Speak the Language of Compliance…
Not sure what a UBO is or when to apply EDD? Our easy-to-use glossary breaks down key AML and KYC terms in plain English. Whether you’re new to compliance or just need a refresher, this page is here to help you and your team feel more confident navigating your obligations.
- Clear definitions.
- Practical examples.
- Flex Tips throughout.
Because understanding the terminology is the first step to getting compliance right.
AML (Anti-Money Laundering)
The set of laws, regulations, and procedures aimed at preventing criminals from disguising illegally obtained money as legitimate income.
Money Laundering
The process of making “dirty” money (from criminal activity) appear “clean” by passing it through legitimate businesses or transaction
Customer Due Diligence (CDD)
The process of verifying your customer’s identity and understanding the nature of the business relationship before working with them.
Enhanced Due Diligence (EDD)
Stronger checks carried out for higher-risk customers,such as politically exposed persons or clients from high-risk jurisdictions.
Risk Assessment
A document or process that helps a business identify how vulnerable it is to money laundering and what controls are in place to reduce the risk.
Suspicious Activity Report (SAR)
A report submitted to the UK’s National Crime Agency (NCA) when you spot suspicious behaviour that could be linked to money laundering or criminal activity.
Beneficial Owner
The person who ultimately owns or controls a business or asset, even if they’re not listed as the legal owner.
HMRC Supervision
His Majesty’s Revenue and Customs (HMRC) is the AML supervisor for businesses such as estate agents, accountants, and office providers.
AML Policy
A written document that outlines your business’s approach to preventing money laundering, including processes, roles, and responsibilities.
PEP (Politically Exposed Person)
Someone in a high-profile political role (or closely linked to one) who may present a higher risk due to potential exposure to corruption or bribery.
Red Flag
A warning sign that might indicate suspicious or unusual behaviour, such as clients avoiding ID checks or transactions that don’t match their profile.
Proliferation Financing
The funding of the spread of weapons of mass destruction. Covered under UK AML regulations alongside money laundering and terrorist financing.
Ongoing Monitoring
Continuing to check that your clients’ activity and risk level stays consistent with what you expected at onboarding.
PSC (Person with Significant Control)
An individual who owns or controls more than 25% of a company or has significant influence over its decisions. This person must be reported to Companies House.
MLRO (Money Laundering Reporting Officer)
The person in your business responsible for receiving internal reports of suspicious activity and deciding whether to report to the NCA.
UBO (Ultimate Beneficial Owner)
A the person who ultimately owns or controls a company or other legal entity, even if they’re not listed as a director or shareholder on public records.
They are the real individual(s) behind a business, who reap the benefits of ownership or have significant influence over decisions.
KYC (Know Your Customer)
A process required by law to verify the identity of your customers and assess the risks associated with doing business with them. It’s a key part of AML compliance.
💡 Flex Tip:
Keeping a glossary handy helps you build a culture of compliance and makes onboarding or training new staff much easier. Feel free to adapt this list to suit your team!
Flex AML 