AML glossary: the terms of anti-money-laundering work
AML terms explained. KYC, UBOs, PEPs, SARs, anti-money-laundering work has a language of its own. This glossary collects the terms that come up across vidd and explains each one in plain English, so partners, engagement teams and administrators can all read from the same page.
Customer due diligence
The vocabulary of knowing your client, verifying who they are, who ultimately owns them, and how much scrutiny each relationship deserves.
KYC (Know Your Customer)
The process of verifying a client’s identity and understanding the purpose and nature of the business relationship before (and while) providing services. KYC is the foundation of every other AML control.
KYB (Know Your Business)
The corporate counterpart to KYC: verifying a company client’s registration, ownership structure and controllers. For accounting and audit firms, most engagements start with a KYB check.
CDD (Customer Due Diligence)
The standard set of checks (identity verification, ownership mapping and risk classification) that an obliged entity must complete for every client. CDD must be kept up to date throughout the relationship.
Kundkännedom
The Swedish AML Act’s term for customer due diligence: identifying and verifying the client, establishing the ultimate beneficial owner, understanding the purpose and nature of the relationship, and following it up on an ongoing basis.
EDD (Enhanced Due Diligence)
Deeper checks applied to higher-risk clients, such as those with complex ownership, high-risk jurisdictions or PEP connections. EDD typically means more documentation, senior approval and closer ongoing monitoring.
UBO (Ultimate Beneficial Owner)
The natural person who ultimately owns or controls a client, even when ownership runs through several holding companies. Identifying and verifying UBOs is a core due-diligence requirement.
PEP (Politically Exposed Person)
A person who holds (or has recently held) a prominent public function, along with their family members and close associates. PEP relationships are not forbidden, but they always require enhanced due diligence.
Monitoring & reporting
The controls that run for the life of a client relationship, screening, watching for unusual activity, and reporting suspicion to the authorities.
Transaction monitoring
Continuously reviewing client transactions and activity against expected behaviour to spot patterns that may indicate money laundering. Alerts are investigated and either dismissed with a rationale or escalated to a report.
Sanctions screening
Checking clients, owners and counterparties against national and international sanctions lists (such as those from the EU, UN and OFAC) both at onboarding and on an ongoing basis as lists change.
Adverse media
Negative news coverage linking a person or company to crime, corruption or regulatory action. Adverse-media screening adds context that registries and sanctions lists alone can miss.
SAR / STR (Suspicious Activity / Transaction Report)
The formal report an obliged entity files with the financial intelligence unit (in Sweden, Finanspolisen, via the goAML system) when it suspects money laundering or terrorist financing. Filing is mandatory and must not be disclosed to the client.
Finanspolisen & goAML
Finanspolisen is Sweden’s financial intelligence unit, the authority that receives reports of suspected money laundering. Reports are filed through goAML, the reporting system obliged entities register with and use to submit them.
Fraud prevention
Detecting and stopping deception aimed at the firm or its clients, from forged invoices and identity theft to manipulated accounting records. Fraud signals often overlap with, and strengthen, AML monitoring.
Regulation & frameworks
The rules and principles behind the work, who is obliged, what the law requires, and how risk-based compliance is meant to operate.
AML (Anti-Money Laundering)
The laws, regulations and internal controls intended to stop criminal proceeds from being disguised as legitimate money. For firms, AML in practice means due diligence, monitoring, reporting and documentation.
Obliged entity
A business that the law requires to perform AML controls, including accounting firms, audit firms, banks and law firms. Obliged entities must assess risk, perform due diligence and report suspicion.
Risk-based approach
The principle that compliance effort should be proportional to risk: more scrutiny for higher-risk clients and services, less for lower-risk ones. It starts with a documented firm-wide risk assessment.
Allmän riskbedömning (firm-wide risk assessment)
The obliged entity’s overall assessment of how its services could be exploited for money laundering or terrorist financing. It is the foundation the firm’s procedures and client risk classification are built on, and it must be documented and kept up to date.
FATF
The Financial Action Task Force, the intergovernmental body that sets global AML and counter-terrorist-financing standards. Its recommendations shape EU directives and national law, and its lists flag high-risk jurisdictions.
Penningtvättslagen
The Swedish AML Act (lagen om åtgärder mot penningtvätt och finansiering av terrorism), which implements the EU AML directives in Sweden. It defines which businesses are obliged entities and what due diligence, monitoring and reporting they must perform.
AMLR (EU Anti-Money Laundering Regulation)
The EU’s upcoming AML regulation, directly applicable in every member state, replacing large parts of national AML legislation with uniform requirements for customer due diligence and risk assessment.
AMLA
The EU’s new anti-money-laundering authority, established to coordinate and strengthen AML supervision across the union as the AMLR framework takes effect.
AML supervision (penningtvättstillsyn)
In Sweden, AML supervision is split by profession: accounting firms are supervised by the county administrative boards (länsstyrelserna), while auditors and audit firms are supervised by the Swedish Inspectorate of Auditors (Revisorsinspektionen).
Read the explainers
Some terms deserve more than a sentence. Our team breaks down the concepts that matter most to compliance teams at accounting and audit firms.
What does KYC actually require?
What the law expects an accounting or audit firm to verify at onboarding (identity, ownership, purpose) and how to document it defensibly.
The risk-based approach, explained
How to build a firm-wide risk assessment, classify clients and let risk drive the depth of due diligence, without buried in paperwork.
How transaction monitoring works
How continuous monitoring of client transactions spots the patterns manual reviews miss, and how alerts turn into documented decisions.