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AML and compliance glossary

The terms behind the certifications, in plain language. Every acronym is expanded on first use across the site.

Quick answer

What do AML acronyms like KYC, CDD, and SAR mean?

KYC (know your customer) is the process of identifying a customer and their risk. CDD (customer due diligence) is the underlying risk-assessment work, with EDD (enhanced due diligence) applied to higher-risk customers. A SAR (suspicious activity report) is the filing made to a financial-intelligence unit when suspicious activity is detected. All three terms appear across the AML certification exams this site compares.

AML (Anti-Money Laundering)
The framework of laws, regulations, and internal controls that financial institutions use to detect and prevent the disguising of illicit funds as legitimate income. It underpins every credential this site compares.
CDD (Customer Due Diligence)
The risk-based assessment a firm performs on a customer, from identity verification through ongoing monitoring, to judge money-laundering and terrorist-financing risk. Enhanced due diligence applies to higher-risk customers.
CFT (Counter-Financing of Terrorism)
The framework of measures used to detect and disrupt the funding of terrorism, usually paired with anti-money-laundering as AML/CFT. Several credentials, including the ICA anti-money-laundering qualifications in some markets, explicitly cover counter-financing of terrorism alongside money laundering.
EDD (Enhanced Due Diligence)
A deeper level of customer due diligence applied to higher-risk customers, products, or jurisdictions, gathering additional information and closer ongoing monitoring beyond standard checks. Knowing when EDD is triggered and what it requires is core to most AML certification syllabuses.
FATF (Financial Action Task Force)
The intergovernmental body whose Recommendations set the international standards for combating money laundering and terrorist financing. National regimes and, indirectly, the AML certifications are built around the FATF standards.
KYC (Know Your Customer)
The process of identifying and verifying a customer and understanding the expected nature of their activity, so that unusual behavior can be recognized. KYC is a core building block of an anti-money-laundering program.
MLRO (Money Laundering Reporting Officer)
The senior individual accountable for a firm's anti-money-laundering program and for deciding whether to escalate suspicious activity to the authorities. The role is a common career destination for certified AML professionals.
PEP (Politically Exposed Person)
An individual entrusted with a prominent public function, whose position carries a higher risk of bribery or corruption and therefore triggers enhanced due diligence. Identifying and managing PEP relationships is a recurring theme across AML and financial-crime credentials.
Sanctions
Restrictions imposed by governments or international bodies on dealings with named individuals, entities, or countries. Screening customers and transactions against sanctions lists is a specialized discipline, and the Certified Global Sanctions Specialist (CGSS) is the credential built specifically around it.
SAR (Suspicious Activity Report)
A report a regulated firm files with its national Financial Intelligence Unit when it suspects funds or activity are linked to crime. In some jurisdictions it is called a Suspicious Transaction Report. Tipping off the subject is generally prohibited.
Typologies
Recognized patterns or methods that criminals use to launder money or commit financial crime, such as trade-based money laundering or the misuse of correspondent banking. Studying typologies is how AML professionals learn to spot suspicious activity, and several ICA Specialist Certificates focus on individual typologies.
UBO (Ultimate Beneficial Owner)
The real person who ultimately owns or controls a customer entity, as opposed to the legal owner on paper. Identifying the ultimate beneficial owner behind complex structures is a central anti-money-laundering task and a common exam topic across these certifications.