Financial Compliance Glossary

Explore a comprehensive collection of terms and concepts essential for understanding financial regulations and compliance in the modern financial landscape, from Accredited Investor to 506(c) Safe Harbor.


Accredited Investor

An Accredited Investor (AI) is an individual or entity meeting specific financial criteria established by the SEC, enabling them to invest in certain securities offerings that are not available to the general public.


Anti-Money Laundering (AML) is a set of regulations and policies designed to prevent money laundering and other illegal financial activities.


Assets Under Management is the total value of assets under the control of a financial entity or individual.



Business Entity Verification (BEV) is the process of confirming the legitimacy of a business entity including its legal status, ownership structure, and registration information.


A blockchain is a decentralized ledger that records and verifies transactions on a public network.


The Bank Secrecy Act (BSA) is the United States’ primary set of rules forcing banks to establish anti-money laundering programs, report certain transactions, and maintain records of customer transactions to combat illegal financial activities.



Customer Due Diligence (CDD) is the process of verifying the identity of customers, assessing their potential risk, and monitoring their financial activities to ensure they do not engage in illicit financial activities.

Control Persons

Control persons are individuals with significant influence over a company, typically through ownership of voting shares or through positions of authority such as executives or directors.


Customer Identification Program (CIP) is a requirement under the USA PATRIOT Act that broker-dealers establish a procedure for verifying the identity of all customers before they can open an account, begin trading, or otherwise conduct business.


A Certified Public Account (CPA) is a qualified, professional accountant who has passed the CPA exam and received an official license to practice accounting.


Customer Relationship Management (CRM) refers to tools that analyze investor interactions, sales, and data to optimize a customer’s experience.


The Corporate Transparency Act (CTA) is legislation that forces increased transparency in corporate ownership to prevent financial crimes like money laundering.


Currency Transaction Reports are reports filed by financial institutions to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury for transactions involving currency worth more than $10,000 in a single business day.



A Decentralized Autonomous Organization (DAO) is a type of organization represented by smart contracts that runs on blockchain technology and allows for decentralized decision-making and governance without traditional hierarchical structures.

Data Breach

A data breach occurs when an individual or entity gains unauthorized access to confidential information posing risks such as theft, misuse, or exposure of personal and proprietary data.

Deep Fake

A deep fake is a form of synthetic media that uses AI to create or manipulate video, audio, or images to portray individuals saying or doing things that they never actually said or did.


Decentralized Finance (DeFi) refers to a new type of financial technology that relies on the blockchain, smart contracts, and distributed ledgers to decentralize traditional financial services and not rely on brokerages, exchanges, or banks to fulfill transactions.

Digital Identity

A digital identity is the online representation of an individual's identity which enables secure access to services and transactions on the internet.


A Distributed Ledger Technology (DLT) is a decentralized system that records transactions across multiple locations on a network, providing greater transparency, security, and efficiency compared to centralized databases.



Entity Data Manager (EDM) refers to our modernized customer data management for corporate and institutional banks that accelerates CDD, elevates customer experiences, and harmonizes data silos that slow you down.


False Positives

A false positive occurs when an identity check mistakenly verifies an individual's identity even though they are not who they claim to be.


The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Treasury Department that collects information about financial transactions to fight crimes like money laundering.


The Financial Industry Regulatory Authority (FINRA) is a non-governmental organization authorized by the United States Congress to regulate the securities industry, including brokerages and stock exchanges.


The Federal Trade Commission is a U.S. federal agency responsible for protecting consumers and promoting competition by enforcing laws related to consumer protection and antitrust regulations.



The Invest Company Act (ICA) is a U.S. federal law that regulates investment companies and ensures buyers understand the risks associated with buying a security before they make a purchase. Private funds, hedge funds, or venture capital funds that exclusively accept qualified purchasers as investors and do not plan to make an initial public offering qualify for the 3(c)(7) exemption under the Investment Company Act of 1940.


Identity Verification (IDV) is the process of confirming the identity of an individual, typically through various methods such as verifying personal information, checking official documents, or using biometric authentication techniques.



Know Your Business (KYB) is the process of verifying and assessing corporate client identities to comply with regulations and prevent financial crimes like money laundering.


Know Your Customer (KYC) is a set of guidelines designed to safeguard financial institutions from fraudulent activities, corruption, money laundering, and terrorist financing.



New Account Opening (NAO) refers to the identity verification process in which a newly onboarded investor or client opens an account with a financial institution.


A Non-fungible token (NFT) is a unique digital asset represented on a blockchain that certifies ownership and authenticity of a specific item, such as digital art, collectibles, or virtual real estate.



Optical Character Recognition (OCR) is a type of technology used to convert scanned paper documents, PDF files, or images into editable and searchable text.


The Office of Foreign Assets Control (OFAC) is an agency of the U.S. Treasury Department that administers and enforces economic sanctions programs, advancing U.S. national security and foreign policy objectives.


Parallel Passport

A Parallel Passport is our portable, reusable “passport” that enables investors to provide verified credentials anywhere without repeating the same KYC process each time.


Politically Exposed Persons (PEPs) are individuals who are at greater risk and are more susceptible to financial crimes like bribery, corruption, and money laundering because they hold prominent public positions or have close associations with government officials.

PID Token

The Parallel Identity Token (PID Token) is our fully on-chain, non-transferable identity token that preserves the Web3 principles of decentralized anonymity while confirming critical aspects of a wallet owner’s identity.


Personal Identifying Information (PII) is any data that can be used to identify a specific individual, such as their name, address, social security number, or biometric records.


Perpetual Risk Monitoring (PRM) refers to the ongoing process of identifying and mitigating customer risk in order to keep your business safe.



A Qualified Electronic Signature (QES) is a digital signature that meets specific legal requirements to act as a physical, binding signature, but can be used online.


A Qualified Institutional Buyer (QIB) is a large, institutional-level investor that maintains, on a discretionary basis, at least $100 million in securities.

Qualified Purchaser

A “qualified purchaser” is an individual or a family-owned business that owns $5 million or more in investments (excluding primary residence or any property used for business)



A Suspicious Activity Report (SAR) is a document filed by financial institutions that report suspicious transactions or activities and are submitted to the U.S. FinCEN for review.


The Securities and Exchange Commission (SEC) is an agency of the United States federal government that oversees the securities market and enforces related laws.



Traditional Finance (TradFi) refers to traditional financial institutions such as banks and stock brokers.



Ultimate Beneficial Ownership (UBO) is the person or entity with ultimate ownership over a company or asset when a financial transaction is initiated.



Web2 refers to the current state of the internet, signified by interactive content creation and sharing through social media platforms, blogs, and other user-generated content sites, in contrast to the static web pages of Web1.


Web3 refers to a vision of the future of the internet in which decentralized applications built on a blockchain allow users to have personalized ownership of all their online data, as opposed to the current model of the internet where large institutions own users’ online data.


506(c) Safe Harbor

Safe Harbor is a ruling by the SEC that permits companies to conduct private offerings without SEC registration and raise capital from accredited investors provided specific conditions are met.