This glossary explains the AML/CTF terms and acronyms used in Firm Verify and in AUSTRAC guidance. Use Acronyms at a glance to check what an acronym stands for, and Terms explained for what each term means and where you'll see it in Firm Verify.
Prepared with reference to AUSTRAC guidance current as at 12 November 2026. AML/CTF requirements are evolving, so seek legal or compliance advice if you're unsure what applies to your firm.
Contents
What's the difference between CDD, KYC and KYB?
Customer due diligence (CDD) is the legal obligation under the AML/CTF Act. It's the whole process of working out who your customer is and what risk they pose: identifying and verifying the customer, identifying beneficial owners, screening for politically exposed persons (PEPs) and targeted financial sanctions, understanding the nature and purpose of the service, and rating the customer's ML/TF risk. It continues for as long as you provide the service.
Know your customer (KYC) and know your business (KYB) are industry terms for the identity checks within CDD:
- KYC checks verify an individual, such as a sole trader, a director or a trustee.
- KYB checks verify an organisation, such as a company or trust, and who owns or controls it.
Example: a family trust with a corporate trusteeYou run KYC checks on the trustee company's directors and on the individuals connected to the trust. A KYB check would verify the trustee company and its ownership. CDD covers all of this, plus the PEP and sanctions screening and the risk rating for the trust.
Please noteKYB checks are planned and not yet available in Firm Verify. Until then, verify companies, trusts and other entities in the initial CDD workflow. See Firm Verify Pricing and Billing.
Acronyms at a glance
| Acronym | Stands for |
|---|---|
| AML/CTF | Anti-money laundering and counter-terrorism financing |
| AUSTRAC | Australian Transaction Reports and Analysis Centre |
| CDD | Customer due diligence (also shown as Client Due Diligence in Firm Verify) |
| ECDD | Enhanced customer due diligence |
| KYB | Know your business |
| KYC | Know your customer |
| ML/TF | Money laundering and terrorism financing |
| PDD | Personnel due diligence |
| PEP | Politically exposed person |
| SMR | Suspicious matter report |
| TFS | Targeted financial sanctions |
| UBO | Ultimate beneficial owner |
Terms explained
Terms are in alphabetical order. The In Firm Verify column shows where you'll see the term and which article covers it.
| Term | What it means | In Firm Verify |
|---|---|---|
| Adverse media | Negative news or other public information about a person or organisation that may point to financial crime risk. | A screening result you record for each related party in initial CDD. See Initial Client Due Diligence. |
| Anti-money laundering and counter-terrorism financing (AML/CTF) | The laws and controls that stop businesses being used to launder money or fund terrorism. In Australia, these are the AML/CTF Act 2006 and the AML/CTF Rules. | Firm Verify is your AML/CTF compliance platform. See What is Firm Verify? |
| AUSTRAC | Australian Transaction Reports and Analysis Centre: Australia's AML/CTF regulator and financial intelligence agency. You enrol with AUSTRAC and lodge reports, such as SMRs, with it. | Your AUSTRAC number goes in your Firm Profile. |
| Beneficial owner (UBO) | An individual who ultimately owns 25% or more of a customer, or who controls it in another way (for example, a trust's appointor). AUSTRAC says "beneficial owner"; "ultimate beneficial owner (UBO)" is the industry term for the same person at the end of an ownership chain. | Added as a related party in the client's CDD. The planned KYB checks include a multi-level UBO report. See Designated services and who is the customer. |
| BGLiD | BGL's identity verification service. Your client receives a BGLiD link and verifies their identity online. | Used for KYC checks. See BGLiD — Frequently Asked Questions. |
| Customer due diligence (CDD) | The process of identifying and verifying your customer, understanding the service and assessing their ML/TF risk. See What's the difference between CDD, KYC and KYB? and the four CDD types below. | Firm Verify calls your customers "clients", so screens use Client Due Diligence. See What is Customer Due Diligence (CDD)? |
| Initial CDD | The CDD you must complete before you start providing a designated service to a customer. | See Initial Client Due Diligence. |
| Ongoing CDD | Monitoring your customers for as long as you provide the service: keeping their information up to date, watching for unusual activity and reviewing their risk rating. | – |
| Simplified CDD | A lighter level of CDD for customers you assess as low risk. You still identify the customer and screen for PEPs and sanctions. | The suggested CDD level applied for a Low risk rating. A Medium rating suggests Standard. |
| Enhanced CDD (ECDD) | Extra checks for high-risk customers, such as source of wealth and senior manager approval. Required for high-risk customers and foreign PEPs. | The suggested CDD level applied for a High risk rating. |
| Compliance officer (AML/CTF compliance officer) | The person who manages day-to-day AML/CTF compliance and reports to the governing body. You must tell AUSTRAC within 14 days of appointing one. | A built-in role that only a user can hold. See Personnel Roles. |
| Designated service | A service the AML/CTF Act regulates. For accounting firms, these are the nine professional services in Table 6 of the Act, such as creating a company or trust or providing a registered office address. Tax returns and BAS aren't designated services. | Selected in Service to Provide and the Services profile. See Designated services and who is the customer. |
| Governing body | The person or group primarily responsible for your firm's governance and executive decisions, such as the partners, the board or a sole practitioner. It oversees AML/CTF compliance. | The built-in Governing body role. See Personnel Roles. |
| Know your business (KYB) | Verifying an organisation, such as a company or trust, and who owns or controls it. | KYB checks are planned. See Firm Verify Pricing and Billing. |
| Know your customer (KYC) | Collecting and verifying an individual's identity details, such as their name, date of birth and address. | KYC checks run through BGLiD. See Client ID Verification. |
| ML/TF risk | The risk that your firm or a customer could be involved in money laundering or terrorism financing. Your firm's risk assessment covers your firm's risk; each customer also gets a risk rating. | See Generate a Risk Assessment. |
| Personnel due diligence (PDD) | Checking that people in AML/CTF roles are suitable, including their identity and PEP and sanctions screening. | See Personnel Due Diligence Tab. |
| Politically exposed person (PEP) | Someone who holds or has held a prominent public position, in Australia (domestic PEP), overseas (foreign PEP) or in an international organisation. Their immediate family members and close associates are also treated as PEPs. | A screening result you record in initial CDD (PEP match). |
| Pre-commencement customer | A customer you were already in a business relationship with on 1 July 2026 for designated services. You don't need initial CDD for them unless an SMR obligation arises or a significant change could make them medium or high risk. Ongoing CDD obligations still apply. | The Pre-commencement toggle and client status. See How to Add and Manage Clients. |
| Related party | A person or organisation connected to a client, such as a director, trustee, beneficial owner or representative. | Added in the client's initial CDD. |
| Senior manager | The person who approves your risk assessment, AML/CTF policies and updates to them, and certain customers, such as foreign PEPs. They can't delegate these approvals. | The built-in Senior Manager role. See Personnel Roles. |
| Source of funds and source of wealth | Source of funds is where the money for a particular transaction comes from. Source of wealth is how the customer built up their overall assets. Source of wealth is usually checked as part of enhanced CDD. | See What is Customer Due Diligence (CDD)? |
| Suspicious matter report (SMR) | A report you must lodge with AUSTRAC when you suspect on reasonable grounds that a matter relates to crime such as money laundering or terrorism financing. You must not tell the customer (tipping off is an offence). | When you decline a client in initial CDD (Do not proceed), consider whether you need to lodge an SMR. |
| Targeted financial sanctions (TFS) | Sanctions placed on specific people and organisations under Australian sanctions laws. You must check whether your customer, or anyone connected to them, is designated for targeted financial sanctions. | A screening result you record in initial CDD (Sanctions match). |
| Tranche 2 | The extension of AML/CTF laws to professions such as accountants and lawyers, which started on 1 July 2026. | – |
Related articles
For more on CDD, see What is Customer Due Diligence (CDD)? and Designated services and who is the customer. For AUSTRAC's own definitions, see the Develop your AML/CTF program guidance on the AUSTRAC website.