Compliance glossary: key words to know

Understanding the Language of Compliance: Keys to Comprehension

The Role of Compliance :

Compliance plays a crucial role in ensuring compliance with legal and regulatory standards, especially in the banking and financial sector. It encompasses a wide range of responsibilities, such as protecting customers' personal data, preventing money laundering and combating the financing of terrorism. Compliance aims to enhance the transparency of financial institutions and mitigate various risks. In the event of non-compliance, regulators can impose severe sanctions on the offending entity.

Financial Crime:

In the world of finance, some individuals or groups choose illegal avenues to accumulate quick gains without apparent risk. Activities such as fraud, money laundering and corruption are typical means used in these cases. The individuals involved in these acts are often referred to as "white-collar criminals". Compliance and regulatory departments play a key role in the fight against this form of crime, working daily to counter these illicit practices.

 

 

 

A

 

Accountability - GDPR

Obligation to be able to demonstrate compliance with personal data regulations at all times. To meet this obligation, the organization must implement internal mechanisms and procedures.

ACP - Prudential Control Authority (ACP)

ACP: Autorité de Contrôle Prudentiel, the French banking and insurance supervisory body, created in 2010 following the merger of the licensing and supervisory authorities for the banking and insurance sectors.

ACPR

Autorité de Contrôle Prudentiel et de Résolution. French regulator responsible for issuing approvals for banks, insurers, mutual insurers, investment service providers, etc...

AFA

The new French Anti-Corruption Agency (AFA) was created by Law n°2016-1691 of December 9, 2016 on transparency, the fight against corruption and the modernization of economic life (known as the "Sapin2 Law")

AML-TF

Anti Money Laundering & Fight against Terrorism Financing. LCBFT stands for Lutte Contre le Blanchiment de capitaux et le Financement du Terrorisme.

Anacredit

AnaCredit stands for analytical credit datasets. Regulation (EU) 2016/867 of the European Central Bank of May 18, 2016 on the collection of granular credit and credit risk data.

 

B

 

Bad will or Bad will

Badwill corresponds to negative goodwill. Badwill is therefore the negative difference between the price paid for a company and its revalued net book value. It is the opposite of goodwill. It is used to describe the value of an asset which is less than its adjusted net book value.

Beneficial owner

The Ultimate Beneficial Owner (UBO) is the natural person who controls, directly or indirectly, the customer or the natural person for whom a transaction is executed or an activity carried out (article L. 561-2-2 of the French Monetary and Financial Code).

Money laundering

Money laundering is the reprocessing of criminal proceeds to disguise their illegal origin.

 

C

 

Risk mapping

Visual representation of the risks associated with a facility and its activities.

Compliance

For a company, compliance means complying with the regulations and standards (professional and ethical) in force. Fraud, conflicts of interest, corruption, etc. are all grounds for non-compliance, which can lead to legal, administrative or disciplinary sanctions by the authorities (ACP and AMF in France, for example).

Compliance

Compliance means respecting directives or legislative and regulatory provisions.

Corruption

Active bribery involves a person (the briber) offering money or benefits in kind to a person in a position of power (the bribe-taker), in exchange for an undue advantage.

COU

The COU, or Central Operating Unit, is responsible for data integrity and the central management of a vast database listing all LEIs (Legal Entity Identifiers) in circulation.

 

D

 

European Directive

Act of the European institutions designed to promote harmonization of national legislation in the Member States. It imposes an objective on member states, while leaving them free to choose the form and means of achieving it.

Due diligence- DD

Vigilance measures implemented to know the customer, his transactions and his behavior.

 

E

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ESMA - European Securities and Markets Authority (ESMA)

ESMA: European Securities and Markets Authority; one of the 3 agencies of the financial supervision system created in 2011, to enforce and respect European regulations. ESMA registers and supervises rating agencies and financial markets (and relies on the AMF in France).

 

F

Fintech

The term FinTech combines the terms "finance" and "technology": it refers to an innovative start-up that uses technology to rethink financial and banking services.

Fraud

Fraud is the act of using unfair means to obtain undue advantage, consent or to circumvent legal or regulatory obligations.

 

G

FATF

Groupe d'Action Financière, also known as FATF ("Financial Action Task Force"). Its main objective is to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system, notably through the development of standards, legislative and regulatory measures.

GLEIS

GLEIS (Global Legal Entity Identifier System).

GRC

Risk and Compliance Management - The purpose of Know Your Business Partner procedures is to uncover potential economic crime and corruption, including, for example :

  • Fraud,
  • bleaching,
  • tax evasion,
  • terrorist financing.

 

K

KYC - KYT - KYS

These acronyms stand for "Know Your Customer/Transactions/Suppliers". Know Your Customer (KYC) and Know Your Supplier (KYS) are the names given to the process of verifying the identity of a company's customers within the framework of GRC-Risk and Compliance Management.

 

L

 

LCB/FT

Combating money laundering and terrorist financing - 4th AML/CFT Directive.

LEI

LEI (Legal Entity Identifier). The LEI is an international identifier. It is designed to meet the need for unambiguous identification of legal entities (other than natural persons) involved in financial transactions.

LOU

LOU or Local Operating Unit allocates LEIs. It is, by jurisdiction, the interface with the establishments and thus the "regional" relay of the global organization. In France, Insee is the LOU for the LEI.

 

O

ORIAS

ORIAS or Organisme pour le Registre des Intermédiaires des Assurances.

 

P

 

Politically Exposed Persons (PEPs)

Politically Exposed Persons are individuals who hold or have held important public positions, not necessarily political positions, with significant decision-making power. Persons known to be closely associated with a PEP customer are also included. The functions of PEPs are listed in article R.561-18-I of the French Monetary and Financial Code.

PS2

PS2 Directive - European Payment Services Directive 2nd version (PSD2)

 

R

 

European regulation

A binding act issued by the European institutions and directly applicable in all Member States.

RegTech

The term RegTech combines the terms "regulation" and "technology". RegTech is a sub-sector of FinTech. The aim of RegTech is to help "financial players manage regulatory constraints in innovative ways to reduce costs.

Reporting

Activity report that can be applied to various fields. In the context of a web marketing action, it involves measuring performance (audience, click-through rate, list of openers, etc.).

ROC

The ROC, or Regulatory Oversight Committee, is the global administrative supervisory body for LEI, and comprises some 60 national regulators.

 

S

 

Fir 2

Law n°2016-1691 of 09/12/2016, known as the SAPIN II Law, impacts companies to varying degrees. Since June 1, 2017, companies subject to the law, must implement an anti-corruption program.

 

T

 

TRACFIN

Traitement du Renseignement et de l'Action contre les Circuits FINanciers clandestins.