Glossary

A facilitating payment is a financial payment, often considered a bribe, made to a public official to speed up routine administrative processes. It serves as an incentive for the official to perform their duties more quickly, benefiting the payer. Although typically small, such payments are unethical and may be illegal under anti-bribery laws in many jurisdictions.

The Act criminalises facilitation (gratuitous) payments?small bribes to expedite routine government services, such as paperwork processing?even if customarily accepted locally. While prosecution is rare, such payments are considered criminal unless deemed lawful under local written law.

While facilitation payments are small unofficial payments made for routine services, the OECD recommends against them, calling them corrosive. Although not always criminalized by the Convention, Parties are encouraged to prohibit and discourage their use.

Although facilitation payments are still excluded from the Convention's core offence, the 2021 Recommendation encourages governments to periodically review their laws on small facilitation payments and discourage them in corporate compliance policies?even if not criminalized.

Fair Market Value refers to the estimated price a property would fetch in the open market between willing parties. Under the Benami Act, FMV is used to assess penalties and determine confiscation value. Authorities rely on FMV to ensure proper valuation of seized assets and accurate computation of fines for illegal benami holdings.

REs must implement and display a board-approved FPC detailing transparency, recovery norms, application safeguards, staff conduct, and recovery agent behavior?promoting accountability and borrower protection.

REs must establish and publicly display a board-approved Fair Practices Code (FPC) outlining transparent lending, recovery ethics, grievance handling, and staff conduct policies.

REs must publish a board?approved Fair Practices Code at branches and websites covering loan terms, interest rates, recovery behavior, and grievance mechanisms?promoting transparency and borrower trust.

The principle that AI systems should treat all individuals and groups equitably, without bias, discrimination, or favoritism. This involves ensuring that the outcomes produced by AI models do not disproportionately harm or benefit any particular demographic, and that the system’s design, data, and implementation processes actively prevent unjust or prejudicial treatment.

A fake ICO is a fraudulent fundraising scheme where scammers promote a non-existent cryptocurrency project, urging investors to buy tokens during its "launch." Once funds are collected, the project vanishes without delivering any product. These scams exploit hype and lack of regulation in the crypto space.

False billing is a type of fraud where fake or inflated invoices are submitted for goods or services that were never provided. This scheme is used to steal money from a company by convincing it to pay for illegitimate expenses. It often involves collusion between employees and external vendors.

The False Claims Act is a U.S. law that enables individuals, called whistleblowers, to report fraud against the government. It allows them to file lawsuits on the government’s behalf to recover lost funds. The law protects whistleblowers from retaliation and provides financial rewards to those whose information leads to successful recoveries.

Providing false information during any stage of benami proceedings?whether during investigation, before the Adjudicating Authority, or in court?is a punishable offence. This includes forged documents, false identity, or fake funding claims. The law treats misrepresentation seriously, and offenders can face imprisonment up to five years and heavy fines for obstructing justice or misleading authorities.

Missed detection of a valid sanctioned match.

A partial match screening alert that turned out not to be a sanctions hit.

An innocent outcome inadvertently marked suspicious when it passed through a compliance screen.

In sanctions or risk screening, a false positive flags a legitimate client incorrectly, while a false negative misses a sanctioned or suspicious target. Wolfsberg advocates for fine-tuning systems to minimize both?balancing detection sensitivity with operational efficiency.

Percentage of screening alerts that are false positives.

NPCI’s OC?214 mandates that payment responses be delivered within 15 seconds, and reversals/status confirmations within 10 seconds, reducing latency and improving UX as of mid-2025.

The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to report assets held by U.S. account holders. It also mandates U.S. citizens and residents, whether living domestically or abroad, to report foreign account holdings annually. FATCA’s primary purpose is to combat tax evasion by increasing transparency of overseas financial assets held by U.S. taxpayers.

The FATCA Registration Portal is an IRS online platform for FFIs and certain non-financial entities to register for FATCA compliance. It issues GIINs and enables ROs to manage accounts, update details, and submit certifications. The portal simplifies oversight and ensures global institutions fulfill U.S. tax obligations.

Egmont’s standards dovetail with FATF: Rec?29 defines the FIU’s role; Rec?40 sets rules for international information?sharing. Egmont’s Principles of Information Exchange operationalise these FATF obligations?ensuring that FIU cross?border cooperation meets global AML/CFT benchmarks.

FCA UK financial regulatory handbook guidance compliance.

The FCPA applies globally to publicly traded U.S. companies and their personnel, including officers, employees, and agents. Following 1998 amendments, it also extends to foreign entities or individuals involved in facilitating or executing corrupt payments within U.S. territory. The Act prohibits bribery of foreign officials and mandates strict accounting practices to prevent corruption

NPCI is piloting federated learning models with partner banks to pool anonymized fraud data and collaboratively train ML algorithms without sharing raw data. This improves detection accuracy, reduces false positives, and enables coordinated defense across institutions.

NPCI is piloting a federated AI project with major banks for UPI fraud?the pilot pools anonymized risk data across institutions to refine predictive analytics, reduce false positives, and enhance detection across channel boundaries.

The feedback loop is a continuous cycle where alerts from transaction monitoring inform periodic reviews and updates to risk profiles, ensuring dynamic alignment between CDD and transactional risk. Under Wolfsberg, its implementation is mandatory to maintain effective AML vigilance.

A fiduciary capacity is when one person holds property for the benefit of another under legal trust or obligation. Examples include trustees, partners, company directors, and legal guardians. In such cases, ownership is not considered benami under the Act, as the transaction lacks concealment or fraud intent. Fiduciary holdings are legally protected and exempt.

Fiduciary duty is a legal obligation requiring one party to act in the best interest of another. In the context of insider trading, it means that corporate insiders?like executives or board members?must not use confidential company information for personal gain. Breaching this duty by trading on such information can lead to legal penalties and insider trading charges.

Form 3 is used for declaring undisclosed foreign assets/income under the one-time compliance opportunity (2015). It includes details like asset location, acquisition cost, and foreign account numbers. Proper filing under this form was crucial for availing immunity from prosecution during the window period.

NSE monitors aggregate FPI/NRI holdings and triggers penalties when positions exceed sector or security limits. This cap, often triggered daily, enforces global compliance with investment norms and ensures seamless integration with overall surveillance architecture.

Egmont periodically publishes compendiums of anonymized and sanitized case studies (e.g., 2014–2020 BECAs report). These foster global knowledge-sharing and analytic methodology improvements among FIUs.

FCCQ is a streamlined version of CBDDQ tailored for non-correspondent clients. Designed for standard AML onboarding, it arms financial institutions with a harmonised approach to assessing compliance without the complexity of the full CBDDQ.

To ensure risk-based compliance processes don't compromise access to the financial system.

FIU-IND collects and analyzes information related to suspicious financial transactions. It assists in identifying undisclosed foreign assets by examining cross-border wire transfers and bank records. It plays a vital role in enforcing the Black Money Act by facilitating data for tax enforcement and legal action.

Under Article 58, each State should establish or empower a Financial Intelligence Unit (FIU) to receive, analyse, and share suspicious transaction reports across agencies and borders. FIUs facilitate detection of corruption-linked financial flows, enabling proactive measures to trace and disrupt illicit asset movement.

Measures that prohibit financial transactions with sanctioned targets.

Financial statement fraud involves intentionally misrepresenting a company’s financial information to deceive stakeholders. This can include inflating revenues, hiding liabilities, or misstating assets to present a healthier financial position. Such fraud misleads investors, regulators, and the public, potentially leading to severe legal consequences and loss of trust.

U.S. regulator compliance in brokerage firms and financial markets.

A firewall is a security system that protects a network by controlling incoming and outgoing traffic based on predefined rules. It acts as a barrier between a trusted internal network and untrusted external networks, helping to block unauthorized access and prevent the spread of malicious software

To reduce repeated balance-check calls, NPCI mandates that banks include the current account balance in every successful UPI transaction alert?minimizing redundant non-financial APIs.

PFRDA mandates that Sponsors and Principal Officers of Pension Funds meet “fit and proper” criteria?assessing integrity, reputation, experience, and financial soundness?similar to SEBI norms. Clear roles are defined to ensure trustees and senior management uphold fiduciary duties.

FISMM is a self-assessment framework supported by Egmont and partners to help FIUs identify gaps in their IT infrastructures?from data collection to analytics to secure exchange?and benchmark progress toward global best practice.

Egmont enforces independence standards: member FIUs may be suspended if political interference erodes trust. For example, EG suspended Russia’s FIU (Rosfinmonitoring) in December 2022 and again in October 2023 over autonomy concerns?a signal that operational independence is paramount.

Egmont Classifies FIUs into four types based on structure and mandate: administrative, law enforcement, judicial, or hybrid. Membership requires cohesive mandate and independence aligned with the chosen type, ensuring effective integration in national AML/CFT systems.

Changingship flag/state of registration to conceal ownership and bypass controls.

Egmont allows member FIUs to work through varying legal systems and institutional settings by establishing shared communication frameworks that adapt (scale) across nations?fostering effective exchange while respecting jurisdictional diversity.

Focal concerns theory suggests that individuals in lower-class communities adopt specific values?such as toughness, autonomy, and excitement?that can lead to delinquent behavior. These “focal concerns” arise as adaptations to social and economic challenges within their environment, sometimes resulting in criminal acts.

FBAR is a requirement for Indian residents to disclose any foreign bank accounts in their income tax returns. Non-disclosure is treated as concealment under black money laws. Holding accounts abroad without reporting may lead to heavy penalties and criminal charges under the Black Money Act.

A Foreign Currency Account is held by Indian residents or entities to retain foreign earnings in foreign currency. These accounts are governed by FEMA and must be opened with RBI’s or an authorized dealer’s approval. They help manage forex for international transactions but are strictly monitored to ensure funds are used for permissible purposes only.

"Foreign Exchange" refers to foreign currency and includes deposits, credits, and balances payable in any foreign currency. It also encompasses drafts, travelers' cheques, letters of credit, or bills of exchange expressed or drawn in Indian currency but payable in any foreign currency.

An FFI is any non-U.S. financial institution?like banks, custodians, investment funds, or insurance companies?that holds financial assets for others, accepts deposits, or invests. Under FATCA, FFIs must register with the IRS, identify and report U.S. account holders, or face a 30% withholding tax to prevent offshore tax evasion.

Schedule FA in the Indian income tax return is a detailed form for disclosing foreign assets, including bank accounts, shares, trusts, and real estate. Omission or misreporting of details here can be prosecuted under black money laws. Accurate reporting in this schedule is crucial for legal compliance.

FIIs are entities such as mutual funds, pension funds, or investment trusts based outside India that invest in Indian securities. Under FEMA, their investment is regulated by RBI and SEBI. Though FII and FPI (Foreign Portfolio Investor) are now unified, FEMA still governs the flow of such capital to maintain market stability and transparency.

NSE monitors Foreign Portfolio Investors' (FPI) and Non-Resident Indian (NRI) ownership against statutory limits per company or sector. If trades breach eligibility caps, the trading member incurs a penalty of 0.10% of transaction value or ?50,000 per security?whichever is higher.

FPIs are investments by non-residents in Indian securities like shares and bonds without significant control. FEMA classifies and regulates FPI separately from FDI. FPIs require registration with SEBI and must follow RBI’s sectoral caps and limits. This ensures stable, legal capital inflows while safeguarding India’s financial markets against volatility and money laundering.

A “foreign public official” includes any individual acting in an official capacity for a government or public enterprise of another country?this includes elected or appointed officials, civil servants, judges, military personnel, or public company employees. Under the Convention, bribery involving any such official must be criminalized by member countries.

A “foreign public official” refers to anyone appointed or elected to a public position?whether governmental, administrative, judicial, or in a public enterprise?of another country. They are within UNCAC’s jurisdiction for foreign bribery offences. This enables countries to criminalize corrupt payments to overseas officials.

OFAC list of individuals/entities who have violated U.S. sanctions or who have facilitated evasions.

A "Foreign Security" means any security in the form of shares, stocks, bonds, debentures, or any other instrument denominated or expressed in foreign currency. It includes securities expressed in foreign currency but where redemption or any form of return is payable in Indian currency.

Forgery is the act of creating, altering, or imitating documents, signatures, or other items with the intent to deceive or commit fraud. It is often used to gain unauthorized benefits, such as financial gain or access to assets, by presenting falsified evidence as genuine.

Form 8966 is the IRS filing for FFIs to report U.S. reportable accounts. It captures institution details, account holder information, year-end balances, and payment data. Timely and accurate Form 8966 submissions ensure compliance and avoidance of FATCA withholding penalties on U.S.-source payments.

Fraud is the deliberate deception or misrepresentation made to secure unfair or unlawful gain, often causing financial or reputational harm. It includes activities like identity theft, embezzlement, and false claims. Whistleblowers help uncover fraud by reporting suspicious or illegal conduct to authorities.

Regular awareness programs must be conducted for employees, agents, and policyholders to educate them on fraud trends, RFIs, reporting protocols, and digital safeguards. These initiatives aim to build frontline vigilance and a fraud-aware culture.

These directions define fraud types and streamline reporting by banks and financial institutions. They require establishing a Central Fraud Registry, reporting to RBI/LEAs, conducting title-document audits for large loans, and maintaining board oversight. They aim to detect fraud early, enforce accountability, and facilitate transparent action, strengthening institutional fraud governance.

Use of tools and procedures for detecting and preventing fraud.

Insurers must maintain a structured incident database capturing all fraud cases?including metadata, financial impact, status, and resolution. This data supports trend analysis, risk assessments, and regulatory reporting as part of a dynamic fraud governance ecosystem.

A senior-level oversight team comprising board or management members that oversees FMU operations, sets fraud risk policies, reviews incident reports, ensures transparency, and recommends disciplinary or corrective actions. It also reports regularly to the board.

An independent cell within insurers responsible for preventing, detecting, investigating, and reporting insurance fraud. FMUs must function separately from internal audit and report to the board or Risk/Fraud Committee.

CRAs and Trustee Banks must have board-approved fraud policies, internal controls, indemnification of subscriber losses, and regulatory reporting to protect subscriber funds and system integrity.

Comprehensive system involving senior management and board oversight, internal controls aligned with risk appetite, periodic fraud risk assessments, awareness initiatives, and linkages with law enforcement. Designed to maintain industry integrity and policyholder trust.

These Master Directions mandate NBFCs above ?500?crore in assets to establish formal fraud risk frameworks. They cover detection systems, reporting protocols, board-level oversight, and coordination with law enforcement and the RBI. The aim is early fraud detection, response coordination, and stronger governance across the financial sector.

Fraudulent conveyance occurs when a debtor illegally transfers assets to another party to avoid paying creditors. This transfer is done to hide property or reduce the debtor’s financial obligations, and it can be reversed by courts to protect creditors? rights.

A Free Trade Agreement (FTA) is a treaty between two or more nations that eliminates or reduces trade barriers like tariffs, quotas, and import restrictions. FTAs aim to promote economic growth by encouraging cross-border trade, improving market access, and supporting investment flows. These agreements also often include provisions for intellectual property, labor standards, and dispute resolution mechanisms.

Under SEBI regulations, regulators or DPs can freeze an investor’s demat account for compliance issues, default, or legal orders. During freeze, transfers or pledges are restricted until unfreeze instructions are received.

Clients or the regulator can instruct DPs to freeze specific securities in a demat account (e.g., for collateral, court orders). These securities cannot be transferred until unfreeze instructions are received.

Frivolous litigation refers to legal claims or lawsuits that lack any basis in law or fact, often filed to harass or delay. Courts may dismiss these cases and penalize parties to prevent abuse of the legal system and protect resources for legitimate claims.

A fronting policy is an insurance arrangement where one insurer issues a policy but immediately transfers most or all of the risk to another insurer, often through reinsurance. This is commonly used by companies with captive insurers to meet regulatory requirements while managing risk efficiently.

CICs collect, process, and disseminate credit information; offer credit scores; register borrowers; undertake research; and perform RBI-specified functions only

Fungibility means all securities of the same class held in a depository are identical and interchangeable. They lose their unique certificate numbers and are treated equally, ensuring smooth and anonymous transactions in the demat system.