Glossary
Plain definitions of the terms compliance teams at payment service providers and e-money institutions use every day. Each entry starts with a one- or two-sentence definition, then explains why the term matters, what the law says (with exact article references), and — where it applies — what ProofVolt does.
Checked against the official texts on .
Due diligence
- KYB (Know Your Business)Customer due diligence for a business customer: the entity, the people acting for it and its beneficial owners.
- KYC (Know Your Customer)Identifying a customer and verifying that identity; in EU law, customer due diligence.
- Customer due diligence (CDD)The measures an obliged entity must apply to know its customer (AMLR Art. 20).
- Enhanced due diligence (EDD)The extra scrutiny required when risk is higher (AMLR Art. 34).
- Simplified due diligence (SDD)Reduced measures where risk is demonstrably low (AMLR Art. 33).
- Risk-based approach (RBA)Controls in proportion to assessed risk.
- Ongoing monitoringKeeping the relationship and the customer file under review (AMLR Art. 26).
Ownership and control
People and risk signals
- Politically exposed person (PEP)A person entrusted with a prominent public function.
- Relatives and close associates (RCA)A PEP's family members and close associates.
- Sanctions screeningChecks against targeted financial sanctions, including the 50 % test.
- Adverse mediaCredible public reporting relevant to ML/TF risk.
- Source of fundsWhere the money in the relationship comes from.
- Source of wealthHow the customer's total wealth was built.
- High-risk third countriesNon-EU jurisdictions listed for strategic AML/CFT deficiencies.
Reporting and governance
- MLROThe officer who runs AML controls and reports suspicions; the AMLR's "compliance officer".
- Suspicious activity report (SAR/STR)The report to the financial intelligence unit (AMLR Art. 69).
- Tipping-offThe prohibition on disclosing a report or analysis (AMLR Art. 73).
- Four-eyes principleA second authorised approval before a decision takes effect.
The rulebook
- AMLRRegulation (EU) 2024/1624, the EU AML single rulebook, applicable from 10 July 2027.
- AMLAThe EU Anti-Money Laundering Authority, Regulation (EU) 2024/1620.
- AMLD6Directive (EU) 2024/1640 on registers, FIUs and supervision (not the 2018 "6AMLD").
- EU AI Act (for compliance tools)Regulation (EU) 2024/1689, as amended in 2026.
Guides
Informational only, not legal advice.