Glossary
Key terms and definitions used across compliance, due diligence, and investigative screening.
A
Adverse Media
Negative news or public information about an individual or entity, often related to criminal activity, regulatory violations or unethical behaviour.
Adverse Media Screening
The process of screening for negative news and media coverage related to individuals or organizations to assess potential risks.
Anti - Corruption Compliance Program
A framework of policies, procedures, training, and controls established to ensure compliance with anti-corruption laws and regulations.
Anti Bribery and Corruption
Laws, policies, and controls designed to prevent, detect, and address bribery and corrupt practices within an organization.
Anti-Money Laundering (AML)
AML refers to practices and regulations that prevent illegal activities like money laundering, typically involving transaction monitoring.
Asset Recovery
The process of identifying, tracing, freezing, and recovering assets obtained through illegal or fraudulent activities.
Asset Tracing
The process of tracking down the location, ownership, or movement of assets that may be hidden, transferred, or concealed, often during investigations or legal disputes.
B
Background Check
A background check reviews a person’s criminal, financial, and employment history to ensure informed decision-making when hiring or partnering.
Bank Secrecy Act (BSA)
A U.S. law requiring financial institutions to assist in detecting and preventing money laundering and other financial crimes.
Bearer Shares
Shares that grant ownership to the person holding the physical share certificate, without the owner's name being recorded.
Beneficial Ownership
Refers to the individuals who ultimately own or control a company, even if the ownership is held through other people or legal entities
Bribery and Corruption
The offering, giving, receiving, or soliciting of something of value to improperly influence decisions or actions.
C
Competitive Intelligence
The ethical collection and analysis of information about competitors, markets, and industry trends to support business decisions.
Compliance Audit
An independent review conducted to assess whether an organization is following applicable laws, regulations, policies, and procedures.
Compliance Risk
The risk of legal or regulatory penalties, financial loss, or reputation damage that a company may face if it fails to follow laws, regulations, or internal policies.
Confidentiality
The obligation to protect sensitive information from being disclosed to unauthorized parties.
Conflict of Interest
A situation where an individual or organization has competing interests or loyalties that could improperly influence decisions or actions.
Conflict Resolution
Conflict resolution involves resolving disputes between parties in a fair and peaceful manner to maintain positive relationships.
Corporate Espionage
The unlawful acquisition of confidential business information for competitive advantage.
Corporate Fraud
Intentional deception or misconduct carried out to gain an unfair or unlawful business or financial benefit.
Corporate Governance
Corporate governance is the system of rules and practices that ensure accountability, transparency, and fairness in a company’s operations.
Corporate Intelligence
The process of gathering and analysing information about companies, industries, and business risks to support strategic decision-making.
Corporate Investigations
Internal or external inquiries into allegations of misconduct, fraud, corruption, or other corporate wrongdoing.
Country Risk Rating
An assessment of the political, economic, regulatory, and financial risks associated with conducting business in a particular country.
Covert Investigation
A discreet inquiry conducted without the subject's knowledge to gather information or evidence.
Cross Border Investigation
An investigation involving activities, individuals, transactions, or organizations operating across multiple countries.
Cross-Border Compliance
Adhering to legal and regulatory requirements when operating across multiple countries or regions.
Customer Due Diligence
The process of verifying a customer's identity and assessing potential risks before establishing or maintaining a business relationship.
Cybersecurity Risk
The potential for financial, operational, legal, or reputation harm resulting from cyber threats, unauthorized access, data breaches, or disruptions to information systems and digital assets.
D
Data Security
The protection of digital information from unauthorized access, breaches, or theft.
Denied Party Screening
The process of screening individuals, organizations, and entities against government sanctions, watchlists, and restricted party lists to ensure compliance with trade regulations.
Discreet Inquiries
Quiet, confidential checks on a person or company, often to gather background information without alerting the subject.
DPDP (Digital Personal Data Protection Act)
An Indian law that governs how personal data is collected, stored, and used. It aims to protect individuals’ digital privacy while allowing organizations to process data responsibly and transparently.
Due Diligence
A structured process of evaluating a person, company, or deal to assess risk, verify information, and make informed decisions.
E
Employee Misconduct Investigation
An inquiry conducted to examine allegations of unethical, inappropriate, or policy-violating behaviour by an employee.
Enhanced Due Diligence
A higher level of due diligence performed on high-risk customers, transactions, or business relationships to better assess and mitigate risks.
Escrow Agreement
A legal arrangement where funds or assets are held by a third party until specific conditions are met.
Export Control Compliance
The process of adhering to laws and regulations governing the export, transfer, and sharing of goods, technology, software, and services across borders.
F
FATF (Financial Action Task Force)
An international organization that develops standards and promotes measures to combat money laundering, terrorist financing, and other related threats.
FCPA (Foreign Corrupt Practices Act)
A U.S. law that prohibits bribery of foreign officials and requires companies to maintain accurate books, records, and internal controls.
Financial Crime
Illegal activities involving financial transactions, including money laundering, fraud, bribery, corruption, terrorist financing, and sanctions violations.
Financial Due Diligence
Financial due diligence examines a company’s financial health, including debts and revenue, to ensure it’s a reliable partner or investment.
Forensic Accounting
Forensic accounting investigates financial discrepancies, fraud, or misconduct to uncover hidden risks and support legal matters.
Fraud Investigation
An examination to uncover evidence of deception intended to result in financial or personal gain.
Fraud Risk Assessment
The process of identifying, analysing, and evaluating an organization's exposure to potential fraud risks and vulnerabilities.
Fraud Triangle
A model that explains the three factors commonly associated with fraud: pressure, opportunity, and rationalization.
Front Company
A business that appears legitimate but is established to conceal illicit activities, ownership, or sources of funds.
G
Ghost Employee
A fictitious or former employee who remains on payroll records, allowing fraudulent salary or benefit payments to be made.
Global Sanctions
International restrictions imposed by governments or bodies to limit trade or financial activity with specific individuals, entities, or countries.
H
Hidden Asset Discovery
The process of uncovering assets that have been intentionally concealed, often during legal proceedings or debt recovery efforts.
Human Rights Due Diligence
The process of identifying, assessing, preventing, and addressing actual or potential human rights impacts associated with an organization’s operations, products, or business relationships.
I
Identity Verification
The process of confirming that an individual or entity is who they claim to be through the validation of identity information and supporting documents.
Indemnification Clause
A contract term where one party agrees to compensate the other for certain losses or damages.
Insider Trading
The buying or selling of securities based on material, non-public information in violation of applicable laws and regulations.
Integrity Due Diligence
A deeper review of individuals or companies to uncover hidden risks, such as past misconduct, unethical behaviour, or reputation concerns.
Integrity Vetting
The assessment of an individual’s or organization’s background, reputation, and conduct to identify potential ethical, legal, or compliance risks.
Investigative Due Diligence
An in-depth review conducted to uncover hidden risks, adverse information, potential misconduct, or reputation concerns related to individuals or entities.
K
Kickback Scheme
A fraudulent arrangement in which a person receives money, gifts, or other benefits in exchange for influencing a business decision or awarding a contract.
Know Your Customer (KYC)
KYC is the process of verifying the identity of clients to meet legal requirements and prevent financial crime.
L
Legal Entity Identifier (LEI)
A unique 20-character alphanumeric code used to identify legally distinct entities participating in financial transactions.
Litigation History
A record of past or ongoing lawsuits involving a person or company, which may reveal patterns of legal risk.
Litigation Risk
The potential for financial, operational, or reputation impact arising from existing, pending, or potential legal disputes and proceedings.
M
M&A Due Diligence (Mergers and Acquisitions)
A comprehensive review conducted before a merger or acquisition to assess financial, legal, operational, compliance, and reputation risks.
MAC Clause (Material Adverse Change)
A contract clause allowing one party to withdraw or renegotiate a deal if a significant negative change occurs in the other party’s situation
Modern Slavery Act Compliance
The process of ensuring compliance with laws designed to prevent forced labour, human trafficking, and other forms of modern slavery within operations and supply chains.
Money Laundering
The process of concealing the origins of illegally obtained funds by making them appear to come from legitimate sources.
N
Network of Trusted Associates
A vetted group of professional partners or experts who can support sensitive investigations, verifications, or intelligence gathering.
Nominee Director
An agreement where a person is listed as a company director on behalf of another, often used to conceal the identity of the real controller.
Nominee Shareholder
An individual or entity that holds shares on behalf of the actual beneficial owner while acting according to the owner's instructions.
Non-Disclosure Agreement
A legal contract that requires parties to keep certain information confidential and not share it with others.
O
OFAC (Office of Foreign Assets Control)
A U.S. government agency responsible for administering and enforcing economic and trade sanctions against targeted countries, entities, and individuals.
Off Balance Sheet Entity
A legal entity whose assets, liabilities, or activities are not fully reflected on a company's balance sheet, often used for specific financial or operational purposes.
OSINT (Open-Source Intelligence)
The collection and analysis of publicly available information from sources such as websites, media, databases, and social networks to support investigations and risk assessments.
P
PEP (Politically Exposed Person)
The risk associated with individuals in prominent public positions who may be more vulnerable to corruption or influence.
Political Risk Assessment
The evaluation of potential political, regulatory, economic, or social factors that may affect business operations or investments in a particular country or region.
Pre-Employment Screening
The process of verifying a job candidate's background, qualifications, employment history, and other relevant information before hiring.
Professional Credentials
Qualifications, certifications, or licenses that verify a person's expertise or professional standing.
R
Red Flag Indicators
Warning signs or risk signals that may suggest potential fraud, misconduct, compliance violations, or other areas requiring further investigation.
Regulatory Compliance
Ensuring that a business follows all relevant laws, regulations, and standards in the regions where it operates.
Regulatory Risk
The potential for a business to face legal or financial consequences due to non-compliance with industry regulations.
Regulatory Threshold
The point at which a certain activity triggers legal or compliance obligations, such as financial reporting or disclosure.
Related Party Transaction
A business transaction between a company and a person or entity that has a close relationship with the company, such as directors, executives, shareholders, or affiliated organizations.
Reputation Due Diligence
The process of assessing an individual's or organization's reputation to identify potential legal, ethical, financial, or compliance concerns.
Reputation Laundering
The practice of improving or concealing a damaged reputation through misleading actions, associations, or public relations efforts.
Reputation Risk
The potential for loss or harm to a company’s reputation due to negative public opinion, customer dissatisfaction, or adverse events, which can impact trust, brand value, and business performance.
Risk and Compliance
The combined practice of identifying, assessing, managing, and monitoring risks while ensuring adherence to applicable laws, regulations, and internal policies.
Risk Assessment
Risk assessment identifies and evaluates potential risks to a business, helping to manage or reduce them proactively.
Risk Management Framework
A structured approach used to identify, assess, mitigate, monitor, and report risks across an organization.
Risk Mitigation
The process of identifying, evaluating, and taking steps to reduce or manage potential risks to minimize their impact on a business or project.
S
Sanction Screening
A process to check if individuals or businesses are listed on global sanctions lists, ensuring compliance with international regulations.
Sanctions Evasion
Attempts to bypass or avoid international sanctions through deceptive practices, hidden transactions, or front companies.
Senior Professional Screening
Background evaluations of high-level executives or board members to assess integrity, reputation, and risks.
Shadow Banking
Financial activities carried out by non-bank entities that fall outside traditional regulatory frameworks, potentially increasing risk and opacity.
Shell Company
A company with little or no active business operations, often used to hold assets, facilitate transactions, or conceal ownership.
Simplified Due Diligence (SDD)
A reduced level of customer due diligence applied when the risk of financial crime is assessed as low.
Skip Tracing
The process of locating the whereabouts or contact details of an individual who is difficult to find.
Source of Funds
Information that explains the origin of funds used in a specific transaction or business relationship.
Source of Wealth
Information that explains how an individual or entity accumulated their overall wealth and financial assets.
Sovereign Risk
The risk that a government may be unable or unwilling to meet its financial obligations or may take actions that adversely affect investments and business operations.
Supply Chain Risk Management
The process of identifying, assessing, and mitigating risks that may disrupt the flow of goods, services, or information across a supply chain.
Surveillance Investigation
The systematic observation and monitoring of individuals, locations, or activities to gather information or evidence.
Suspicious Activity Report (SAR)
A report filed with relevant authorities to disclose transactions or activities that may indicate money laundering, fraud, or other financial crimes.
T
Third Party Due Diligence Questionnaire
A structured set of questions used to assess the compliance, integrity, and risk profile of third parties before or during a business relationship.
Third-Party Risk Management
The practice of assessing and managing the risks that come from working with third-party partners or vendors.
TPRM Framework
A structured process to identify, assess, and manage risks from third-party vendors, ensuring they meet compliance, security, and performance standards.
Trade Based Money Laundering
A method of money laundering that uses trade transactions, such as the over- or under-invoicing of goods and services, to disguise illicit funds.
Trade Secret Theft
The unauthorized acquisition, disclosure, or use of confidential business information that provides a competitive advantage.
Transaction Monitoring
Transaction monitoring tracks financial transactions in real-time to detect suspicious activity and prevent fraud.
U
Ultimate Beneficial Owner
The individual who ultimately owns or controls a company, regardless of how many layers of ownership are in place.
V
Vendor Due Diligence
The process of evaluating a vendor's background, capabilities, compliance practices, and risk profile before entering or maintaining a business relationship.
Vendor Risk Assessment
The evaluation of risks associated with a vendor, including operational, financial, cybersecurity, compliance, and reputation risks.
W
Watchlist Screening
The process of checking individuals and entities against sanctions lists, regulatory watchlists, politically exposed persons (PEP) databases, and other risk-related lists.
Whistle-blower Fraud
Fraud uncovered or reported by an insider, often an employee or associate, who exposes wrongdoing within an organization.
Whistleblower Policy
A policy that establishes procedures for reporting suspected misconduct and protects individuals who report concerns from retaliation.
White-collar Crime
Non-violent, financially motivated crimes typically committed by business professionals or officials.