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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.
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B
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.
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C
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.
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D
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.
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E
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.
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F
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.
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G
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.
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H
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I
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.
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J
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K
Know Your Customer (KYC)
Method taken by banks and financial institutions to identify a client, whether they are
individuals, corporates or other financial institutions.
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L
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.
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M
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.
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N
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.
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O
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.
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P
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.
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Q
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R
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.
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S
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).
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T
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.
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U
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.
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V
Value Date (or settlement date)
The date on which a payment is due to be credited to the payee.
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W
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.
