Glossary

Backdating stock options is the practice of setting the grant date of stock options to an earlier time when the stock price was lower. This allows recipients to buy shares at a cheaper price, creating an unfair financial benefit. Backdating is illegal if not properly disclosed, as it misleads shareholders and regulators about executive compensation.

UPI platforms must remove any feature allowing users to manually edit the recipient’s name. Names must exactly match those returned by the Validate API, ensuring authenticity and fraud protection.

NPCI mandates displaying only verified beneficiary names from Core Banking Systems (CBS), banning personalized contact nicknames in transaction UIs. This reduces errors and protects users from social-engineering misdirection during confirmation.

U.S. laws mandating the assistance of financial institutions in preventing and detecting money laundering.

Once declared an FEO, the individual is barred from filing or defending any civil claims in Indian courts. This legal penalty deters evasion and ensures that economic offenders cannot use the judiciary while refusing to submit to its authority.

The Basel Accords were established to create a standardized international regulatory framework for managing credit risk, market risk, and, in later iterations, operational risk within the banking sector. Developed by the Basel Committee on Banking Supervision, these accords aim to strengthen the stability and resilience of the global financial system.

International regulatory framework in connection with bank capital adequacy, stress tests, and risk management.

Bulk screening of customer databases periodically against refreshed lists.

Bear raiding is a manipulative tactic where traders attempt to drive down a stock’s price by heavy short selling or spreading negative rumors. The goal is to create panic selling among investors, allowing the manipulators to profit by buying shares at a lower price. Bear raiding is illegal and considered market manipulation.

Bearer instruments are important in the financial world because they do not require registration of ownership, making them easily transferable and highly liquid. While this characteristic allows for quick transactions, it also presents significant risks, as they can be used anonymously, potentially facilitating illegal activities such as money laundering or terrorist financing.

A benami transaction occurs when property is held in the name of one person, but the consideration is paid by another, concealing the true owner. Such arrangements are often used to hide unaccounted wealth or evade taxes. The Act prohibits these transactions to promote transparency and curb black money circulation in the economy.

The benamidar is the individual in whose name property is held but who is not the actual owner or the person who paid for it. Under the Act, the benamidar does not have any legal ownership rights and the property can be confiscated by authorities if deemed benami.

A “Beneficial Owner” is the actual economic interest holder of securities – receiving dividends, profits, or exercising voting rights – although the securities are held in electronic form by a depository under its name. This distinction clarifies ownership in dematerialized systems and ensures rightful entitlement to benefits

Section?312 and related USA PATRIOT Act amendments require U.S. banks and foreign financial institutions to identify and verify the beneficial owners of private banking and correspondent accounts. The rule aims to prevent money-laundering through shell companies or hidden owners.

Egmont guidance urges FIUs to collect legal?person registries, cross?match corporate control layers, and exchange beneficial?ownership data swiftly?particularly for shell companies or trusts spanning multiple jurisdictions, closing gaps exploited by professional money?launderers.

Recipient details in a financial transaction.

An annual initiative that recognises exceptional collaborative investigations between FIUs, such as the 2017 Ukraine case uncovering a $1.45?billion laundering network using 1,000+ shell companies. These awards spotlight excellence, strengthen peer learning, and incentivize investigative innovation in the Egmont network.

Separate from general awards, the BECA highlights outstanding typology-based analysis. For instance, Brazil’s case on diamond smuggling versus Colombia’s securities-fraud investigation won top honours in 2016?driving shared learning and operational excellence across FIUs.

Under 2025 Directions, RBI provided best practices for credit institutions and CICs, focusing on data governance, grievance redressal, audit trails, and dispute mechanisms .

A bilateral investment treaty (BIT) is an agreement between two countries designed to encourage and protect investments made by individuals and companies from each country in the other's territory. It typically includes provisions on fair treatment, protection from expropriation, free transfer of funds, and dispute resolution mechanisms, offering legal certainty to foreign investors and promoting cross-border economic cooperation.

Binding authority is the permission granted by an insurance company to an agent or broker, allowing them to enter into contracts and legally bind the insurer to provide coverage. This authority enables agents to issue insurance policies and accept risks on behalf of the insurer within specified limits.

BCRs are internal policies adopted by multinational enterprises to allow secure transfers of personal data from the EU/EEA to affiliates abroad. They require approval from EU data protection authorities and provide legal compliance across borders, ensuring consistent privacy practices and accountability within the corporate group.

U.S. Department of Commerce government bureau with regulations on export restrictions.

U.S. Department of Commerce list limiting exports to certain foreign parties.

Black money refers to income earned through illegal means or undeclared to tax authorities, often to evade taxes. It includes unaccounted funds hidden from regulatory oversight. Common sources include criminal activities, smuggling, corruption, and tax evasion. Black money undermines economic transparency, reduces government revenue, and contributes to parallel economies outside legal financial systems.

The Black Money Compliance Window (July?September 2015) allowed individuals to voluntarily disclose foreign assets and income by paying 30% tax and 90% penalty. Those who used this route were shielded from prosecution. After this window, stricter enforcement and penal provisions under the Act became applicable.

NPCI maintains real-time blacklists and watchlists for high-risk entities?such as devices, SIMs, VPA handles, merchants, or virtual accounts. Transactions involving these are auto-rejected or flagged, enhancing proactive exposure control across the UPI ecosystem.

Lists of persons, firms, or institutions barred for illicit activity.

Blackout period is a designated time during which company insiders?such as executives, directors, and employees?are prohibited from buying or selling the company’s securities. This typically occurs around earnings announcements or major corporate events to prevent trading based on material non-public information. Violating a blackout period may result in legal action or internal disciplinary measures.

Systems for tracing cryptocurrency transactions associated with sanctions offenses.

Blockchain risk involves potential security vulnerabilities, regulatory challenges, and operational issues related to implementing blockchain technology. These risks include smart contract flaws, privacy concerns, and scalability limitations, which can affect trust and reliability in blockchain-based systems.

Aggregation of addresses to determine wallets controlled by same party.

Actions necessary when faced with a sanctions match?either freezing or rejecting the transaction.

A law enacted in retaliation for the extraterritorial imposition of foreign sanctions.

EU legislation protecting EU companies from extraterritorial application of American sanctions.

Freezing blocks funds until license/notification; rejection denies the payment in full.

PFRDA requires Pension Funds to form critical board-level committees: Audit, Nomination & Remuneration, and optionally a Risk Committee, strengthening governance, decision-making, and oversight?aligned with frameworks like the Companies Act.

Each Regulated Entity (RE) must have a board?approved interest rate policy, including transparent pricing, fee disclosures, and a standard borrower factsheet. These policies ensure clarity and accountability.

REs must adopt household-income assessment methodologies?board-approved and aligned with RBI/NABARD frameworks?which must be reported to CICs, and discrepancies explained.

The Recommendation highlights that ethical tone must originate at the board level; Boards should actively oversee anti-bribery initiatives and embed compliance DNA throughout corporate culture, not leave it solely to implementation teams.

Separate from anti-fraud policies, IRDAI requires a board-approved cyber-security policy?covering data confidentiality, access controls, alert management, incident handling, and continuous system-strengthening?to counter evolving digital threats.

Boiler room fraud is a scam where high-pressure sales tactics are used?often via phone calls?to sell worthless or non-existent investments. The fraudsters operate from call centers known as “boiler rooms” and target unsuspecting individuals with promises of high returns. Victims often lose significant sums, and the investments usually have no real value.

A boiler room scam is a fraudulent operation where high-pressure sales tactics are used to sell worthless or overvalued investments to unsuspecting investors. These scams often involve unregistered brokers and can lead to significant financial losses for victims.

A boilerplate clause is a standard provision commonly included in contracts to address general legal conditions. These clauses cover topics like dispute resolution, governing law, severability, and force majeure. Though often overlooked, they can significantly affect how a contract is enforced or interpreted if a dispute arises.

While the Act focuses on bribery acts, maintaining incomplete or falsified records (e.g. hiding facilitation payments) can violate other laws like the Companies Act or financial crime regulations. Transparency International notes that failing to record small bribes risks broader non-compliance and legal exposure beyond the UK Bribery Act.

Credit institutions must obtain explicit consent from borrowers before disseminating credit information to a CIC, safeguarding borrower rights.

Botnet refers to a network of internet-connected devices?including PCs, servers, mobile phones, and IoT devices?that have been infected with malware and are remotely controlled without the owners? knowledge. Each compromised device, or "bot," can be directed by a central controller (bot-herder) to perform coordinated malicious activities, such as launching large-scale cyberattacks.

Controllers must report personal data breaches to the supervisory authority within 72 hours of detection, unless unlikely to risk individuals' rights. If high risk is likely, they must inform affected customers. Financial institutions must maintain established workflows and documentation for breach management.

In case of a personal data breach, fiduciaries must notify both the Data Protection Board and the affected Data Principals “as soon as practicable” via prescribed forms and timelines. Timely reporting enhances transparency and prompt response.

Breach of contract occurs when one party fails to fulfill their obligations under a legally binding agreement without a valid legal excuse. This can involve not performing on time, not performing to agreed standards, or refusing to perform altogether. The non-breaching party may seek remedies such as damages or specific performance.

A breakup fee is a pre-agreed payment made by one party to another if a merger or acquisition deal is terminated under certain conditions. It compensates the affected party for lost time, expenses, and missed opportunities. Breakup fees are often used to discourage parties from withdrawing from the deal without serious cause or to protect against competing offers.

Bribery is a criminal act involving the offer, giving, receiving, or acceptance of something of value to influence someone's actions. It typically entails money or other benefits exchanged to sway behavior in a way that deviates from normal conduct. The intent is to improperly gain advantage or manipulate decisions through unethical or illegal means.

The Bribery Act 2010 is a UK law addressing criminal offenses related to bribery. It was introduced in 2009, passed with cross-party support, and received royal assent in April 2010. Initially set to take effect in 2010, it was later enforced on July 1, 2011. The Act strengthens anti-bribery measures in both public and private sectors.

Giving, receiving, granting, or requesting something of worth in order to make a decision illegally.

Countries that classify domestic bribery as a money-laundering offence must extend this to foreign bribery. This measure enables anti-money laundering tools to assist in prosecuting corrupt cross-border flows.

UNCAC requires criminalizing bribery in the private sector, where a person offers or accepts undue advantage to influence joint venture or business dealings. This offence complements public bribery provisions and helps eliminate corrupt practices in corporate and commercial settings.

This offence criminalises offering, promising, or giving a corrupt advantage to a foreign public official, either directly or indirectly, to influence their role. It covers entities with a UK link and aligns with international anti-corruption standards, even when the recipient acts lawfully in their jurisdiction but improperly in terms of the UK test.

S6 prohibits giving, promising, or offering financial or other advantages to foreign public officials for improper performance of their duties. It includes indirect payments, is globally applicable for UK-linked businesses, and is stricter than local laws?focusing on ethical conduct rather than local legality.

Broken windows theory suggests that visible signs of disorder and neglect, such as broken windows or graffiti, can encourage further crime by creating an environment that appears unmonitored and unsafe. Addressing minor offenses promptly can help prevent more serious crimes from occurring.

A brute force attack is a hacking technique that uses trial and error to guess passwords, login credentials, or encryption keys. This method involves systematically trying numerous combinations?often with the help of automated tools?until the correct one is found, allowing unauthorized access to systems, accounts, or networks.

Prohibition on providing fuel to ships linked to sanctioned parties.

PMLA shifts the burden of proof to the accused to demonstrate that the property in question is not proceeds of crime, differing from traditional criminal law where prosecution must prove guilt.

Bust-out fraud occurs when individuals or businesses deliberately establish lines of credit with the intention of maxing them out and then disappearing without repaying. This premeditated scheme results in significant financial losses for creditors and undermines the integrity of the credit system.

These regulations govern the process by which companies can repurchase their own shares or other specified securities from the market, detailing the conditions, procedures, and disclosures required to protect shareholder interests.

Bye-laws are internal rules created by depositories and approved by SEBI. They define procedures for operations like opening accounts, dematerialisation, handling disputes, and ensuring transparency in services. They provide the legal foundation for the depository’s functioning.