Payments & Licensing Glossary
Payments terminology misleads people into expensive mistakes. Registration is not a license. An FBO account carries no authority to transmit money. SWIFT moves messages, not funds. Every entry here gives the definition and then the qualification that matters operationally.
Searches every term, abbreviation and alternative name — so an abbreviation finds the full term, and the full term finds the abbreviation.
Category
Jurisdiction
328 entries
A
- AAOIFIAAOIFI, the Accounting and Auditing Organization for Islamic Financial Institutions, is a Bahrain-based international standard-setter whose Sharia, accounting, auditing, governance and ethics standards are widely used in Islamic finance.
- ACHACHUSAACH is the batch system for domestic bank-to-bank debits and credits in the United States. Payments are grouped into files, exchanged between banks and settled on a processing schedule rather than one at a time, which makes ACH cheap, slower than a wire, and reversible within defined return windows.
- AML ProgramAn AML program is the documented set of controls a regulated firm must maintain to detect and deter money laundering. In the United States it is conventionally described as four pillars: written policies and procedures, a designated compliance officer, staff training, and independent review. Other regimes frame the same components differently.
- Account Information ServiceAISEUAn account information service is a regulated open banking service that reads a customer's payment account data, with their consent, and presents it back to them. PSD2 defines it as an online service providing consolidated information on one or more payment accounts. It reads; it cannot move money.
- AcquirerAn acquirer is the institution that contracts with a merchant to accept card payments, submits those transactions into the card schemes, settles the merchant’s proceeds, and carries the acquiring-side financial exposure — including the cost of chargebacks the merchant cannot fund itself.
- Adverse MediaAdverse media screening is the practice of searching public sources for negative information about a customer — allegations, investigations, charges, convictions, regulatory action. It is a due diligence input, not a verdict, and treating a search hit as proof is how firms get the decision wrong in both directions.
- Agent of the PayeeAOTPUSAAn exemption in some US states under which a company collecting funds as the seller’s authorized agent is not treated as transmitting money. Payment to the agent discharges the buyer’s obligation to the seller, so nothing is in transit — the buyer has already paid.
- AggregatorAn aggregator consolidates many downstream providers behind a single contract and integration, so its customer reaches multiple corridors, rails or payout networks through one connection. Aggregation is a commercial and technical arrangement; it carries no regulatory status of its own.
- All-in CostThe all-in cost of a transfer is everything the sender gives up: explicit fees, the FX markup built into the exchange rate, and any deduction taken downstream before the recipient is paid. It is expressed against the amount sent.
- Anti-Money LaunderingAMLAnti-money laundering, usually shortened to AML, is the body of law, regulation and internal controls requiring financial firms to detect, prevent and report attempts to disguise the origin of criminal proceeds. It is an obligation placed on the firm, not a product the firm can buy.
- Appointed RepresentativeARUKA UK firm that carries on regulated activities under FSMA as the representative of an authorized principal firm. The principal accepts regulatory responsibility for what the representative does, and the representative holds no authorization of its own.
- Authorized DelegateUSAA company authorized to conduct money transmission on behalf of a licensed principal, operating under that principal’s money transmitter license rather than holding one of its own. Most US states call this an authorized delegate; some call it an agent.
B
- BCEAOBCEAOThe BCEAO, the Central Bank of West African States, is the single central bank of the eight countries of the West African Economic and Monetary Union. It issues the West African CFA franc (XOF) and regulates banks, payment systems and e-money across the union.
- BEACBEACThe BEAC, the Bank of Central African States, is the single central bank of the six countries of the Central African Economic and Monetary Community (CEMAC). It issues the Central African CFA franc (XAF) and enforces the zone's foreign exchange regulations.
- BICBICA BIC — Business Identifier Code, and still widely called a SWIFT code — identifies a financial institution in international payments. It is an ISO standard of eight or eleven characters, for which Swift is the registration authority. It identifies an institution, not an account.
- BIN SponsorshipBINBIN sponsorship is the arrangement in which a licensed member of a card scheme lets another company run a card programme under the sponsor's scheme membership and BIN range. The programme belongs commercially to the sponsored firm; the scheme relationship and the regulatory responsibility stay with the sponsor.
- Bank CharterUSAA bank charter is the authorisation that makes an institution a bank — granted in the United States either by a state banking department or by the federal Office of the Comptroller of the Currency. Deposit insurance and access to Federal Reserve services are separate approvals, not things the charter brings with it.
- Bank RunA bank run is a rush by depositors or other short-term creditors to withdraw their money from an institution because they fear it will fail. Because no bank holds enough liquid assets to repay everyone at once, the rush itself can cause the failure.
- Bank Secrecy ActBSAUSAThe Bank Secrecy Act is the 1970 United States statute, heavily amended since, that requires banks, money services businesses and other financial institutions to keep records, register where applicable, report large cash transactions and suspicious activity, and maintain an anti-money-laundering program.
- Bank for International SettlementsBISThe Bank for International Settlements (BIS) is an international institution in Basel, owned by central banks, that provides banking services to them and hosts the committees that write global standards for bank capital and payment infrastructure.
- Banking-as-a-ServiceBaaSBanking-as-a-Service is an arrangement in which a licensed bank makes its accounts, payments and cards available to a non-bank company, which builds the customer-facing product. The bank keeps the charter, the insured deposits and the regulatory responsibility.
- Basel Committee on Banking SupervisionBCBSThe Basel Committee on Banking Supervision (BCBS) is the global standard-setter for the prudential regulation of banks. Hosted by the BIS, it writes the Basel framework on capital, liquidity and leverage that national regulators then put into law.
- Basis PointbpsA basis point is one hundredth of one percentage point — 0.01%. FX and payments pricing is quoted in basis points because small percentages are easy to misread: 25 basis points is 0.25%, and 100 basis points is 1.00%.
- Bay' al-'InahBay' al-'inah is a sale and buy-back: a person sells an asset on deferred payment terms and immediately buys it back from the same buyer for a lower cash price, leaving the buyer with cash now and a larger debt later.
- Beit DinA Beit Din is a Jewish rabbinical court.
- Beneficiary BankThe beneficiary bank is the financial institution that holds the account intended to receive a payment. It may review the beneficiary, currency, payment purpose and supporting documents before making funds available.
- Beneficiary-Account MismatchA beneficiary-account mismatch occurs when the account holder’s name does not agree with the expected supplier or contractual payee. It can indicate a clerical error, undisclosed collection arrangement, payment-diversion fraud or an unrelated third party.
- Bill of LadingA bill of lading is a transport document issued in connection with the carriage of goods by sea. Depending on its form, it can evidence receipt of the goods, contain the carriage terms and function as a document controlling delivery.
- BitLicenseUSANew York’s dedicated license for virtual currency business activity, granted by the New York State Department of Financial Services under rules in force since June 2015. It is separate from a New York money transmitter license, and a firm that also moves fiat currency generally needs both.
- Blockchain AnalyticsBlockchain analytics is software that traces transactions across a public chain and attributes addresses to entities and risk categories — exchanges, mixers, sanctioned parties, darknet markets. Crypto businesses use it to screen counterparties, monitor flows and investigate alerts.
- Bretton Woods SystemThe Bretton Woods system was the international monetary order agreed in 1944, under which currencies were fixed to the US dollar and the dollar was convertible into gold at US$35 an ounce. It created the IMF and the World Bank and ended in 1971.
- Business Email CompromiseBECBusiness email compromise is a fraud in which an attacker impersonates or takes control of a business email account to manipulate payments or obtain sensitive information. Independent verification of changed bank instructions is one of the most important defenses.
C
- CBDCCBDCA CBDC, or central bank digital currency, is digital money issued by a central bank and held as a claim on that central bank. It is not a privately issued stablecoin, and it is not the commercial bank money already moving through payment systems.
- CFA FrancThe CFA franc is the name shared by two separate currencies used by fourteen African countries: the West African CFA franc (XOF) and the Central African CFA franc (XAF). Both are pegged to the euro at the same rate but are issued by different central banks.
- CHAPSCHAPSUKCHAPS is the United Kingdom's high-value sterling payment system, operated by the Bank of England. It settles each payment individually and irrevocably in real time across the Bank's RTGS infrastructure, which is what makes it the rail for house purchases and wholesale settlement.
- CHIPSCHIPSUSACHIPS is a private-sector clearing and settlement system for high-value US dollar payments, operated by The Clearing House. Unlike Fedwire it nets: it matches and offsets payments continuously so participants can settle very large volumes with far less funding.
- CIPSCIPSChinaCIPS, the Cross-border Interbank Payment System, is China's clearing and settlement infrastructure for renminbi payments. It began operating in October 2015 and is supervised by the People's Bank of China. It settles RMB; it is not a general-purpose replacement for SWIFT.
- CLSCLSCLS is the specialist institution that settles foreign exchange trades between major banks on a payment-versus-payment basis. Launched in 2002 and owned by its member banks, it settles 18 currencies and removes the risk of paying one side of a trade without receiving the other.
- CNHChinaCNH is the market convention used to identify renminbi traded and held outside Mainland China, particularly in Hong Kong. CNH is not a separate sovereign currency or an independent ISO 4217 currency code.
- CNYChinaCNY is the official ISO 4217 currency code for renminbi. In financial-market discussions, CNY also commonly refers to the onshore RMB market and exchange rate inside Mainland China.
- CNY–CNH SpreadChinaThe CNY–CNH spread is the difference between the onshore and offshore RMB exchange rates. It can reflect differences in liquidity, market expectations, funding conditions and restrictions on movement between the two markets.
- CSBSCSBSUSAThe Conference of State Bank Supervisors, the membership organization through which US state financial regulators coordinate. CSBS operates NMLS, the system state money transmitter applications are filed through, and drafted the model Money Transmission Modernization Act.
- Capital ControlsCapital controls are government limits on moving money into or out of a country, or on converting its currency at the official rate. Imposed by a central bank or finance ministry, they determine whether a payment corridor is workable at all, and in which direction.
- Capital FlightCapital flight is the rapid movement of money out of a country by residents and investors who fear devaluation, inflation, confiscation, default or political instability. It drains foreign exchange reserves and often triggers the controls it was trying to escape.
- Capital-Account TransactionChinaA capital-account transaction involves activity such as direct investment, portfolio investment, cross-border borrowing or movement of investment capital. These transactions can face different registrations, approvals, quotas and controls from ordinary trade payments.
- Card SchemeA card scheme is the network that sets the rules for card payments, operates the switch that carries authorisation and clearing messages between issuers and acquirers, licenses the brand, and sets interchange. In the four-party model it neither issues cards nor holds anyone's money.
- Cash PickupCash pickup is a payout method in which the recipient collects physical cash from an agent location instead of receiving money into an account. It is the oldest form of remittance payout and still the only one that works for a recipient with no bank account and no reliable mobile wallet.
- Cash in AdvanceCash in advance requires the buyer to pay before the seller ships or releases the goods. It protects the supplier against nonpayment but gives the buyer less protection if the goods are late, defective or never delivered.
- Central BankA central bank is the public institution that issues a country's currency, sets monetary policy, holds its foreign exchange reserves and acts as banker to commercial banks and the government. Most also run the core payment system and lend in emergencies.
- Central Bank MoneyCentral bank money is money that is a direct liability of the central bank: banknotes and coins, and the balances that commercial banks hold in their accounts at the central bank. It carries no credit risk and is the safest settlement asset.
- Central Bank Swap LineA central bank swap line is a standing agreement under which one central bank lends its currency to another in exchange for the borrower's currency, so the borrower can supply foreign-currency funding to banks in its own jurisdiction.
- Change of ControlA change of control is a transaction that shifts ownership or control of a licensed entity past a regulatory threshold. It must be cleared with the regulator before completion, by approval in some regimes and by the regulator not objecting within a set assessment window in others. What is assessed is the incoming owners, not the deal.
- ChargebackA chargeback is a forced reversal of a card payment, initiated by the cardholder’s bank rather than by the merchant. The money is taken back out of the merchant’s account under the card scheme’s dispute rules, whether or not the merchant agrees.
- Check CasherUSAA check casher is a FinCEN money services business category: a person who cashes checks for more than $1,000 for any one person on any day. Federal registration as an MSB and a state check-cashing licence are separate requirements, and neither covers money transmission.
- Client MoneyUKIn the United Kingdom, client money is a defined regulatory term: money a firm holds for customers under one of the FCA’s client asset regimes, covering investment business, insurance distribution, debt management and claims management. It must be segregated, identifiable, and — in investment business — held on trust for the customers it belongs to.
- Commercial Bank MoneyCommercial bank money is the money that exists as deposits at commercial banks. It is a private bank's promise to pay, created when banks lend, and makes up the large majority of the money that households and businesses actually use.
- Commercial InvoiceA commercial invoice is the seller’s formal statement of the goods or services supplied and the amount owed by the buyer. Banks, customs authorities and payment providers may use it to verify the payment amount, parties, currency and commercial purpose.
- Committee on Payments and Market InfrastructuresCPMIThe Committee on Payments and Market Infrastructures (CPMI) is the international standard-setter for payment, clearing and settlement systems. Hosted by the BIS, it brings together central banks to promote the safety and efficiency of the infrastructure that moves money.
- Compliance OfficerA compliance officer is the individual a regulated firm formally designates as responsible for its anti-money-laundering program — the person named on a licensing application, asked for by a bank during onboarding, and interviewed by an examiner. In the United States the role is often called the BSA officer.
- Control PersonUSAAn individual or entity whose ownership stake in, or authority over, a licensee is large enough to require regulatory disclosure, fingerprinting and background checks. Control usually arises from a threshold ownership percentage or from holding an officer or director position.
- Correspondent BankingCorrespondent banking is an arrangement in which one bank holds deposits for another bank and makes and receives payments on its behalf, normally so the second bank can reach a currency or a market where it has no branch or license of its own.
- Correspondent Tie-UpA correspondent tie-up is an arrangement, bilateral or tri-party, under which one operator sends payments through another operator’s correspondent banking relationship. It buys reach into a market where the first party cannot open an account or hold a license of its own.
- Cross-Border PaymentA cross-border payment is one where the payer and the payee are in different jurisdictions. It usually involves a currency conversion and at least one intermediary, and it answers to the rules at both ends rather than only the sender’s.
- Cross-Border RMB SettlementChinaCross-border RMB settlement is the payment and settlement of an international transaction in renminbi rather than another currency such as the US dollar. The transaction must still satisfy applicable banking, documentation, foreign-exchange and regulatory requirements.
- Cross-Currency BasisThe cross-currency basis is the extra cost, or saving, of borrowing one currency through the FX swap market compared with borrowing it directly. A negative dollar basis means dollars are scarcer and dearer offshore than interest rates alone imply.
- Crypto CustodyCrypto custody is holding someone else’s crypto-assets, or the means of access to them, in a way that lets you move them. The test is control in fact — who could move the balance without the customer’s cooperation — not how the service describes itself in its terms.
- Crypto-Asset Service ProviderCASPEUThe authorization category under the EU’s Markets in Crypto-Assets Regulation for firms providing crypto services — custody, exchange, transfer, trading platforms and advice. A crypto-asset service provider is authorized by one member state’s regulator and can then passport across the EU.
- Currency ConvertibilityCurrency convertibility is the ability to exchange a currency for foreign currency without official restriction. A currency may be convertible for trade payments but restricted for investment flows, and a legal right to convert does not guarantee the foreign currency is available.
- Currency PairA currency pair is two currencies quoted against each other — EUR/USD, USD/JPY, GBP/INR. The first is the base currency, the second the quote currency, and the price says how many units of the quote currency one unit of the base is worth.
- Currency PegA currency peg is a policy under which a central bank fixes its currency's exchange rate to another currency or a basket and stands ready to buy and sell at that rate. The peg lasts only as long as the reserves and credibility behind it.
- Currency Transaction ReportCTRUSAA Currency Transaction Report, or CTR, is a report a United States financial institution files with FinCEN when currency transactions by or on behalf of one person exceed USD 10,000 in a single business day. It is triggered by an amount of cash, not by anything suspicious.
- Current Account BalanceThe current account balance is the net of what a country earns from and pays to the rest of the world for goods, services, investment income and transfers such as remittances. A deficit must be financed by borrowing, investment inflows or reserves.
- Current-Account TransactionChinaA current-account transaction generally relates to ordinary economic activity such as trade in goods, trade in services, income or certain transfers. Legitimate trade payments usually fall within this category, subject to documentation and bank review.
- Customer Due DiligenceCDDCustomer due diligence, or CDD, is the baseline set of checks a regulated firm performs on a customer: who they are, who owns and controls them, and what activity to expect. It is done at onboarding and then kept current for as long as the relationship lasts, with risk rather than a fixed calendar setting when it is revisited.
- Customer Identification ProgramCIPUSAA Customer Identification Program, or CIP, is the United States rule requiring a bank to collect a minimum set of identifying details — name, date of birth for an individual, address and an identification number — before it opens an account, and to verify identity within a reasonable time afterwards. It is not a synonym for KYC.
D
- DayanA dayan is a rabbinical judge who sits on a Beit Din.
- De-riskingDe-risking is a bank exiting a whole category of customer, such as money services businesses, crypto firms or particular corridors, rather than assessing and pricing each relationship on its own facts. Accounts close because of what the customer is, not what the customer did.
- Dealer in Foreign ExchangeUSAA dealer in foreign exchange is a FinCEN money services business category: a person who exchanges the currency of one country for that of another in an amount greater than $1,000 for any other person on any day. Exchanging currency and transmitting money are different activities with different consequences.
- Deferred Net SettlementDNSDeferred net settlement (DNS) is a method in which a payment system collects payments over a period, offsets what participants owe each other, and settles only the net amounts at set times. It saves liquidity but delays finality.
- DevaluationDevaluation is a deliberate official reduction in the value of a currency that is fixed or managed against another. It makes exports cheaper and imports dearer overnight, and is usually forced by reserves running too low to defend the old rate.
- Direct CIPS ParticipantChinaA direct CIPS participant maintains an account in CIPS and connects directly to the system to process eligible transactions. Direct participation is generally limited to approved financial institutions and financial-market infrastructures.
- Documentary CollectionA documentary collection is a trade-payment method in which banks handle shipping or commercial documents in exchange for payment or acceptance. The banks facilitate the process but do not provide the same payment guarantee as an issuing bank under a letter of credit.
- DollarizationDollarization is the use of a foreign currency, usually the US dollar, in place of or alongside a country's own for saving, pricing and payment. It can be official policy or something households and firms do on their own.
- Double Currency ConversionDouble currency conversion occurs when funds are converted into an intermediate currency and then converted again before reaching the beneficiary. The additional conversion can create another FX spread, extra fees and uncertainty about the delivered amount.
- Due Diligence PackA due diligence pack is the set of documents a seller assembles so a buyer can verify what a licensed entity actually is — its corporate record, its permission, its compliance programme and its money. It is evidence, not marketing, and how good it is tells a buyer most of what they need to know.
E
- E-money DistributorEMDUKAn e-money distributor is a person engaged by an electronic money institution, authorized or small, to distribute or redeem that institution’s electronic money on its behalf. It issues nothing itself and cannot provide payment services; the customer’s claim on the funds stays against the institution.
- EMI AgentUKA firm through which an electronic money institution provides payment services in the UK. The EMI applies for the agent’s registration and the FCA registers it; the agent holds no authorization of its own, acts under the institution’s permissions, and the EMI remains responsible for everything the agent does or fails to do.
- Electronic Money InstitutionEMIUKEUA firm authorized in the United Kingdom or in an EU member state to issue electronic money and to provide payment services. The e-money it issues is a claim its holders have against the institution, redeemable at par and expressly not a deposit, which is why the funds behind it must be safeguarded.
- Embedded FinanceEmbedded finance is the delivery of a financial product inside a non-financial company's own product — a loan at a checkout, an account inside an accounting package, insurance inside a booking flow. The customer sees one brand; a regulated firm is still somewhere behind it.
- Enhanced Due DiligenceEDDEnhanced due diligence, or EDD, is the additional scrutiny applied where money laundering risk is higher. In the UK and the EU it is mandatory in prescribed cases — politically exposed persons, high-risk countries, correspondent banking — as well as wherever a firm’s own risk assessment says the baseline is not enough.
- Escrow AccountAn escrow account holds funds with a neutral third party until conditions both sides agreed to are met, at which point the money is released to whichever side the conditions point to. Neither party can move it unilaterally while it sits there.
- EurodollarA Eurodollar is a US dollar deposit held at a bank outside the United States, or at an offshore unit of a US bank. Eurodollars are created by bank lending abroad and sit largely beyond US banking regulation; they have nothing to do with the euro.
- European Economic AreaEEAEUThe European Economic Area is the EU's 27 member states plus Iceland, Liechtenstein and Norway. It is the area across which a payment or e-money authorisation can be passported — which is why it, rather than the EU, is usually the right boundary in a licensing conversation.
- Exotic CurrencyAn exotic currency is one that trades thinly — wide spreads, limited market depth, few willing counterparties, and often restrictions on converting or moving it. The label is about liquidity and tradability, not about geography or how unfamiliar the country is.
- Export Proceeds RepatriationExport proceeds repatriation is a rule requiring exporters to bring their foreign-currency earnings back into the country within a set period, and often to sell some or all of them to local banks or the central bank for local currency.
- e-CNYChinaThe e-CNY is China’s central bank digital currency and forms part of the official renminbi monetary system. It is fundamentally different from privately issued stablecoins such as USDC or USDT.
F
- FATFFATFThe Financial Action Task Force, or FATF, is the intergovernmental body that sets the international standards for anti-money-laundering and counter-terrorist financing, assesses countries against them, and maintains the lists — informally the grey list and the black list — that drive country risk ratings across the industry.
- FBO AccountFBOUSAAn FBO account is a bank account held in one company’s name for the benefit of its underlying customers. The company controls the account; the money inside belongs to the customers. The bank’s relationship is with the account holder, not with them.
- FINMAFINMASwitzerlandThe Swiss Financial Market Supervisory Authority, Switzerland’s integrated financial regulator. FINMA licenses banks, securities firms and fintech licensees, and authorizes and oversees the self-regulatory organizations that supervise other financial intermediaries for anti-money-laundering purposes. Most payment firms in Switzerland therefore deal with an SRO rather than with FINMA directly.
- FINTRACFINTRACCanadaCanada’s financial intelligence unit and anti-money-laundering supervisor. Money services businesses must register with FINTRAC before operating in Canada, report prescribed transactions to it and are examined by it — but FINTRAC issues no license and grants no permission to move money.
- FX MarkupAn FX markup is the difference between a reference rate — normally the mid-market rate — and the rate actually offered to the customer. It is the provider’s price for the conversion, and on a cross-border transfer it is usually the largest part of the cost.
- FX SpreadStrictly, the FX spread is the bid/ask spread: the gap between the price at which a currency can be bought and the price at which it can be sold at the same moment. It is a property of the market and of liquidity in that pair.
- FX SwapAn FX swap is a contract in which two parties exchange two currencies today and agree to reverse the exchange on a set future date at a rate fixed now. In economic terms it is a loan of one currency secured by another.
- Family OfficeA family office is a private organisation that manages the wealth and affairs of one very wealthy family, or of several. It handles investments, tax, estate planning, philanthropy and administration, and is controlled by the family it serves.
- Faster PaymentsUKFaster Payments is the United Kingdom's 24/7 instant sterling payment service, operated by Pay.UK. Central infrastructure supports payments of up to £1 million, but each participating institution sets its own, usually much lower, limits.
- FatwaA fatwa is a scholarly legal opinion on a question of Islamic law. In finance it is the ruling — from an individual scholar, an institution's Sharia board or a national authority — that a product, structure or transaction is or is not compliant.
- FedNowUSAFedNow is the Federal Reserve’s instant payment service, launched in 2023. A payment sent over it clears and settles in central bank money in the same moment, so the beneficiary’s bank has final funds within seconds of accepting the instruction.
- FedwireUSAFedwire is the Federal Reserve’s real-time gross settlement system for US dollar wires. Each payment is settled on its own, for its full amount, across the banks’ accounts at the Federal Reserve, and it is final the moment it settles.
- Fiat On-Ramp and Off-RampA fiat on-ramp is the point where money leaves the banking system and becomes crypto; an off-ramp is the point where it comes back. Both are conversion and settlement points, and both sit on the boundary where banking rules meet crypto rules.
- FinCENFinCENUSAThe bureau of the US Treasury that administers the Bank Secrecy Act. FinCEN writes the anti-money-laundering rules applying to financial institutions, receives suspicious activity and currency transaction reports, and maintains the federal register of money services businesses.
- FinCEN RegistrationUSAThe federal filing a money services business makes with FinCEN, on Form 107, to put itself on the Treasury’s MSB register. It must be renewed every two years. It is a notification that the business exists, not an approval of it.
- Financial Conduct AuthorityFCAUKThe Financial Conduct Authority is the United Kingdom’s conduct regulator for financial services. It decides whether a payments or e-money firm may operate in the UK, authorizes or registers it, and supervises how it behaves afterwards.
- Financial IntermediarySwitzerlandUnder Swiss anti-money-laundering law, a financial intermediary is either a prudentially supervised institution such as a bank, securities firm or fund manager, or any other person who on a professional basis accepts, holds or helps transfer assets belonging to someone else. Only the second group joins a self-regulatory organization.
- Fiqh al-Mu'amalatFiqh al-mu'amalat is the branch of Islamic jurisprudence that governs transactions between people: sales, leases, partnerships, loans, agency, guarantees, property and the other contracts on which Islamic finance is built.
- FloatFloat is customer money sitting with a payment firm between the moment it is received and the moment the beneficiary is paid, together with the working-capital and interest effects of holding that balance. Whether the firm may keep those benefits is set by its regime and its customer terms.
- Flow of FundsFoFA flow of funds is a map of every party a payment passes through and, at each step, who legally controls the money. Banks, regulators and counterparties use it to work out licensing exposure, banking requirements and where settlement risk actually sits.
- Foreign Exchange ReservesForeign exchange reserves are the foreign-currency assets a central bank holds and can use at short notice: deposits and government securities in major currencies, gold, Special Drawing Rights and the country's reserve position at the IMF.
- Foreign Money Services BusinessFMSBUSACanadaA foreign MSB is a money services business located outside the United States that does business wholly or in substantial part within the United States, and must therefore register with FinCEN. Canada uses the same term for a separate status of its own.
- Forward ContractA forward contract is an agreement to exchange one currency for another on a future date at a rate fixed today. It creates a binding obligation on both sides — which is what makes it useful for certainty and dangerous if the underlying payment never happens.
G
- Gas FeeA gas fee is what a user pays a blockchain network to execute a transaction. On Ethereum it is the amount of computational work the transaction consumes, multiplied by a price per unit that rises and falls with demand for block space.
- GemachA gemach is a Jewish mutual-aid institution.
- GhararGharar is excessive uncertainty or ambiguity in the essential terms of a contract — the subject matter, the price, the delivery — of a kind that can make one party's gain depend on the other's ignorance.
H
- HaircutA haircut is the percentage by which a lender discounts the market value of collateral when deciding how much to lend against it. A 2 percent haircut means US$100 of securities supports a loan of US$98.
- HalachaHalacha is the body of Jewish law and legal practice developed from the Torah, Talmud, later legal codes, rabbinic responsa and communal precedent.
- Hard CurrencyA hard currency is one that is widely accepted for international payment, freely convertible and expected to hold its value, such as the US dollar, euro, yen, pound sterling or Swiss franc. Suppliers abroad generally insist on being paid in one.
- HawalahHawalah is the classical Islamic contract for transferring a debt from one debtor to another: the original debtor's obligation is discharged and the creditor collects from the new party instead.
- Herstatt RiskHerstatt risk is the risk in a foreign exchange trade that one party pays the currency it sold but never receives the currency it bought, because the counterparty fails in between. The full principal amount is at stake.
- Heter IskaA Heter Iska is a Jewish-law financing agreement that structures an advance wholly or partly as an investment relationship so the provider can receive investment profit rather than prohibited interest on a simple loan.
- High-Risk MerchantA high-risk merchant is a business an acquirer classifies as elevated risk because of its dispute rate, its regulatory exposure or its reputation — gambling, adult content, crypto, nutraceuticals and retail forex are the usual examples. The label is the acquirer’s, not a regulator’s.
- Hosted WalletA hosted wallet is a wallet where a service holds the private keys on the user’s behalf. The user sees a balance and can instruct a transfer, but the provider is the party that signs, and the provider’s records are what the balance actually rests on.
I
- IBANIBANEUAn IBAN is a standardized account number format that wraps a domestic account identifier in a country code, check digits and a bank code, so a payment can be routed and structurally validated across borders. It is an address for an account, not a payment network.
- IFSBThe IFSB, the Islamic Financial Services Board, is a Kuala Lumpur-based international body that issues prudential and supervisory standards for Islamic banking, Islamic capital markets and takaful, much as the Basel Committee does for conventional banks.
- ISOISOIn card payments, an ISO — Independent Sales Organization — is a company registered with a card scheme through an acquirer to sell and service merchant accounts. The same three letters also mean the International Organization for Standardization, which is why the abbreviation is never safe on its own.
- Ibra'Ibra' is the release or remission of a debt, in whole or in part. In Islamic banking it is the rebate a financier grants when a customer settles a deferred sale price early.
- IjarahIjarah is an Islamic lease: the owner of an asset transfers the right to use it for an agreed period in return for rent, while keeping ownership and the risks that come with ownership.
- Import CoverImport cover is the number of months a country could keep paying for its imports out of its foreign exchange reserves if no new foreign currency came in. It is the simplest measure of how long a country can withstand an external shock.
- Income PurificationIncome purification is the process of identifying income that is not Sharia-compliant — such as interest earned incidentally or the share of a dividend from prohibited activities — and giving it away, usually to charity, instead of treating it as profit.
- IncotermsIncoterms are standardized trade terms published by the International Chamber of Commerce that allocate specified delivery responsibilities, costs and risks between buyer and seller. They do not by themselves determine ownership, payment method or every contractual obligation.
- Independent AML ReviewAn independent AML review is the periodic examination of a firm’s anti-money-laundering program by someone who is not responsible for running it. In the United States it is a mandatory element of the program; in the United Kingdom and European Union it is required where the size and nature of the business make it appropriate.
- Indirect CIPS ParticipantChinaAn indirect CIPS participant does not maintain its own settlement account in CIPS. It accesses CIPS services through a direct participant that processes eligible RMB transactions on its behalf.
- Informal Value Transfer SystemIVTSAn informal value transfer system (IVTS) is any network that moves money for customers outside the conventional banking system, typically by having an operator in one place instruct a counterpart elsewhere to pay out, with the operators settling between themselves later.
- InterchangeInterchange is the fee the acquirer pays the issuer on a card transaction. The card scheme sets the rate, and for most merchants it is the largest single component of the cost of accepting cards — but it is not the whole of that cost.
- Intermediary BankAn intermediary bank sits between the sending bank and beneficiary bank when they lack a direct settlement relationship. It may process, screen, convert or deduct charges from the payment as it passes through the correspondent chain.
- International Monetary FundIMFThe International Monetary Fund (IMF) is the international organisation of more than 190 countries that monitors the global monetary system, lends to members that cannot meet their external payments, and issues the Special Drawing Right.
- International Poverty LineThe international poverty line is the World Bank's threshold for extreme poverty: a daily amount per person, expressed in purchasing-power-adjusted dollars, below which someone is counted as extremely poor. Since June 2025 it has been US$3.00 a day.
- IskaAn iska is a Jewish-law investment or venture arrangement in which supplied capital is treated through a combination of investment and, in some forms, loan characteristics.
- Islamic WindowAn Islamic window is a Sharia-compliant business run inside a conventional financial institution — a division, branch network or product line — usually with segregated funds, accounts and Sharia governance.
- IssuerThe issuer is the bank or licensed institution that gives a cardholder their card, holds the account the card draws on, decides whether each transaction is approved, and pays the acquirer for the ones it authorizes. It sits on the cardholder’s side of every card payment.
- Istisna'Istisna' is a contract to manufacture or build a specified asset for an agreed price, which may be paid in advance, in instalments or on delivery. It is widely used in project, construction and infrastructure finance.
K
- Know Your BusinessKYBKnow Your Business, or KYB, is the verification of a corporate customer rather than an individual: that the entity legally exists, who owns and controls it, and what it actually does. It is the corporate counterpart to KYC, and the ownership chain is the hard part.
- Know Your CustomerKYCKnow Your Customer, or KYC, is the process of identifying and verifying a customer before a business relationship starts and keeping that understanding current while it lasts, so a firm knows who it is actually dealing with. Identity verification is the first step of KYC, not the whole of it.
- Know Your TransactionKYTKnow your transaction, or KYT, is the practice of screening individual transactions and the counterparties behind them, particularly on-chain, rather than relying only on what was established about the customer at onboarding. It answers a different question: not who this customer is, but where this particular payment came from.
L
- Last MileThe last mile is the final step of a cross-border payment: getting value into a form the recipient can actually use, in their own country, in local currency. It is where most of the cost, most of the failure and most of the competitive difference in a corridor sit.
- LedgerA ledger is the internal record of who owns what inside an account or system. The bank statement shows a single balance; the ledger says which customers, merchants or wallets that balance belongs to, and in what amounts.
- Letter of CreditA letter of credit is a bank’s conditional undertaking to pay when the seller presents documents that comply with its stated terms. Banks examine documents rather than confirming the physical quality or performance of the goods.
- License SponsorshipUSALicense sponsorship is an arrangement under which one business conducts regulated activity using a license held by another, instead of obtaining its own. In US money transmission it is normally implemented by appointing the sponsored business as an authorized delegate.
- Liquidity ProviderLPA liquidity provider is a counterparty that quotes both a buy and a sell price in a currency or asset and stands behind those quotes. It lets a customer transact immediately instead of waiting to find someone with the opposite need.
M
- MLROMLROUKThe Money Laundering Reporting Officer is the named individual an FCA-regulated firm appoints to oversee its anti-money-laundering systems and controls. In most firms the same person is also the firm’s nominated officer, the separate appointment that receives internal suspicion reports and decides what is reported onward. The responsibility attaches to the person, not to a department.
- Maqasid al-ShariaMaqasid al-Sharia are the objectives or purposes of Islamic law — classically, the protection of religion, life, intellect, lineage and property. In finance they are invoked to ask whether a product serves those aims, not just whether its contracts are technically valid.
- Maritime ChokepointA maritime chokepoint is a narrow sea passage that a large share of world trade must pass through and that has no cheap alternative route. Disruption at one raises freight, insurance and energy costs and quickly reaches currencies and payments.
- Marketplace PaymentsMarketplace payments are the flows on a platform where buyers pay the platform and the platform pays sellers — collection, the splitting out of commission, and payout, all for transactions between two other parties. How that flow is built, not the business model, decides the platform’s regulatory position.
- Master AccountUSAA master account is an account held directly at a Federal Reserve Bank. It gives its holder settlement in central bank money and direct access to US payment systems, instead of reaching them through a commercial bank that holds an account on its behalf.
- Maturity TransformationMaturity transformation is the practice of funding long-term, illiquid assets with short-term liabilities that can be withdrawn or must be renewed quickly. It is the core economic function of banking and the source of its fragility.
- MaysirMaysir is gambling or wagering — acquiring wealth by chance at someone else's expense rather than through trade, work or the productive use of capital. It is prohibited in the Qur'an and is a key test applied to speculative financial products.
- Merchant Category CodeMCCA merchant category code is a four-digit number describing the line of business a merchant is in. It is assigned by the acquirer, standardised internationally as ISO 18245, and it drives interchange, risk treatment, and in some cases whether a card will be authorised at all.
- Merchant of RecordMoRThe merchant of record is the legal seller in a transaction — the party named in the contract of sale and on the customer’s statement, and the one the chargeback and consumer obligations follow, whoever actually fulfills the order. It is a commercial description rather than a card-scheme term, and tax law does not always follow it.
- MiCAMiCAEUMiCA, the Markets in Crypto-Assets Regulation, is the EU law governing the offer of crypto-assets, their admission to trading, and the provision of crypto-asset services, with one set of rules applying directly across every member state. Service providers are authorized once and can then passport through the bloc.
- Mid-Market RateThe mid-market rate is the midpoint between the price at which a currency pair is being bought and the price at which it is being sold — the rate with no margin added. It is a reference point for pricing, not a rate a customer transacts at.
- Money Laundering StagesThe three stages of money laundering — placement, layering and integration — are the standard descriptive model of how criminal proceeds are turned into apparently legitimate funds. It is a teaching device rather than a legal test, and real schemes rarely run through it in a tidy order.
- Money Market FundMMFA money market fund (MMF) is an investment fund that holds short-term, high-quality debt such as Treasury bills, repo and commercial paper, and aims to keep a stable value while offering daily access. Investors use it like a deposit, but it is not one.
- Money Services BusinessMSBUSAA money services business is a category in US federal law under the Bank Secrecy Act, covering seven capacities: dealer in foreign exchange, check casher, issuer or seller of money orders or traveler’s checks, provider of prepaid access, seller of prepaid access, money transmitter, and the US Postal Service.
- Money Transfer OperatorMTOA money transfer operator, or MTO, is a non-bank business whose main activity is moving money for customers, usually across borders. A global network and a single neighborhood storefront are both MTOs — the term describes what the business does, not what it is licensed to do.
- Money Transmission Modernization ActMTMAUSAThe Money Transmission Modernization Act is a model state law drafted by the CSBS to harmonize US money transmitter licensing — definitions, net worth, permissible investments and control-person rules. It has no force of its own; each state decides whether to adopt it.
- Money Transmitter LicenseMTLUSAA money transmitter license is permission granted by a US state for a company to receive money from the public in that state and pay it, or its value, to someone else. Each state licenses separately.
- MudarabahMudarabah is an investment partnership in which one party provides the capital and the other provides the management. Profit is shared at an agreed ratio; financial loss falls on the capital provider unless the manager was negligent or in breach.
- MurabahaMurabaha is a sale in which the seller discloses its cost and the agreed profit to the buyer. Islamic banks use it to finance purchases by buying an asset and reselling it to the customer on deferred terms.
- MusharakahMusharakah is a partnership in which each party contributes capital to a venture. Profit is shared at an agreed ratio, while losses are borne in proportion to each partner's capital contribution.
- Musharakah MutanaqisahMusharakah mutanaqisah is a diminishing partnership: a financier and a customer co-own an asset, the customer pays rent for using the financier's share and gradually buys that share until it owns the asset outright.
N
- NMLSNMLSUSANMLS, the Nationwide Multistate Licensing System, is the shared online system through which US state regulators accept, process and renew money transmitter and other non-depository license applications. One company record serves every state the applicant selects.
- NMLS MU FilingsUSANMLS MU filings are the form set behind a US state license application: MU1 for the company, MU2 for each individual control person, MU3 for a branch, and MU4 for an individual licensee. They are four forms in one system, not four licenses.
- NYDFSNYDFSUSANYDFS is the New York State Department of Financial Services, the regulator that issues New York money transmitter licenses and the BitLicense, and that sets some of the most demanding supervisory standards in the United States.
- Named AccountA named account is a bank account opened in the end customer’s own name rather than in the operator’s name with the customer recorded internally. The customer is the account holder of record, so money arriving there is identified with them at the bank.
- Natural HedgeA natural hedge reduces currency exposure by matching receipts and payments in the same currency. For example, a company receiving RMB may use those funds for RMB supplier obligations instead of converting twice.
- Nested AccountA nested account is a correspondent banking arrangement in which a respondent bank lets other banks or financial institutions use its account at a correspondent, giving them indirect access to a payment system the correspondent never agreed to serve them in.
- NettingNetting is offsetting mutual obligations so that only the difference actually moves. Two parties that have been paying each other all day settle one payment for the net amount, which cuts both the funds transferred and the liquidity each side must hold to support them.
- Nostro AccountA nostro account is an account a bank holds in a foreign currency at a bank in that currency’s home market, literally “our account with you.” It is how a bank keeps a working balance in a currency it cannot hold at its own central bank.
O
- OFACOFACUSAThe Office of Foreign Assets Control is the US Treasury office that administers and enforces US economic sanctions. It writes the programs, designates the people and companies caught by them, publishes the lists that firms screen against, and grants the licenses that permit otherwise prohibited dealings.
- OUR, SHA and BEN Charge CodesOUR, SHA and BEN are instructions describing how bank charges should be allocated between sender and beneficiary. OUR generally places charges on the sender, SHA shares them and BEN places them on the beneficiary, although actual deductions can still depend on the route and institutions.
- Odious DebtOdious debt is a doctrine holding that a state should not be bound to repay debt that a previous regime incurred without the people's consent and against their interests, where the lenders knew this. It is an argument, not settled international law.
- Offshore RMBChinaOffshore RMB is renminbi held, traded or financed outside Mainland China, most prominently in Hong Kong. It gives international businesses access to RMB liquidity, but it does not provide unrestricted access to Mainland accounts.
- Omnibus AccountAn omnibus account is a single bank account holding the funds of many underlying customers together, with the operator keeping the sub-ledger that records who owns what. The bank deals with one account holder and sees one balance.
- Onshore RMBChinaOnshore RMB refers to renminbi circulating within Mainland China’s domestic banking and financial system. It is generally associated with CNY pricing, Mainland liquidity and China’s foreign-exchange and capital-control framework.
- Open BankingEUOpen banking is regulated access to bank account data and to payment initiation through APIs, with the account holder’s consent. In the European Union and the United Kingdom it is a licensed activity under payment services law, not a private arrangement between a fintech and a bank.
- Open-Account TradeOpen-account trade allows the buyer to receive goods or services before payment becomes due. It supports the buyer’s working capital but leaves the supplier exposed to the buyer’s credit and payment risk.
P
- P2P TradingP2PP2P trading is buying and selling crypto directly between two individuals, usually through a platform that holds the crypto in escrow while the buyer pays the seller by local bank transfer or cash. The platform matches and escrows; the money itself moves outside it.
- PCMLTFAPCMLTFACanadaThe PCMLTFA is Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17. It is the statute from which Canadian AML obligations flow, and it is the source of law — FINTRAC administers it and issues guidance, but guidance is not the obligation.
- PSD2PSD2EUPSD2, the Second Payment Services Directive, is the EU law governing payment services. It sets the authorization categories for payment firms, opened bank account access to licensed third parties, and required strong customer authentication for electronic payments.
- Parallel Market RateA parallel market rate is the rate at which a currency actually trades outside official channels, in a country where the official rate is not obtainable. In a tightly controlled market it is often the only rate at which real business clears.
- PassportingEUPassporting is the mechanism by which a firm authorized in one EEA state may provide its services in the other EEA states without seeking separate authorization in each one. The home state regulator continues to supervise the firm throughout.
- Pay-in and PayoutPay-in and payout are the two legs of a payment. The pay-in collects money from the sender, by card, bank transfer, wallet or cash. The payout delivers money to the final recipient, often through a local partner, bank network or cash agent.
- Payment CorridorA payment corridor is a specific send-and-receive country pair, treated as a market in its own right. Each corridor carries its own regulation, rails, payout habits, competitors and price, and is analyzed separately from every other.
- Payment Diversion FraudPayment diversion fraud redirects a legitimate payment to an account controlled by a fraudster. It commonly involves altered invoices, compromised communications or false instructions announcing a change in beneficiary bank details.
- Payment FacilitatorPayFacA payment facilitator, or PayFac, holds one master merchant account with an acquirer and onboards sub-merchants beneath it. Those sub-merchants transact under the facilitator’s account instead of each contracting with an acquirer, and the facilitator underwrites and settles them.
- Payment FinalityPayment finality is the point at which a transfer of funds becomes irrevocable and unconditional: it cannot be recalled by the sender, reversed by the system or unwound if a participant becomes insolvent. Before that point a payment is still a promise.
- Payment GatewayA payment gateway is the software layer that captures payment details at checkout or at the point of sale and passes them to a processor or acquirer for authorization. It is a connection between the merchant and the card system, and it moves data rather than money.
- Payment Initiation ServicePISEUA payment initiation service instructs a payment from a customer's own bank account on their instruction. PSD2 requires that the provider must not hold the payer's funds at any time in connection with the service — which is the whole distinction between a PISP and a firm that handles money.
- Payment InstitutionPIUKEUA payment institution is a firm authorized in the United Kingdom or a European Union member state to provide payment services — transfers, acquiring, remittance, payment initiation — but not to issue electronic money. It may hold customer funds in payment accounts used only for payment transactions; those funds are neither deposits nor e-money.
- Payment InvestigationA payment investigation is a formal inquiry into a delayed, missing, rejected, misapplied or incorrectly processed transfer. Banks may exchange messages to verify routing, beneficiary details, compliance holds, fees or the disposition of funds.
- Payment ProcessorA payment processor carries out the technical steps of a transaction — authorization, capture, clearing and settlement instructions — for a merchant, an acquirer or an issuer. It generally handles the transaction rather than taking ownership of the money.
- Payment RailA payment rail is the underlying network a payment travels over: ACH or Fedwire in the United States, SEPA in the euro area, a card scheme, a domestic instant scheme, or a blockchain. The rail chosen decides what the payment can and cannot do.
- Payment RecallA payment recall is a request by the sending institution to recover or stop a transfer after it has been released. A recall is not guaranteed because the funds may already have been credited, withdrawn or made subject to the beneficiary bank’s procedures.
- Payment Service ProviderPSPA payment service provider, or PSP, is a firm that moves payments for merchants or consumers. In UK and EU payment services law it is also a defined umbrella term covering several kinds of regulated provider, and Canada defines it separately again under the Retail Payment Activities Act.
- Payment Services AgentUKA payment services agent is a person that provides payment services on behalf of a payment institution, an electronic money institution or a registered account information service provider. The principal applies and the FCA decides; the agent is entered on the register, works under the principal’s permissions, and the principal answers for what it does.
- Payment TraceA payment trace is a request to identify the current location and status of a transfer. It commonly uses the payment message, UETR, value date, beneficiary details and intermediary information to follow the transaction.
- Payment versus PaymentPvPPayment versus payment (PvP) is a settlement mechanism for foreign exchange in which the final transfer of one currency happens if, and only if, the final transfer of the other currency happens too. It removes the principal risk of paying first.
- Payment-Purpose CodeA payment-purpose code identifies the commercial or regulatory reason for a transfer, such as payment for goods or services. Using an inaccurate code can cause delays, rejection, reporting problems or inconsistencies with the supporting documents.
- People’s Bank of ChinaPBOCChinaThe People’s Bank of China is China’s central bank. It is responsible for monetary policy and plays a central role in payment systems, RMB internationalization, financial stability and oversight of China’s monetary framework.
- Permissible InvestmentsUSAPermissible investments are the categories of asset a licensed US money transmitter may count against its outstanding money transmission obligations. Under the model law states have been adopting, the licensee must hold permissible investments worth at least the whole of what it owes customers, and the eligible list runs wider than cash and government securities.
- Politically Exposed PersonPEPA politically exposed person is someone entrusted with a prominent public function, together with their close family and known associates, who is treated as higher risk because such positions create opportunity for bribery and corruption. The label is a risk classification, not an accusation.
- Pooled AccountA pooled account holds several customers’ money together in one bank account, with ownership of the individual balances tracked off the bank’s books in the firm’s own records. The bank knows the account holder and knows nothing of the customers inside.
- PosekA posek is a rabbinic authority who issues rulings on questions of Jewish law.
- PrefundingPrefunding means placing money with a payout partner or correspondent before transactions are sent, so the partner can release funds locally without waiting for settlement to arrive. The balance is drawn down as payouts are made and topped up before it runs out.
- Prepaid AccessUSAPrepaid access is a FinCEN money services business category covering stored value that can be reached electronically. It splits into two roles with different duties: the provider of prepaid access, which is the programme's principal, and the seller of prepaid access, which sells it at the counter.
- Principal MSBUSAA principal MSB is the licensed entity whose authority an authorized delegate operates under. The principal remains answerable to regulators for the delegate’s transactions, AML program and reporting, and for keeping the delegate inside the scope it was appointed to work in.
- Pro Forma InvoiceA pro forma invoice is a preliminary commercial document describing the proposed goods, price, currency and terms before the final invoice is issued. It is commonly used to support quotations, deposits, approvals and import preparations.
- Proof of ReservesProof of reserves is published evidence that an issuer or exchange holds the assets it says it holds — typically a third-party verification report on holdings as at a single date, sometimes paired with a cryptographic exercise letting customers check that their own balance was counted. It is not an audit.
- ProzbulA prozbul is a rabbinic legal mechanism associated with Hillel the Elder that allows qualifying debts to remain collectible despite the sabbatical-year debt-remission rule.
- Purchasing Power ParityPPPPurchasing power parity (PPP) is a conversion rate between currencies that equalises what money can buy, calculated by comparing the cost of the same basket of goods and services in each country. It is used to compare incomes and living standards.
Q
- QabdQabd is possession or control of an asset. Islamic law uses it to decide when a sale is complete, when an asset may be resold, and whether a currency or gold exchange has been settled on the spot as required.
- QardQard is a loan of fungible property — usually money — that the borrower must repay with its equivalent, with no stipulated benefit to the lender. Any benefit the lender requires as a condition of lending raises a riba problem.
- Qard HasanQard hasan is a benevolent, interest-free loan made to help the borrower rather than to earn a return. The principal remains repayable, but the lender seeks no benefit and is expected to be lenient if the borrower struggles.
R
- RMB Clearing BankChinaAn RMB clearing bank is a bank authorized or positioned to provide renminbi clearing services in a particular offshore market. It helps participating institutions access RMB liquidity and settle eligible RMB transactions.
- RTGSRTGSRTGS stands for real-time gross settlement: a system that settles each payment individually and finally in central bank money, rather than offsetting many payments against each other and settling only the difference at the end of a cycle.
- Real-Time PaymentsRTPUSAReal-time payments are bank transfers that clear and settle within seconds, at any hour, and are irrevocable once the receiving bank accepts them. RTP is also the proper name of one of the two US instant networks, which is a common source of confusion.
- Real-World AssetRWAA real-world asset, in crypto usage, is a claim on something that exists off-chain — a Treasury bill, a property, an invoice, a fund unit — represented by a token. The token is a record of the claim; whether the claim is any good is a legal question the blockchain cannot answer.
- ReconciliationReconciliation is matching what your own system says happened against what the bank or partner says happened, and resolving every difference that remains. In payments it runs daily, on every account and every partner file, and its output is a list of unexplained breaks rather than a signed-off balance.
- Regulatory ArbitrageRegulatory arbitrage is structuring a business to fall under a lighter regulatory regime while serving the same customers and doing substantially the same thing. Some of it is legitimate jurisdiction selection; some of it is a supervisory problem waiting to surface.
- Regulatory CapitalRegulatory capital is the minimum capital a licensed financial firm must hold, and keep holding, calculated by a method the regulator prescribes rather than by ordinary accounting. It is a continuing condition of the license, tested at application and at every examination afterwards.
- Relevant FundsUKRelevant funds are the customer money a UK payment institution or electronic money institution must safeguard: sums received for the execution of a payment transaction, and, for an e-money issuer, funds received in exchange for electronic money issued. Separation from the firm’s own money is immediate on receipt; placing the funds in a designated account comes a day later.
- RemittanceA remittance is a cross-border transfer sent by one individual to another — typically a migrant worker sending money home to family. It is distinct from a commercial payment between businesses, and regulators define it more narrowly than everyday speech does.
- RenminbiRMBChinaRenminbi is the official name of the currency of the People’s Republic of China. RMB is the common abbreviation, while yuan is the unit in which renminbi amounts are counted.
- Repurchase AgreementRepoA repurchase agreement, or repo, is a short-term loan structured as a sale: one party sells securities for cash and agrees to buy them back later at a slightly higher price. The securities are the collateral and the price difference is the interest.
- Reserve AccountA reserve account holds funds a bank, acquirer or partner keeps back against future chargebacks, refunds or unsettled exposure, released on an agreed schedule. The money is economically yours, but it is out of your hands while it is held.
- Reserve AdequacyReserve adequacy is the judgement of whether a country's foreign exchange reserves are large enough for the shocks it could plausibly face. It is assessed with several ratios together, because no single number captures every way reserves can drain.
- Reserve CurrencyA reserve currency is a currency that central banks hold in large amounts as part of their foreign exchange reserves and that is widely used to price trade, issue debt and settle international payments. The US dollar is the dominant one.
- Reserve RequirementUSAA reserve requirement is the proportion of its deposits a bank must hold rather than lend out. In the United States that proportion has been zero since 26 March 2020, so the textbook money-multiplier story no longer describes how US bank lending is constrained.
- Respondent BankA respondent bank is the bank that receives services in a correspondent banking relationship. It holds an account with a larger correspondent bank and uses it to make and receive payments in a currency or market it cannot reach on its own.
- Retail Payment Activities ActRPAACanadaThe Retail Payment Activities Act is Canada’s framework requiring payment service providers to register with the Bank of Canada and meet operational risk and end-user fund requirements. RPAA registration is separate from, and additional to, FINTRAC registration as a money services business.
- RetakafulRetakaful is the Sharia-compliant counterpart of reinsurance: it lets takaful operators pass part of the risk carried by their participants' funds to a larger pool, so that a single large claim does not exhaust them.
- Returned PaymentA returned payment is a transfer sent back toward the payer because it could not be completed or accepted. The returned amount may be reduced by fees or foreign-exchange differences incurred during the original and return journeys.
- RibaRiba is the prohibited increase at the centre of Islamic finance: an unjustified excess in a loan or in certain exchanges. It is broader than the English word "interest" and is not limited to excessive rates.
- Riba al-FadlRiba al-fadl is the unlawful excess in a same-kind exchange of specified commodities — originally gold, silver, wheat, barley, dates and salt — which must be traded in equal amounts and hand to hand.
- Riba al-Nasi'ahRiba al-nasi'ah is riba arising from deferment: any increase stipulated in return for time on a loan, and the deferral of delivery in an exchange of like commodities that must be settled on the spot.
- RibbitRibbit is the Jewish-law prohibition on receiving or paying certain forms of interest on a loan between Jewish parties.
- Risk-Based ApproachRBAA risk-based approach means identifying where the money-laundering and terrorist-financing risk actually sits and applying stronger controls there and lighter ones elsewhere. It is the organising principle of the FATF standards, and it is not a licence to do less.
S
- SDN ListSDNUSAThe SDN List is OFAC's list of Specially Designated Nationals and Blocked Persons — parties whose US-linked property is blocked and with whom US persons generally may not deal. It is the best-known part of US sanctions and nowhere near the whole of them.
- SEPASEPAEUSEPA, the Single Euro Payments Area, is the set of schemes that makes a euro transfer between participating European countries work like a domestic one. It comes in credit transfer, instant credit transfer and direct debit variants.
- SEPA InstantEUSEPA Instant is the euro instant credit transfer scheme — SCT Inst — run by the European Payments Council, under which funds reach the payee within ten seconds, around the clock. EU regulation has since made offering it compulsory for euro-area payment service providers.
- SWIFTSWIFTSWIFT is a cooperative messaging network that banks use to send each other standardized instructions about payments. It does not hold funds and it does not move them; the money moves separately, through the accounts banks keep with one another.
- SWIFT GPIGPISwift GPI is a service layer over existing correspondent banking that gives a cross-border payment a unique reference, end-to-end tracking, fee transparency and agreed service levels between participating banks. It is not a new payment rail, and it does not change how the money moves.
- SadaqahSadaqah is voluntary charity: giving of any amount, at any time, to anyone in need, beyond the fixed obligation of zakat and without expecting repayment.
- SafeguardingUKEUSafeguarding is the statutory requirement that an authorized payment or e-money firm keep customer funds apart from its own money, by a method the rules prescribe, so the funds are identifiable and returnable to customers if the firm fails. It is a licensing condition, not best practice.
- Safeguarding AccountUKA safeguarding account is the account at an eligible institution in which a UK payment or e-money firm places the customer funds it must safeguard, held and designated the way the applicable rules require rather than the way a bank chooses to label its product.
- SalamSalam is a sale in which the buyer pays the full price at the time of contract for goods of a precisely specified type, quantity and quality, to be delivered on a fixed future date.
- Same Day ACHUSASame Day ACH is a faster settlement option within the US ACH network, operated under Nacha rules. It clears in one of three same-day windows instead of overnight. The per-payment limit is $1 million, and Nacha has approved a rise to $10 million from 17 September 2027.
- Sanctions ScreeningSanctions screening is the checking of customers, counterparties and payment messages against sanctions lists and watchlists — at onboarding, repeatedly afterwards, and on payments while they are still in flight — and the holding or rejecting of anything that genuinely matches.
- Segregated AccountA segregated account holds customer money apart from the firm’s own money, so the two are never mixed and the customer balance is identifiable as customer balance in both the firm’s and the bank’s records.
- Self-CustodySelf-custody is an arrangement in which the user alone holds the private keys and no service can move the assets. A provider may build the wallet, host the interface and broadcast the transaction, but if it cannot produce a signature, the balance is beyond its reach.
- Self-Regulatory OrganizationSROSwitzerlandIn Switzerland, a self-regulatory organization is a FINMA-supervised body that admits and monitors financial intermediaries for anti-money-laundering purposes. Membership is the supervision route for intermediaries that do not hold, and do not need, a full FINMA license.
- SettlementSettlement is the point at which value actually moves between parties and the obligation between them is discharged. It is a separate step from clearing, which only works out who owes what, and from finality, which is the moment the transfer can no longer be reversed.
- Settlement AccountA settlement account is used to receive and pay out the net proceeds of transactions between counterparties — a processor paying a merchant, a partner paying an operator. It is an operating account between businesses, not a structure for holding customer money.
- Settlement RiskSettlement risk is the risk that a payment or trade does not complete as expected because a party fails to deliver what it owes, on time or at all, after its counterparty has already performed.
- Shadow BankingShadow banking is credit intermediation carried out by institutions and markets outside the regular banking system: money market funds, finance companies, hedge funds, securitisation vehicles and repo markets doing what banks do without bank licences, deposit insurance or central bank backing.
- ShariaSharia is the broad body of Islamic norms and law derived from the Qur'an and the Sunnah; in finance it supplies the principles that jurists turn into concrete rules for contracts, ownership, debt and exchange.
- Sharia Non-Compliance RiskSharia non-compliance risk is the legal, financial and reputational risk an Islamic financial institution faces if it fails to comply with the Sharia rules that apply to it — through a flawed product, a contract executed out of sequence or income it cannot keep.
- Sharia Supervisory BoardSSBA Sharia Supervisory Board is the panel of scholars responsible for reviewing and overseeing an Islamic financial institution's compliance with Sharia — approving products and contracts, issuing rulings and reviewing whether operations follow them.
- ShmitaShmita is the seven-year sabbatical system in Jewish law.
- Short-Paid PaymentA short-paid payment occurs when the beneficiary receives less than the amount expected under the invoice or instruction. The difference may result from bank charges, intermediary deductions, unexpected conversion or an incorrect charge code.
- Small Electronic Money InstitutionSEMIUKA small electronic money institution is a UK firm registered by the FCA to issue electronic money below a set limit, rather than authorized. It is a separate status from an authorized EMI, not a smaller version of one: lighter prudential requirements, a cap on outstanding e-money, and narrower permissions.
- Small Payment InstitutionSPIUKEUA small payment institution is a UK registration for a payment firm whose payment transactions average no more than EUR 3 million a month. It is registered rather than authorized, carries no ongoing capital requirement, and cannot be used to provide account information or payment initiation services, or to issue electronic money.
- Source of FundsSoFSource of funds is the evidenced origin of the specific money in a transaction or account — where this particular payment came from and how it reached the customer. It is a narrower question than source of wealth, which asks how the customer accumulated their assets overall.
- Source of WealthSoWSource of wealth is the evidenced account of how a customer accumulated their overall assets — the business they built, the inheritance, the years of earnings — as distinct from the origin of the particular money moving through one transaction.
- Special Drawing RightSDRThe Special Drawing Right (SDR) is an international reserve asset created by the IMF. It is not a currency and cannot be spent directly; it is a claim that a member country can exchange for US dollars, euros, yen, sterling or renminbi.
- Special Purpose Depository InstitutionSPDIUSAA Special Purpose Depository Institution is a Wyoming state bank charter for institutions that take deposits and custody digital assets without lending out customer fiat. It is a bank charter with restricted powers — not a national charter, not automatically FDIC-insured, and with no guaranteed Federal Reserve access.
- Sponsor BankA sponsor bank is a regulated bank that lets a non-bank reach accounts, payment rails or card networks under the bank’s own charter and permissions. The program runs on the bank’s authority, and the bank stays answerable for what happens on it.
- Spot RateThe spot rate is the price for exchanging one currency for another for near-immediate settlement. "Immediate" is a convention rather than a fact: standard spot settlement in most currency pairs is two business days after the trade.
- StablecoinA stablecoin is a crypto-asset designed to hold a steady value against a reference, almost always a fiat currency such as the US dollar. How that steadiness is supported differs sharply from one issuer to the next, and so does what a holder can actually redeem.
- Stablecoin-Funded PaymentA stablecoin-funded payment begins with stablecoins as the source of offshore liquidity, followed by conversion through an appropriate provider into conventional bank money. The final supplier payment may still be a fiat bank transfer supported by ordinary trade documents.
- Stablecoin-Settled PaymentA stablecoin-settled payment occurs when the seller directly accepts a stablecoin as payment for the commercial obligation. This is legally and operationally different from converting stablecoins offshore before making a conventional fiat payment.
- State Administration of Foreign ExchangeSAFEChinaSAFE is the Chinese authority responsible for major parts of foreign-exchange administration and cross-border capital-flow monitoring. Its rules and supervisory framework influence how banks review international trade, investment and other foreign-exchange transactions.
- Strong Customer AuthenticationSCAEUStrong customer authentication is the PSD2 requirement to verify a payer using two independent factors drawn from knowledge, possession and inherence. It applies to electronic payments and account access in the EEA, subject to a defined set of exemptions — and the exemptions are where the work is.
- StructuringStructuring is deliberately splitting transactions into smaller amounts so that each one falls below a reporting threshold and no report is triggered. In the United States it is a federal offense in its own right, committed whether or not the money being moved is criminal in origin.
- SukukSukuk are certificates representing undivided ownership interests in assets, usufructs, services or ventures, with returns paid from what those underlying interests generate. "Islamic bond" is useful shorthand but not an accurate legal description.
- Supplier-Payment TermsSupplier-payment terms define when and under what conditions a buyer must pay a supplier. They may include deposits, production milestones, inspection requirements, shipment events, credit periods and final-balance deadlines.
- Surety BondUSAA surety bond is a guarantee from a third-party surety company that a state regulator requires a money transmitter licensee to post, so consumers and the state can be paid if the licensee fails to meet its obligations. It is a guarantee the licensee buys, not money it sets aside.
- Suspicious Activity ReportSARUSAA suspicious activity report is a confidential filing made to FinCEN when a US financial institution knows, suspects, or has reason to suspect that a transaction above a set dollar floor involves illicit funds, has no apparent lawful purpose, or is designed to evade reporting rules. It is filed without telling the customer.
T
- Tabarru'Tabarru' is a voluntary donation. In takaful, it is the part of each participant's contribution that is donated to the shared risk fund, from which claims are paid to any participant who suffers a covered loss.
- TakafulTakaful is a cooperative risk-sharing arrangement in which participants contribute to a common fund that pays claims among them, run by an operator under a Sharia-compliant contract rather than sold as conventional insurance.
- Tangible Net WorthUSATangible net worth is net worth with intangible assets such as goodwill stripped out. US state regulators use it as the minimum capital test a money transmitter must pass to obtain a license and to keep it, and it is computed to the state’s definition rather than the company’s.
- TawarruqTawarruq is a structure in which a person buys an asset on deferred payment terms and immediately sells it to a third party for cash, ending up with cash now and a debt payable later. It is widely used and heavily debated.
- Term SheetA term sheet is a short document recording the commercial shape of a deal — price, structure, conditions, timetable — before anybody spends money on definitive contracts. Most of it is deliberately not binding; a few clauses in it always are.
- Tether (USDT)USDTUSDT, or Tether, is the largest US dollar stablecoin by trading volume and the one most often used in peer-to-peer and emerging-market corridors. It is issued by Tether and is a claim on that issuer, not on a bank or a central bank.
- Third-Party BeneficiaryA third-party beneficiary is a person or company receiving payment despite not being the seller or invoice issuer. The arrangement may be legitimate, but its contractual role and entitlement to receive the funds should be documented and accepted by the relevant institutions.
- TimberlandTimberland is forest land owned as an investment. Its return comes from the biological growth of the trees, movements in timber prices and the value of the land, and increasingly from carbon credits and conservation payments.
- TokenizationTokenization means representing an asset, or a claim on one, as a transferable token recorded on a ledger. The token is a record of entitlement; whether legal ownership of the underlying asset moves with it depends on the contract and the governing law, not on the ledger.
- Trade Authenticity VerificationChinaTrade authenticity verification is the process of confirming that a cross-border payment is supported by a genuine underlying commercial transaction. Banks may compare the parties, invoice, contract, goods, shipment, amount and payment purpose for consistency.
- Trade-Based Money LaunderingTBMLTrade-based money laundering (TBML) is the use of trade transactions to disguise and move criminal proceeds or to shift value across borders, most often by misstating the price, quantity or nature of goods on the documents.
- Trade-Payment ComplianceTrade-payment compliance is the review of the parties, ownership, goods, end use, documents, funding and payment route supporting a commercial transfer. It combines financial-crime controls with sanctions, export-control, banking and transaction-authenticity considerations.
- Transaction MonitoringTransaction monitoring is the ongoing review of customer activity — automated rules and models plus human investigation — against what the firm expected that customer to do and against known laundering patterns. Activity that does not fit produces an alert for someone to work.
- Travel RuleThe travel rule requires the firm sending a transfer to pass identifying information about the originator and the beneficiary to the firm receiving it, so that the data travels with the money. It began as a banking wire rule and now reaches virtual asset transfers as well.
- Trust AccountA trust account is an account whose contents are held by one party for the benefit of others under a trust. Where a valid trust exists, the money is generally not available to the account holder's own creditors — which is the entire point, and also the part that is easiest to get wrong.
- TzedakahTzedakah is the Jewish obligation of charitable giving and economic support, a concept connected with justice or righteousness rather than optional generosity alone.
U
- UPIUPIIndiaUPI — Unified Payments Interface — is India's instant retail payment system, built by the National Payments Corporation of India, an RBI-regulated entity. It moves money between bank accounts in real time using an address such as a UPI ID rather than account details.
- USDCUSDCUSDC is a US dollar stablecoin issued by Circle. The issuer states that it is fully reserved, redeemable one for one by approved account holders, and reported against attestations published by an accounting firm. Those terms are the issuer’s, and the issuer can change them.
- UjrahUjrah is a fee or wage paid for a genuine service or for the use of an asset. In Islamic finance it is legitimate compensation — but only where a real service exists and the fee is not, in substance, a charge for credit.
- Ultimate Beneficial OwnerUBOThe ultimate beneficial owner is the natural person who ultimately owns or controls a customer, identified by tracing ownership up through holding companies, trusts and nominees. Twenty-five percent is the common anchor in the United States, the United Kingdom and the European Union, but each states it differently and control is tested alongside it.
- Unhosted WalletAn unhosted wallet is a wallet whose private keys are held by the user, with no service in a position to move the funds. Regulators use the term mainly to describe the far end of a transfer: a counterparty that is a person and a device rather than a firm.
- Unique End-to-End Transaction ReferenceUETRA UETR is a unique reference assigned to a qualifying cross-border payment message. It allows participating institutions to identify and track the same payment across the payment chain.
V
- VQFVQFSwitzerlandVQF is a self-regulatory organisation recognised by FINMA, through which Swiss financial intermediaries obtain anti-money-laundering supervision. Membership is AML supervision — it is not a FINMA licence, and it does not confer any EU or EEA passport.
- Virtual AccountA virtual account is an account number, often a virtual IBAN, that routes incoming payments into a single underlying real account while recording which customer or invoice each payment relates to. It identifies money; it does not hold any.
- Virtual Asset Service ProviderVASPA virtual asset service provider, or VASP, is the FATF category for a business that exchanges, transfers, safekeeps or administers virtual assets for other people, or provides financial services around their issuance. It is an international standard-setter’s term, not a license.
- Vostro AccountA vostro account is the account a foreign bank holds with a domestic bank in the domestic currency, or “your account with us.” It is the same account a nostro describes, seen from the books of the bank that holds it.
W
- Wa'dWa'd is a unilateral promise by one party to do something in the future, such as buy or sell an asset. Islamic finance uses binding promises in hedging and financing where a bilateral forward contract would not be permitted.
- WakalahWakalah is an agency contract in which one party, the principal, appoints another, the agent or wakil, to act on its behalf — buying, selling, investing or managing — usually for a fee.
- WaqfA waqf is an Islamic endowment: an asset permanently dedicated so that its income or benefit serves a charitable, religious or public purpose, while the asset itself is preserved rather than spent.
- White LabelWhite label means offering another provider’s product or service under your own brand. The arrangement is about branding and delivery — it does not by itself bring that provider’s license, banking access or regulatory responsibility with it. What a deal covers is whatever its contract says.
Y
Z
Page Last Updated: 12-Oct-2026 (1000071)