Glossary

PFRDA now allows PoPs, CRAs, and NPS Trust to perform Aadhaar-based e-KYC using NPCI’s e-KYC Setu, without disclosing full Aadhaar numbers. They must obtain subscriber consent, use secure authentication, and comply with privacy/security standards?including regular NPCI audits?for KYC under the PMLA framework.

Abuse of process refers to the misuse or manipulation of legal procedures for purposes other than those intended by the law, such as harassing or coercing an opponent. It involves perverting the judicial process to achieve an ulterior motive, distinct from merely filing a frivolous claim.

Acceptance is the unambiguous agreement to the terms of an offer, signifying a party’s intent to be legally bound by the proposed contract. It must match the offer exactly and be communicated clearly to the offeror. Once accepted, a binding contract is formed between the parties.

UNCAC promotes public access to information held by public bodies, including laws, decisions, budgets, and audit reports. Transparency supports detection, accountability, and citizen oversight?strengthening democracy and reducing opportunities for corruption.

Account stacking involves opening multiple accounts under various names to obscure fund origins or avoid limits. Wolfsberg recommends using analytics to detect overlapping behaviors?like shared data points?enabling institutions to consolidate scrutiny and flag suspicious networks.

Periodic statements detailing securities held, transactions, corporate actions, debit/credit entries, and balances sent by DPs?equivalent to bank statements, supporting investment tracking and compliance.

Account Takeover (ATO) occurs when a fraudster gains unauthorized access to a victim's online account?such as banking, email, or social media?by stealing login credentials. Once access is obtained, the attacker can make unauthorized transactions, change account settings, or steal sensitive information, leading to financial loss and compromised personal data

Requests to fetch linked bank accounts are limited to 25 per app, per customer, per day, reducing infrastructure overload and preventing misuse.

Parties are required to prohibit off?book accounts, false invoices, and unrecorded transactions. They must also apply effective sanctions for accounting crimes, ensuring full transparency in financial records and preventing concealment of bribery.

Accounting fraud is the intentional manipulation of financial records to present a misleading view of a company’s financial health. This can involve inflating revenue, hiding expenses, or misstating assets and liabilities. The goal is often to deceive investors, regulators, or stakeholders for financial gain or to meet performance targets.

Accounting irregularities are intentional or unintentional deviations from standard accounting practices. They may involve misstating revenues, understating expenses, or manipulating records to distort a company’s financial position. While some irregularities result from error, others may signal fraud. Detecting and addressing them is crucial for maintaining financial transparency and integrity.

Accretion refers to an increase in the acquiring company’s earnings per share (EPS) following a merger or acquisition. It indicates that the deal is financially beneficial to shareholders, often resulting from cost savings, synergies, or efficient integration. Accretive deals typically enhance shareholder value and are viewed positively by investors and analysts.

Accuracy refers to how well an AI system performs its intended task by producing correct outputs based on input data. It is a key measure of the system’s effectiveness and performance. Accuracy is crucial in assessing the reliability of an AI model, particularly in high-stakes applications that demand precision, such as medical diagnoses.

When fiduciaries use data to make decisions or disclose to others, they must ensure that data is accurate, complete, and consistent. Systems must minimize errors and enable corrections at the principal’s request, ensuring data reliability.

An acquirer, or buyer, is the company or individual that purchases another company in an acquisition or merger. The acquirer gains control of the target company, aiming to expand its operations, market share, or capabilities. The acquirer may integrate the target fully or allow it to operate independently, depending on strategic goals and business plans.

An acquisition occurs when one company purchases most or all of another company’s shares or assets to gain control. It can be friendly or hostile and often aims to expand the buyer’s market reach, product lines, or capabilities. The acquired company may continue operating independently or be fully integrated into the buyer’s operations, depending on the strategy

The Convention makes it a criminal offence for individuals or companies to offer, promise, or give a bribe to a foreign public official to influence their duties improperly in international business. This “supply-side” focus holds payers accountable, requiring parties to criminalize such acts, regardless of where they take place.

Active bribery involves offering, promising, or giving an undue advantage to a (foreign) public official to influence their official duties. UNCAC explicitly requires all member states to criminalize this offence for both domestic and foreign public officials.

Active bribery is when a person offers, promises, or gives a financial or other advantage to another, intending to induce improper performance of a “relevant function or activity.” This offence applies even when conducted through third parties and regardless of location, so long as there is a UK nexus or a close connection to the UK.

An active NFFE is a non-financial foreign entity whose passive income and assets each constitute less than 50% of its totals, or that meets specific operational tests (e.g., active trade). Active NFFEs are generally exempt from FATCA reporting and withholding obligations, reducing administrative burdens for bona fide businesses.

Actuarial risk is the possibility that assumptions made by actuaries?such as life expectancy, accident rates, or claim frequency?may turn out to be incorrect. These miscalculations can lead to premiums being too low to cover actual losses, affecting an insurer’s profitability and financial stability. Accurate modeling is essential to minimize this type of risk.

RBI plans to mandate Additional Factor of Authentication (AFA) for online transactions made internationally with Indian cards. AFA adds an extra verification layer (e.g. OTP or biometric) to prevent cross-border fraud. The draft circular seeks stakeholder feedback to enhance customer confidence and strengthen fraud defences in international digital payments.

ASD adds extra margin (typically 50–100% of trade value) for participants taking large positions or engaging in suspicious trades. Often used alongside trade-for-trade constraints, ASD reduces risk and discourages speculative or manipulative behaviors.

NSE imposes extra cash margin for net short positions in Out?of?Money (OTM) or In?the?Money (ITM) options based on how far they are from the index or stock’s strike price. This margin, collected on T+1 and held until expiry or square-up, helps contain tail-risk exposures in the options market.

ASM is a dynamic tool used for broader volatility control. Short-term (ST-ASM) and long-term (LT-ASM) categories target excessive price movements, volume spikes, or unusual patterns. Affected stocks are subjected to higher margins or trade-for-trade restrictions?intended as alerts, not punitive measures.

Section?7 includes a defence if the organisation demonstrates “adequate procedures,” defined in Ministry of Justice guidance. These consist of six principles: proportionate procedures, top-level commitment, risk assessment, due diligence, communication & training, monitoring and review?to prevent internal or third-party bribery.

Parties must ensure that statutes of limitation allow sufficient time for investigation and prosecution of foreign bribery. The legal timeframe should enable effective enforcement, not hinder prosecution due to administrative delays.

An independent body set up under PMLA to evaluate whether provisionally attached property is involved in money laundering. It hears both parties?ED and accused?and confirms or revokes the attachment, thus playing a quasi-judicial role in the process.

Advance fee fraud involves soliciting upfront payments from individuals or businesses with the promise of larger financial gains that never materialize. Perpetrators convince victims to pay fees in advance for services or goods that are never delivered, leading to financial losses and eroded trust.

Advance remittance involves paying a foreign supplier before goods or services are received. Under FEMA, this requires authorized dealer banks to comply with RBI rules, especially for large amounts. Proper documentation, verification, and timelines are essential to prevent money laundering and safeguard India’s foreign exchange reserves from potential fraud or unauthorized outflows.

Adversarial attacks target the vulnerabilities of AI systems, regardless of how advanced they are. Since these systems rely on large datasets for training, they become attractive targets for malicious actors. Organizations that lack strong security measures and cybersecurity awareness are especially at risk. They can fall victim to data breaches, insider threats, phishing attempts, third-party risks, and other forms of cyberattacks that exploit weaknesses in AI infrastructure.

Adverse selection occurs when individuals with higher risks are more likely to buy insurance, while those with lower risks may opt out. This imbalance can lead to a pool of insured people who are more likely to make claims, increasing costs for insurers and potentially causing higher premiums for everyone.

Adware is a type of software that automatically displays or downloads advertising content while a program is running. These ads often appear as pop-up windows or banners within the user interface. Although commonly found on PCs, mobile devices can also be targeted by adware for similar exploitative purposes.

Automatic Exchange of Information (AEOI) under the Common Reporting Standard (CRS) and the U.S. Foreign Account Tax Compliance Act (FATCA) involves tax authorities sharing detailed financial account data across borders. This exchange helps identify offshore assets, ensuring compliance and transparency. AEOI aims to prevent tax evasion by enabling governments to monitor foreign financial holdings of their taxpayers.

An affidavit is a written statement sworn under oath, used as evidence in court. It allows a person to present facts without appearing in person. Affidavits support motions, establish facts, or provide proof when live testimony isn’t required or feasible.

Regional sanctions by AU for peace and security.

AI assurance refers to a comprehensive approach that includes frameworks, policies, processes, and controls designed to ensure AI systems are safe, reliable, and trustworthy. This approach involves assessing and promoting AI performance through various methods such as conformity assessments, impact and risk evaluations, AI audits, certifications, testing, and compliance with relevant standards.

AI crypto scams use artificial intelligence tools to create deepfake videos, fake influencers, or chatbot-driven investment schemes to deceive victims. These scams promise high returns through “AI-powered” trading or projects, often with no real technology behind them. They exploit the hype around AI and crypto to attract and defraud investors.

Governance refers to the processes, standards, and safeguards that ensure AI systems and tools operate safely and ethically. AI governance frameworks guide the research, development, and application of AI to ensure these systems uphold safety, fairness, and respect for human rights.

Fraud case resolutions feed into NPCI's ML systems?using data from blocked and confirmed fraudulent transactions to retrain models, reduce false positives, and adapt detection algorithms over time.

AI in cybersecurity refers to the use of artificial intelligence technologies to enhance the detection, prevention, and response to cyber threats. AI can analyze large volumes of data in real time to identify patterns and anomalies that may indicate malicious activity. It is particularly useful in detecting threats such as phishing, malware, unauthorized access, and data breaches.

The Wolfsberg “AI/ML Principles” guide technology use for AML?covering legitimate purpose, proportional usage, technical rigour, transparency, and accountability. Firms must calibrate, validate, and document AI/ML systems, with senior oversight and bias checks.

Manipulation of Automatic Identification System data to conceal vessel identity or location.

Algorithmic orders must be tagged with Exchange-assigned identifiers (NNF IDs). Mismatches or omissions in algo-tagging trigger daily penalty notices??10,000/day for up to five instances, increasing to ?50,000/day?ensuring transparency and traceability of automated trading.

All algorithmically generated orders must carry NSE-tagged algo IDs. Missing or incorrect tags lead to escalating penalties??10,000 per day for up to five violations, then ?50,000 daily?to ensure traceability of automated trading.

Algorithm bias occurs when AI systems produce unfair or prejudiced outcomes due to biased data or design. Since AI is created by humans, it can reflect human biases related to gender, race, religion, language, and perception. When these systems are trained on biased data, they tend to generate biased results, which undermines fairness, equality, and ethical standards.

Algorithmic bias arises when machine learning algorithms produce unfair or discriminatory outcomes due to systematic errors. These biases often mirror or amplify existing societal inequalities related to race, gender, or socioeconomic status.

is a type of coverage that protects against all types of losses or damages except those specifically excluded in the policy. Unlike named-peril policies, which cover only listed risks, all-risk policies provide broader protection, offering more comprehensive coverage for unexpected events. Policyholders should review exclusions to understand what is not covered.

ADR encompasses methods like mediation and arbitration used to settle disputes outside of court. It aims to save time, reduce costs, and provide more flexible solutions. ADR is often voluntary but can be court-ordered, promoting cooperation and faster resolution.

These regulations provide a framework for the registration and regulation of Alternative Investment Funds (AIFs) in India, including private equity, venture capital, and hedge funds. They aim to enhance transparency and protect investors.

System of laws, regulations, and procedures to counter money laundering and terrorist financing.

Monitoring suspicious transactions for potential money laundering or fraud signals.

Identification of customer profile AML risk level.

International infrastructure in combat against money laundering and terrorist financing.

Advanced program outlining a firm's AML/CFT compliance strategy.

Insurers must conduct a detailed annual review to identify fraud vulnerabilities across all business lines?using past incidents, emerging trends, and Red Flag Indicators (RFIs). The findings are submitted to the board and used to update systems, policies, RFIs, and awareness programs?ensuring a proactive, risk-centric anti-fraud approach.

Anomie refers to a state of normlessness or a breakdown of social norms and values within a society. It occurs when individuals feel disconnected from the collective conscience, often during times of rapid social or economic change. This disconnection can lead to increased deviant or criminal behavior as people struggle to find meaning and stability.

Anonymous reporting allows individuals to report misconduct or unethical behavior without revealing their identity. It is designed to protect whistleblowers from retaliation and encourage reporting in environments where fear of consequences may prevent disclosure. Many organizations offer secure hotlines or digital platforms to support anonymous reporting while ensuring proper investigation.

Internal company regulation against corruption and bribery.

Anti-dumping measures are trade defense actions taken by a country to protect its domestic industries from foreign companies selling goods below fair market value, often called "dumping." These measures typically involve imposing additional duties to level the playing field and prevent injury to local producers.

A board-approved policy outlining procedures, controls, and sanctions related to fraud detection, prevention, and escalation. It must affirm a zero-tolerance stance, define responsibilities, and embed fraud awareness across all levels and channels.

The PATRIOT Act strengthened AML obligations by mandating comprehensive internal policies (e.g., CIP, EDD), compliance officers, employee training, audits, suspicious activity monitoring, and reporting. These enhancements built on the existing framework of the Bank Secrecy Act to proactively address evolving threats of money laundering and terrorist financing.

Anti-trust risk refers to the potential legal exposure an organization faces when engaging in practices that may violate competition laws. These laws prevent monopolistic behavior, price-fixing, and unfair trade practices to promote a fair and competitive market. Violations can result in fines, lawsuits, and reputational damage.

Antitrust review is a regulatory process where government authorities evaluate mergers or acquisitions to ensure they do not reduce competition or create monopolies. The goal is to protect consumers by preventing unfair market dominance, price-fixing, or other anti-competitive practices that could harm the economy or limit choices.

Integration of sanction screening systems with payment platforms for real-time blocking.

Banks must restrict calls to ??3 per transaction and adhere to timing rules (each ??90?sec apart). Misuse?like flooding API calls?has caused outages; third-party audits ensure adherence and system stability.

NPCI enforces caps (e.g., max 3 calls/status check per transaction, ??90 seconds apart). Over-use triggers throttling or blocking?preventing high-volume bot attacks or system overloading.

API security risk involves threats and vulnerabilities related to application programming interfaces (APIs) that can lead to unauthorized access, data breaches, or service disruptions. As APIs connect different software systems in digital transformation, securing them is crucial to protect sensitive data and maintain system integrity.

PSPs and acquiring banks are required to monitor all UPI API calls, ensuring compliance with rate limiting, retry logic, and no batch submissions. Exceptions detected during audits must be reported to NPCI.

If an individual or entity is aggrieved by SEBI’s decisions or penalties under this Act, they can file an appeal before the Securities Appellate Tribunal (SAT) for redress.

To begin proceedings under the Act, the Enforcement Directorate files an application before the Special Court. The application must include details of the person, alleged offense, property to be confiscated, and evidence. This initiates the legal process for declaring the person a Fugitive Economic Offender.

Any company intending to operate as a CIC must apply to the RBI in its specified format. Existing CICs (as of the act’s commencement) were required to apply within six months

Application fraud occurs when an individual uses stolen or fake documents to open an account or obtain credit. This type of fraud can lead to financial institutions granting loans or credit lines to unqualified individuals, resulting in financial losses and reputational damage.

After confiscation, the property vests in the government free of any encumbrances or third-party claims, even if others assert rights over it. This limits delays or interference from others claiming interest in the assets.

Arbitration is an alternative dispute resolution process where a neutral third party, known as an arbitrator, resolves a disagreement outside of court. It is commonly used in international business to settle cross-border conflicts. Arbitration is typically faster and more confidential than litigation, and the parties agree in advance that the arbitrator's decision will be final and binding.

An argument in the alternative is a legal tactic where multiple, sometimes conflicting, arguments are presented to cover all possibilities. This approach ensures that if one argument fails, others may succeed, strengthening a party’s overall case.

Prohibition of sale, supply, or transfer of arms and materials related to arms.

A theoretical form of artificial intelligence that can understand, learn, and apply knowledge across a broad range of tasks at a level equal to or beyond human intelligence. Unlike narrow AI systems, which are designed for specific tasks, AGI would possess the flexibility and reasoning ability to solve unfamiliar problems, adapt to new situations, and exhibit common sense?traits associated with human cognitive capabilities.

Utilization of AI models to decrease false positives and enhance sanctions detection.

Asset forfeiture refers to the legal process through which the government seizes property linked to criminal or unlawful activity, often following a criminal or civil conviction. For example, if a drug dealer owns an expensive car purchased with illicit funds, the state may confiscate it. The seized assets are typically sold at auction, and the proceeds are used to compensate victims and support law enforcement operations.

Assets placed in a foreign trust, if set up by or for an Indian resident, are reportable under Indian tax law. The settlor, trustee, or beneficiary must disclose such interests. Failure to report foreign trusts can be interpreted as holding undisclosed assets under the Black Money Act.

Any movable or immovable property held outside India?including bank deposits, shares, real estate, or jewelry?is considered a foreign asset. If not disclosed in Indian tax filings, it is treated as black money. The Black Money Act imposes strict penalties and prosecution for nondisclosure, even if the asset was lawfully acquired.

Asset misuse is the unauthorized or unethical use of an organization’s resources for personal benefit. This can include using company vehicles, funds, equipment, or supplies for non-business purposes. While often less complex than other financial crimes, asset misuse violates company policy, reduces efficiency, and can signal deeper issues in internal controls and corporate governance.

An asset purchase is a type of transaction where a buyer acquires specific assets and liabilities of a company rather than buying the entire company. This allows the buyer to select which parts of the business to acquire, often minimizing risks and avoiding unwanted liabilities.

UNCAC establishes the return of assets as a fundamental principle. Chapter?V sets detailed procedures for tracing, freezing, confiscating, and returning illicit assets across borders. Victim states can obtain stolen assets via civil claims, confiscation orders, or bilateral agreements?a major innovation in global anti-corruption.

Asset repatriation refers to bringing undisclosed foreign assets back to India. While the Black Money Act doesn’t mandate repatriation, disclosure and taxation are required. In some cases, repatriation is suggested to regularize assets and simplify future compliance. Voluntary repatriation may support mitigation in enforcement actions and asset recovery initiatives.

“Associated persons” are individuals who perform services on behalf of a commercial organisation?like employees, agents, distributors, contractors, or joint-venture partners. Under Section?7, their bribery can expose the principal organisation to liability unless adequate anti-bribery procedures are effective.

An “associated person” performs services for or on behalf of a commercial organisation?employees, agents, subsidiaries, or JV partners. Their actions can attract corporate liability under S7 unless the entity can show “adequate procedures” were in place to prevent bribery by such individuals or third parties.

Wolfsberg recommends regular, independent audits to test AML program effectiveness. Audits should evaluate KYC, transactions monitoring, and suspicious activity reporting systems?not just compliance documentation?to ensure actual risk mitigation and identification of implementation gaps.

State of readiness to address regulator audits/exams on sanctions.

Electronic record of screening choices and compliance measures for regulator reference.

Full records showing screening/investigation decisions.

Situations where auditors fail to detect or report fraudulent activities within an organization, either due to negligence or complicity. This can lead to significant financial losses and legal consequences

CICs are required to appoint qualified auditors each year whose reports on financial statements and internal controls must be submitted to R

Empowers Australia to impose independent sanctions.

a person or entity authorized by the Reserve Bank of India (RBI) under Section 10(1) of FEMA to deal in foreign exchange or foreign securities. This includes banks and financial institutions permitted to conduct foreign exchange transactions.

An authorized officer is an income tax official empowered to investigate, assess, and initiate action under the Black Money Act. They can issue notices, conduct inquiries, and recommend prosecution. These officers play a vital role in enforcing compliance and ensuring legal consequences for non-disclosure of foreign income or assets.

An "Authorized Person" refers to entities authorized by the Reserve Bank of India (RBI) to deal in foreign exchange or foreign securities. This includes authorized dealers, money changers, offshore banking units, or any other person for the time being authorized under Section 10(1) of FEMA.

APP fraud involves tricking individuals into willingly authorizing payments to fraudsters, often through social engineering tactics. Victims believe they are making legitimate payments, but the funds are directed to accounts controlled by criminals, leading to substantial financial losses.

ACH fraud involves unauthorized electronic funds transfers through the Automated Clearing House network, which processes large volumes of credit and debit transactions. Fraudsters exploit stolen bank account information to initiate unauthorized payments or withdrawals, leading to significant financial losses for individuals and businesses.

Automated controls are internal controls embedded within IT systems that operate without human intervention. They enforce policies, validate data, and detect exceptions automatically to reduce errors and improve efficiency. These controls help ensure consistent application of rules and timely identification of issues within business processes.

When financial services use algorithms to make decisions?such as approving loans or setting credit limits?the institution must inform customers and offer manual review by a human. The purpose, logic, and consequences of automated decisions must be explained clearly.

GDPR defines profiling as any automated processing aimed at analyzing or predicting aspects about a person (e.g., creditworthiness). Individuals have rights to explanation, human review, and objection, ensuring safeguards over algorithmic decision-making?especially high-impact actions like loan approvals.

Automated incident response uses advanced technologies to detect and respond to security incidents without manual intervention. Unlike traditional methods that rely on manually reviewing logs, alerts, and events?a process that is time-consuming and error-prone?automated systems can quickly identify abnormal activity and take action.

AEOI is a global initiative where countries automatically share financial information about account holders with each other. India receives data about Indian residents holding foreign bank accounts. This mechanism helps the government detect undeclared offshore assets and enforce the Black Money Act effectively.

AI systems capable of performing tasks, making decisions, and taking actions without human intervention. These systems operate independently based on programmed objectives and learned data patterns, often in dynamic or unpredictable environments. Governance, oversight, and ethical safeguards are essential to ensure accountability and prevent unintended consequences.