Banking Dictionary

This dictionary is a glossary of key banking words/phrases and terms.

As well as generic banking terms the Bankers' Almanac dictionary also provides definitions of terminologies specifically associated with Bankersalmanac.com products and services, denoted by (*).

Abbreviated Accounts

Financial items that are not a full set of Financial statements e.g. Balance sheets.

Absorbed by

Type of corporate action wherein an institution is no longer operational as it has been absorbed by another.

Acquired by

Type of corporate action wherein an institution is no longer operational as it has been acquired by another.

Agency Agreement

Letter confirming who the agent is for the USA PATRIOT Act.

AML Auditor

Independent auditor used by a bank or financial institution to test their Anti-Money Laundering (AML) policies and processes.

Annual Reports

Comprehensive report issued at the end of an institution's financial year detailing their financial and other activities over the preceding year.

Anti-Money Laundering (AML)

Legal controls required by banks and financial institutions to prevent or report money laundering activities.

Auditors Report

Statement on the financial report (letter format) without any financials.

Automated Clearing House (ACH)

A payment clearing system in which payment orders are exchanged among financial institutions electronically.

Bank code (or clearing code)

A primarily domestic standard for identifying financial institutions and their branches.

Bank Identifier Code (BIC)

The international standard for identifying financial institutions and their branches. BIC codes are always 8 or 11 characters with positions 1-4 representing the bank, 5&6 the country of operation, 7&8 the location and 9-11 branch/function/department.

Bank Licence

Document issued by financial services authority giving permission for financial institution to conduct banking business.

Bank Secrecy

Law which prevents banks or financial institutions from disclosing information about their customers without the customer's consent.

Banking business acquired by

Type of corporate action wherein a bank's banking business has been acquired by another institution. (After loss of the banking business the institution will either cease to operate or continue as another type of institution).

Banking business ceased

Type of corporate action wherein a bank no longer conducts banking business and will either cease to operate or continue as another type of institution.

Banking Licence revoked

Type of corporate action wherein a bank has had its banking licence removed by the Central Bank/Monetary Authority. (The bank's operations will be suspended at this time, if the licence is not re-instated the bank will either cease to operate or continue as another type of institution).

Banking Licence surrendered

Type of corporate action wherein a bank has voluntarily given up its banking licence. (The bank may cease to operate at this time or continue as another type of institution).

Banking Licence suspended

Type of corporate action wherein a bank has had its banking licence removed by the Central Bank/Monetary Authority. (The bank will suspend operations at this time. The licence may be regained after "abnormalities" have been rectified. If not, the bank will either cease to operate or continue as another type of institution).

Bankrupt

Type of corporate action wherein the institution has ceased to operate as it has insufficient funds to continue trading.

Batch processing

The processing of incoming payment orders or outgoing payment orders in bulk.

BBAN (Basic Bank Account Number)

Up to thirty alphanumeric characters which define the domestic bank account number and bank code sometimes including check digits which allow for the validation of the number.

Became a branch of

Type of corporate action wherein a bank no longer operates as it has become a branch (office) of another bank.

Beneficial Owner

Person identified as benefiting from the ownership of a company or account.

Beneficiary

The final recipient of the payment in a funds transfer.

BIC Principal Location (or Owning Location)*

The address that is officially listed against a BIC code (required because SWIFT codes are often used at multiple locations of a financial institution but only registered at one of these).

Biographies

Biographies of board members or other senior executives.

Black list

Countries, entities or individuals with whom a bank or financial institution are prohibited from conducting business with.

Branch Certification

USA PATRIOT Act/Foreign Bank Certificate that covers branches.

Branch Information*

Information that relates to branch only.

Branch Licence

Licences that covers a bank or financial institutions' branches.

Brokers Licence

Document issued by financial services authority giving permission for financial institution to conduct brokerage business.

By-Laws

Similar function as Memorandum/Articles of Association.

Ceased

Type of corporate action wherein the institution no longer operates.

Central bank

(or reserve bank or monetary authority) The entity responsible for the monetary policy in specific countries or trading blocks.

Certificate of Incorporation/Registration

Legal document relating to the formation of a company or corporation.

Charter

Legally binding document incorporating an organisation or institution and specifying its purpose, remit or bylaws.

Clearing

The process of transmitting, reconciling and confirming payment instructions.

Clearing Code Principal Location (or Owning Location)*

The address that is listed against a clearing code by the issuer of clearing codes in that country (required because clearing codes are often used at multiple locations of a financial institution but only registered at one of these).

Code of conduct/Ethics

Set of rules outlining the responsibilities of or proper practices for an individual or organization.

Commercial Licence

Document issued by financial services authority giving permission for financial institution to act as a commercial bank.

Compliance

Act of ensuring a bank, financial institution or company is following the rules and regulations associated with their industry.

Compliance Personnel

Names and job titles of individuals responsible for compliance within a bank or financial institution.

Confirmation

The process of notifying counterparts and/or customers of the details of a trade or payment and seeking their agreement that these are correct.

Confirmed as current*

Date that the document was last checked by a bank or financial institution.

Constitution

Similar function as Memorandum/Articles of Association.

Correspondent

A bank that supplies products or performs services for another bank.

Correspondent Banking

A contractual arrangement where one bank provides products and/or services to another bank. Correspondent banking services are primarily provided to financial institutions without a domestic presence in the country concerned although correspondent relationships can also occur in the domestic context. The agreement normally focuses on the sending and receipt of payments but can include the provision of other products and services.

Counter Terrorist Financing (CTF)

Legal controls required by banks and financial institutions to prevent individuals or organisations accessing the financial system to fund terrorist activities.

Counterpart

The opposite party in any financial transaction.

Counterparty

Entity that a bank or financial institution has entered into an agreement with.

Counterparty review

Process that is taken to re-evaluate a counterparty in order to assess their money laundering risk. The time between reviews is dependent on the risk associated with a counterparty e.g. high risk counterparties may be reviewed every 6 months.

Credit

An instruction to request the placing of funds within an account.

Credit Institution Licence

Document issued by financial services authority giving permission for financial institution to act as a credit institution.

Credit risk

The risk that a counterpart will not settle an obligation.

Credit transfer

A one-off payment instruction that places funds in the payees account.

Custodian

An entity which is responsible for the administration of financial assets on behalf of other entities or individuals (most commonly a bank).

Customer Identification Programme (CIP)

A process required by law that banks and financial institutions must implement to identify their customers.

Date of expiry

Date that a document expires (if applicable).

Date of issue

Date that a document was supplied by the issuing body e.g. central bank or financial services regulator (if applicable).

Debit

An instruction to request the removal of funds from an account.

Delivery agent

A financial institution which makes payments on behalf of other entities.

Direct debit

A pre-authorised debit on a payers bank account initiated by the payee.

Direct from institution*

Bankersalmanac.com has received the document directly from a named contact at the source bank or financial institution.

Direct participant

(or Participant) a participant in a payment system that is able to send and receive payments on its own behalf.

Document Approved*

Document has been approved by Bankersalmanac.com as fit to be published on the Due Diligence Repository.

Document Audit*

History of the document, showing contact between Bankersalmanac.com and the bank or financial institution in order to obtain the document or confirm that the document is still current, and date that this contact took place. It also shows the status of the document within Bankersalmanac.com's process and the associated dates.

Document provider advised document not available until ____________*

Bank of financial institution has advised that the requested document will not be available until a specified date.

Document Received*

Document that meets Bankersalmanac.com's specified criteria has been received from a bank or financial institution.

Document Request*

Document has been requested from the bank or financial institution by Bankersalmanac.com.

Domestic settlement (or domestic payment)

Payments which take place within the country in which both counterparts are located.

Due Diligence

Performance of an investigation or evaluation of a bank or financial institution.

Egmont Group

Informal group of financial intelligence units (FIUs) who work together to facilitate international cooperation in the areas of training and information exchange.

Executive Board

Names and job titles of individuals who hold a position on the Management or Supervisory Board for a bank or financial institution or have controlling management for that institution.

Extract from Registers

Updated document when there have been changes to an entity after its initial registration.

Extract from Regulators List

Extracts from Central Bank or financial services regulator.

Failed

Type of corporate action wherein an institution no longer operates as it has been unsuccessful (see also: bankrupt).

Financial Action Task Force (FATF)

Inter-governmental body whose purpose is to develop and promote national and international policies to combat money laundering and terrorist financing.

Financial Intelligence Unit (FIU)

Central national agency responsible for receiving, analysing and transmitting disclosures on suspicious transactions to the appropriate authorities.

Financial Statements

Institution's full accounting statements that provide specific information about their financial position including the Profit and Loss or Income Statement, Balance Sheet, and the Statement of Cash Flows.

Foreign Exchange Licence

Licence to carry out payments and foreign exchange.

From website*

Bankersalmanac.com has received permission from the source to take the document directly from bank or financial institution's website.

General Governance Information

Non-specific governance information.

General Licence

For financial institutions where more than one licence is required. Can also be other non-specific document.

Group Reports

Group/Holding Company Annual Reports.

Group USA PATRIOT Act/Foreign Bank Certificate

USA PATRIOT Act/Foreign Bank Certificate that covers a group of entities.

IBAN (International Bank Account Number)

An international standard for identifying bank accounts across national borders primarily used in Europe. The IBAN consists of a 2 character country code, 2 check digits and up to thirty further alphanumeric characters which define the domestic bank account number and bank code (defined as the BBAN or Basic Bank Account Number).

IBAN BIC

The BIC issued with IBANs that originate from a specific clearing code, bank branch/location.

In liquidation

Type of corporate action wherein an institution no longer operates, its assets are sold off and payment of outstanding obligations are met where possible.

In receivership

Type of corporate action wherein the institution's operations have been suspended. (The business can continue for a limited period if the court has appointed an Administrative Receiver).

Indirect participant

A participant in a payment system that requires the services of a direct participant in the system to send or receive payments on its behalf.

Institution declined to supply document*

Bank or financial institution has declined to supply a document into the Due Diligence Repository.

Insurance Licence

Document issued by financial services authority giving permission for financial institution to sell insurance.

Interim Reports

Report that does not relate to the institution's financial year end.

Intermediary

Any recipient of a payment in transit that is not the final recipient (beneficiary) of the funds transfer.

International settlement (or international payment)

Payments which take place in a country other than the one in which one or both counterparts are located.

Know Your Customer (KYC)

Method taken by banks and financial institutions to identify a client, whether they are individuals, corporates or other financial institutions.

Language*

Language in which the document has been supplied.

Large-value payment system

A payment system which facilitates the exchange of large and/or high priority payments between participants (usually financial institutions).

Law/Regulations

Formal, written rules of a country or state, written and enacted by its legislative authority or highest central authority.

Letter of credit (L/C)

A promise by the issuer (usually a bank) to make payment on behalf of a customer in accordance with specified conditions.

Licence Document*

Document issued by a financial services authority giving permission to trade. Can also be other non-specific document.

Liquidity risk

The risk that a counterpart will not settle an obligation for full value when due.

List of entities covered by USA PATRIOT Act/Foreign Bank Certificate

List of banks and financial institutions, subsidiaries, branches that are covered by the USA PATRIOT Act/ Foreign Bank Certificate.

List of Regulated Entities

List of entities regulated by Central Bank or financial services regulator.

Memorandum/Articles of Association

Internal rules and regulations which govern the relationship between the company and the members.

Merged into

Type of corporate action wherein the business of one or more institutions has merged into another existing institution and the merged institution no longer operates.

Merged to form (New Bank)

Type of corporate action wherein the business of two or more institutions have merged together to form a new institution and the merged institutions no longer operate.

Merger/Name Change Information*

Document explaining any merger or name change information related to the bank or financial institution.

Money Laundering

Process of disguising the original source of illegally obtained funds so that they appear to be legitimate.

Name changed to

Type of corporate action wherein the institution continues to operate under a new registered name.

Named contact*

The person at the bank or financial institution, usually located within the compliance department, who supplies their institution's documents and/or data to be included in the Due Diligence Repository.

No date*

There is no date shown on the document.

Non Co-operative Countries and Territories (NCCT) List

List of countries or territories deemed as not complying with FATF's given criteria to prevent money laundering and terrorist financing.

Non SWIFT-BIC (or unconnected BIC)*

A BIC (Bank Identifier Code) that is not attached to the SWIFT network of computers and to which messages cannot be received at or sent from. Non SWIFT-BICs can be easily identified by the presence of the digit 1 in the 8th position of the code.

Non-Global USA PATRIOT Act/Foreign Bank Certificate

USA PATRIOT Act that only covers one named entity (not a global certificate).

Not Applicable - Institution does not have a USA PATRIOT Act Certificate*

Bank of financial institution confirms that they do not have a USA PATRIOT Act/Foreign Bank Certificate.

Not Applicable Regulator does not issue physical bank licence*

Bank of financial institution has not provided a bank licence as their financial services regulator does not issue a physical document.

Not Applicable - See alternative document type*

Bank or financial institution does not have this document but there is an equivalent document of an alternative type.

Offshore Licence

License to conduct banking activities which, as a condition of the license, prohibits the licensed entity from conducting banking activities with the citizens of, or with the local currency of, the country which issued the license.

On-boarding

Process of acquiring a new counterparty.

Operational risk

The risk that one counterpart does not meet their payment obligations as a result of errors in the processing of the payment.

Payment

The payers transfer of funds to the payee.

Payment message (or payment instruction)

A financial communication detailing single or multiple funds transfers.

Payment system (or clearing system)

An infrastructure and set of procedures which facilitate the transfer of funds between payers and payees.

Politically Exposed Persons (PEPs)

Person who may be or has recently held a position within the political arena of a country.

Real-time gross settlement (RTGS)

The settlement of payment obligations as and when they are due on an instruction by instruction basis.

Reason*

Bank or financial institution has provided Bankersalmanac.com with a statement in place of a document.

Reason Approved*

Bankersalmanac.com has approved the reason supplied by the bank or financial institution.

Reason Received*

Bank or financial institution has provided Bankersalmanac.com with a reason why they have not supplied a document.

Receiving agent

A financial institution which takes payments on behalf of other entities.

Re-certification

Appendix B is the re-certification for USA PATRIOT Act when the original Certificate Appendix A has expired after 3 years.

Regulator

Organisation responsible for issuing and monitoring the rules and processes that banks and financial institutions must comply with in order to do business.

Reinstate

The institution is now operating. (The business may previously have been suspended or ceased and operations have recommenced).

Request made to confirm "reason" is still current*

Bankersalmanac.com has requested that the bank or financial institution confirms whether the reason they have not supplied a document is still applicable.

Request made to confirm document still current*

Bankersalmanac.com has requested that the bank or financial institution confirms their document is still current.

Retail payment system

A payment system which facilitates the exchange of small and/or low priority payments between participants (usually business and individuals).

Risk-based approach

Method in which banks or financial institutions identify and manage the money laundering and terrorist financing risk posed to them.

Routing BIC*

A connected SWIFT-BIC that can be used to make a payment to a Non SWIFT-BIC.

Rules, Policies and Procedures

Issued by the institution itself, summarises the bank's policies and procedures for Corporate Governance.

Sanctions

Restrictions imposed by a government or body to exert pressure on individuals, countries or regimes in order that they comply with political objectives.

Screening

Act of checking an individual, entity or transaction against given lists.

Securities Licence

Document issued by financial services authority giving permission for financial institution to trade securities.

SEPA (Single Euro Payments Area)

A European Union initiative creating a zone of countries and a set of financial instruments and infrastructures in which all payments are considered domestic and are governed by a single set of rules.

SEPA Credit Transfer

A one-off payment instruction that places funds in the payees account, occurs within the SEPA area, conforms to the SEPA standards and is processed using a SEPA compliant payment mechanism.

SEPA Direct Debit

A pre-authorised debit on a payers bank account initiated by the payee that occurs within the SEPA area, conforms to the SEPA standards and is processed using a SEPA compliant payment mechanism.

SEPA payment

A payment within the zone of countries covered by SEPA which conforms with the relevant regulations and is made using a SEPA compliant payment mechanism.

Settlement

The process of recording debits and credits to the accounts of parties involved in a payment. Net settlement indicates that mutual obligations are settled in bulk at a specified time after netting the value of all payments between the parties. Gross settlement indicates that each payment is made individually.

Settlement risk

The risk that a counterpart will not be able to meet their payment obligations due to solvency issues.

Shareholder and Ownership information

Document outlining the entities shareholder and ownership information.

Source*

Name of the bank or financial institution that supplied the document.

Source confirmed "reason" still current*

Bank or financial institution has confirmed that the reason they have not supplied a document is still applicable.

Source confirmed document is still current*

Bank or financial institution has confirmed that the document is still current.

Split to form

Type of corporate action wherein a business has been divided to form a new institution(s) and the original institution is no longer operational.

SSI (Standard Settlement Instruction)

The set of details which defines how a financial institution (or part thereof) makes and receives payments in a specific currency and for specific type or set of transactions.

SSI List*

A list of standard settlement instructions covering all of the currencies that a financial institution (or part thereof) is able to make or receive payments for.

SSI List BIC*

The BIC code which defines the part of the institution that an SSI list relates to. This will usually be a SWIFT-BIC in order to allow payment messages or instructions to be sent to the correct part of the institution related to payments it is required to make or expected to receive.

Standing order

A payment instruction which involves the regular payment of a fixed amount to a specific payee.

Statutes

Similar function as Memorandum/Articles of Association.

Stock Exchange

Name of the recognised stock exchange that the bank or financial institution's shares are traded on.

STP (Straight Through Processing)

The automated processing of payment instructions from origination by the payer to receipt by the payee.

Submitted*

Date that the document was first published on the Due Diligence Repository.

Summary Report

Any summary/abridged item that does not fit into Abbreviated accounts.

Suspended payment

Type of corporate action wherein a bank fails and payments are suspended. This means any money deposited with the bank cannot be withdrawn.

Suspicious Activity Report (SAR)

Report outlining suspect or potentially suspect activity filed with a financial services regulator or equivalent body.

Suspicious Transaction Report (STR)

Report outlining suspect or potentially suspect financial transaction filed with a financial services regulator or equivalent body.

SWIFT (Society for Worldwide Interbank Financial Telecommunication)

A co-operative organisation which operates a network of computers designed to facilitate the exchange of payment and other financial messages.

SWIFT-BIC

A BIC (Bank Identifier Code) that is attached to the SWIFT network of computers and to which messages can be received at or sent from.

SWIFT-BIC Principal Location (or Owning Location)*

The address that is officially listed against a SWIFT-BIC code (required because SWIFT codes are often used at multiple locations of a financial institution but only registered at one of these).

Taken over by

Type of corporate action wherein an institution no longer operates as it has been taken over by another.

Tax/Company ID

Number used to identify a bank or financial institution to its government.

This document has been replaced*

Bank or financial institution has confirmed that this document should no longer be used and has provided a replacement.

Trade date

The date on which any trade is agreed.

Under administration

Type of corporate action wherein an insolvency practitioner is appointed by the court as an administrator and takes over the day to day running of the institution. The institution can continue to operateduring this time. After administration the institution may become solvent or go into liquidation.

USA PATRIOT Act/Foreign Bank Certification

Certificate completed by any foreign bank that maintains a correspondent account with a US bank.

Value Date (or settlement date)

The date on which a payment is due to be credited to the payee.

The Wolfsberg Group

An association of the following leading international financial institutions: Banco Santander, Bank of Tokyo-Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Société Générale and UBS which aim to develop financial services industry standards, and related products, for Know Your Customer, Anti-Money Laundering and Counter Terrorist Financing policies.