Financial Fraud Glossary

A fraud tactic in which the victim is assigned a personal "account manager" or "senior broker" whose role is to build trust and encourage increasingly larger deposits into a fraudulent platform.

EU directive establishing a regulatory framework for alternative investment fund managers, including requirements for authorisation, transparency, and investor protection for funds that fall outside the UCITS framework.

A series of EU directives (4AMLD through 6AMLD) that establish the framework for preventing money laundering and terrorist financing. These directives impose obligations on financial institutions for customer due diligence, suspicious transaction reporting, and beneficial ownership transparency.

A measure of confidence in the authentication process. In the context of financial services, higher assurance levels require stronger identity verification methods such as multi-factor authentication.

The financial markets authority of the Netherlands, responsible for supervising the conduct of financial institutions and markets, including investment firms, exchanges, and financial advisors.

France's financial markets regulator, responsible for safeguarding investments in financial instruments, ensuring the orderly functioning of financial markets, and providing information to investors. The AMF maintains a public register and a blacklist of unauthorised entities.

Germany's federal financial supervisory authority, responsible for the supervision of banks, financial services providers, insurance companies, and securities trading. BaFin maintains a public register of authorised entities and publishes warnings about unauthorised firms.

The process of examining blockchain transaction data to trace the movement of cryptocurrency between wallets, identify patterns, and link transactions to identifiable entities such as exchanges or service providers.

EU directive establishing the framework for the authorisation and prudential supervision of credit institutions (banks). Together with the Capital Requirements Regulation (CRR), it defines the capital, liquidity, and governance requirements for banks operating in the EU.

Ireland's central bank and financial services regulator, responsible for authorising and supervising financial service providers operating in or from Ireland, including investment firms and payment institutions.

A dispute resolution mechanism provided by card networks (Visa, Mastercard) that allows a cardholder to request the reversal of a card payment through their issuing bank. Chargebacks can be initiated on grounds including fraud, non-delivery of services, or misrepresentation.

A fraudulent entity that uses the name, registration number, address, or other credentials of a legitimate, authorised firm to deceive potential investors into believing they are dealing with a regulated business.

Spain's national securities market commission, responsible for the supervision and inspection of securities markets and the activities of participants in those markets.

Italy's public authority responsible for regulating the Italian securities market, protecting investors, and ensuring the transparency and efficiency of the market.

A national body designated by an EU Member State as responsible for the supervision and enforcement of specific EU financial legislation within its jurisdiction. Different directives may designate different competent authorities.

A financial derivative that allows traders to speculate on price movements of underlying assets without owning the asset itself. CFDs are high-risk leveraged products subject to marketing restrictions under ESMA product intervention measures.

A financial institution that provides services on behalf of another bank, typically in a different jurisdiction. In cross-border wire transfers, correspondent banks serve as intermediaries that facilitate the movement of funds between the originating and beneficiary banks.

The process by which financial institutions verify the identity of their customers and assess the risk of doing business with them. CDD is a core requirement under EU anti-money laundering legislation and includes identification, verification, and ongoing monitoring.

The independent supervisory authority responsible for the supervision of the investment services market, transactions in transferable securities, and the collective investment and asset management sector in Cyprus.

A scheme mandated by the Deposit Guarantee Scheme Directive (DGSD) that protects eligible deposits up to EUR 100,000 per depositor per credit institution. These schemes are funded by contributions from member banks and activated in cases of bank failure.

EU directive mandating that each Member State establish at least one deposit guarantee scheme, providing protection up to EUR 100,000 per depositor per institution for eligible deposits held in authorised credit institutions.

An independent EU authority that works to ensure effective and consistent regulation and supervision across the European banking sector. The EBA develops regulatory and implementing technical standards and issues guidelines for the banking sector.

An EU judicial cooperation instrument that allows a judicial authority in one EU Member State to request that investigative measures be carried out in another Member State to obtain evidence in criminal proceedings.

The EU authority responsible for safeguarding the stability of the European financial system by enhancing investor protection and promoting stable, orderly financial markets. ESMA coordinates the work of national securities regulators and maintains warning lists of unauthorised entities.

An intergovernmental body that develops and promotes policies to combat money laundering, terrorist financing, and other threats to the integrity of the international financial system. FATF Recommendations form the basis of EU anti-money laundering legislation.

The financial regulatory body of the United Kingdom, responsible for regulating financial firms providing services to consumers and maintaining the integrity of UK financial markets. The FCA maintains a public register of authorised firms and publishes warnings about unauthorised entities.

A national agency responsible for receiving, analysing, and disseminating financial intelligence related to suspected money laundering, terrorist financing, and other financial crimes. Each EU Member State is required to establish an FIU under anti-money laundering legislation.

Austria's financial market authority, responsible for the supervision of banks, insurance companies, pension funds, and investment firms operating in Austria, including cross-border services.

Belgium's financial services and markets authority, responsible for supervising financial markets and listed companies, and for ensuring that financial products and services comply with applicable rules.

The global decentralised market for trading national currencies. Retail Forex trading involves speculating on currency pair price movements and is subject to regulatory oversight under MiFID II when offered to clients within the EEA.

An internationally agreed system of identifying bank accounts across national borders, used to facilitate the communication and processing of cross-border transactions within SEPA and internationally.

A scheme established under the Investor Compensation Scheme Directive that provides compensation to investors when an authorised investment firm is unable to return client funds or instruments. Coverage limits and eligibility vary by Member State.

A standardised document required under the PRIIPs Regulation that must be provided to retail investors before they purchase a packaged retail investment or insurance-based product. The KID contains essential information about the product risks, costs, and potential returns.

The process by which businesses verify the identity and assess the suitability and risks of their customers. In the financial services context, KYC is a mandatory requirement under anti-money laundering legislation.

EU regulation establishing a comprehensive regulatory framework for crypto-asset issuers and crypto-asset service providers, including requirements for authorisation, conduct of business, consumer protection, and market integrity.

The core EU directive governing investment firms and financial markets, establishing requirements for the authorisation and operation of investment firms, conduct of business rules, investor protection measures, and the transparency of financial markets.

The designated national body responsible for supervising and enforcing compliance with specific EU financial regulations within a Member State. For MiFID II, this is typically the national securities regulator; for banking, the national central bank or banking supervisory authority.

EU regulation requiring manufacturers of packaged retail investment and insurance-based products to produce a Key Information Document (KID) that provides retail investors with clear, comparable information about the product before purchase.

The right of a firm authorised in one EEA Member State to provide services or establish a branch in another EEA Member State without needing separate authorisation. Passporting operates under the MiFID II, PSD2, and other EU financial services directives.

EU directive governing payment services and payment service providers, establishing rights for payment service users (including liability limits for unauthorised transactions), rules for access to payment systems, and the framework for open banking.

A fraudulent investment scheme in which returns to earlier investors are paid from the capital contributed by newer investors, rather than from legitimate business profits. Ponzi schemes require a continuous flow of new investment to sustain the illusion of returns and inevitably collapse.

A secondary fraud scheme targeting individuals who have already been victims of financial fraud. The perpetrators contact victims offering to recover their lost funds in exchange for upfront fees, further exploiting the victim's financial losses.

A procedure under the SEPA Credit Transfer scheme that allows the originating bank to request the return of a payment from the beneficiary bank. SEPA recalls are requests, not instructions; the beneficiary bank may refuse if the funds have already been disbursed.

A payment integration initiative of the European Union that simplifies bank transfers denominated in euros across participating countries. SEPA includes standardised credit transfers, direct debits, and card payment frameworks.

A global messaging network used by financial institutions to securely transmit instructions for financial transactions. SWIFT codes (BIC) identify banks in international wire transfers and are essential for tracing cross-border fund movements.

A request sent via the SWIFT network by the originating bank to the beneficiary bank asking for the return of transferred funds. Unlike domestic payment recalls, SWIFT recalls involve international correspondent banking chains and are subject to the policies of each intermediary bank.

A report filed by a financial institution or other obliged entity to the national Financial Intelligence Unit when it suspects or has reasonable grounds to suspect that funds are the proceeds of criminal activity or are related to terrorist financing.

EU regulation requiring that transfers of funds be accompanied by information on the payer and the payee, enabling the tracing of transfers for the purposes of preventing, detecting, and investigating money laundering and terrorist financing.

An entity that conducts one or more of the following activities for or on behalf of another person: exchange between virtual assets and fiat currencies, exchange between virtual assets, transfer of virtual assets, safekeeping or administration of virtual assets. VASPs are subject to anti-money laundering obligations under EU legislation.