership and control to foreign authorities and counterparties. Also: offshore financial centre.
Sectoral sanctions: Restrictions on particular types of dealing with named entities in a defined economic sector, rather than a full block on all dealings with them.
Shadow fleet: A loosely defined group of ageing tankers with opaque ownership and insurance that carry sanctioned or price-capped cargo outside mainstream shipping arrangements. Also: dark fleet; parallel fleet.
Shell company: A registered company with no significant operations, assets or employees, used to hold assets or to sit in a chain of ownership.
Ship-to-ship transfer: Transferring cargo directly between two vessels at sea or at anchorage rather than through a port terminal. Also: STS transfer; lightering.
Specially Designated Nationals and Blocked Persons List: The principal United States sanctions list. Property of anyone on it is blocked and US persons are generally prohibited from dealing with them. Also: SDN List; SDN.
Specific licence: A written authorisation issued to a named applicant permitting a particular transaction that would otherwise be prohibited.
Stablecoin: A virtual asset designed to hold a steady value against a reference such as a national currency, usually by holding reserves or by algorithmic mechanism.
Suspicious activity report: A confidential report filed by a regulated firm with its national financial intelligence unit when it knows or suspects that activity may involve criminal proceeds or sanctioned parties. Also: SAR; STR; suspicious transaction report.
SWIFT: A member-owned cooperative operating the messaging network banks use to exchange standardised payment and securities instructions internationally.
The 50 percent rule: OFAC guidance that any entity owned fifty per cent or more, directly or indirectly, by one or more blocked persons is itself blocked, whether or not it is named. Also: 50% rule; the fifty per cent rule.
Trade misinvoicing: Deliberately misstating the price, quantity or description of goods on trade documents so that the value recorded differs from the value actually exchanged. Also: misinvoicing.
Trade-based money laundering: Moving value by misrepresenting the price, quantity or quality of goods in international trade, so that the transfer appears as ordinary commerce. Also: TBML.
Transshipment: Unloading goods from one conveyance and reloading them onto another en route, so that the shipment reaches its destination through an intermediate country.
Typology: A published study describing how a category of illicit activity is actually carried out, built from case material contributed by member jurisdictions.
Under-invoicing: Stating a price below the true value of goods, so that value is retained abroad or duty and export restrictions are reduced.
Virtual asset service provider: A business that exchanges, transfers, safekeeps or administers virtual assets for others, and which FATF expects to be licensed and supervised like other financial institutions. Also: VASP.
Wilful blindness: Deliberately avoiding knowledge of a fact that would create liability, treated in enforcement practice as equivalent to knowing it. Also: red flag knowledge; deliberate ignorance.
Wire stripping: Removing or altering originator, beneficiary or reference information from a payment message so that screening at an intermediary bank does not identify a restricted party. Also: payment stripping; message stripping.
Zombie registry: A ship registry that continues to issue documentation in a state's name after that state has withdrawn authorisation, or that never had it. Also: false flag; fraudulent registry.