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
140 entries
A
- 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.
- 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.
- 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
- 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.
- 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%.
- 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.
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.
- 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.
- 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.
- 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.
- 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.
- 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 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.
- 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
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.
- 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.
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.
- 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.
- 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 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.
H
- 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.
- 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.
- 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.
- 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.
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
- 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.
- 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.
- 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.
- 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 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.
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.
- 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.
- 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.
- 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.
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.
- 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 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 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 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 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 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.
- 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.
- 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.
- 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.
- 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.
R
- 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.
- 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 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.
- 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.
- 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.
S
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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
- 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.
- 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.
- 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.
- 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.
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- 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.
- 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.
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- 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.
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Page Last Updated: 23/Sep/2026 (1000071)