Glossary
AI Finance Glossary
Plain-English definitions of AI, accounting, and SaaS-finance terms.
Categories
A
ADA Compliance
Adherence to the Americans with Disabilities Act prohibiting discrimination and requiring reasonable accommodations.
AI Hallucination
AI model generating confident but factually incorrect or fabricated information not grounded in reality.
AML
Anti-Money Laundering — a framework of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income.
ASC 606
The GAAP revenue recognition standard requiring a five-step model to determine when and how to recognize revenue from customer contracts.
Anti-Bribery Compliance
Corporate program and legal framework preventing improper payments to government officials and commercial counterparties.
Audit Trail
A chronological record of all user actions, system events, and data changes in a financial system, providing a traceable history for auditing and investigation.
B
BSA (Bank Secrecy Act)
U.S. primary anti-money laundering law requiring financial institutions to assist in detecting and preventing financial crimes.
Basel III
International banking regulatory framework strengthening capital requirements and risk management for banks post-2008 crisis.
Beneficial Ownership
Identification of natural persons who ultimately own or control a legal entity above a defined ownership threshold.
C
CDD (Customer Due Diligence)
Process of verifying customer identity and assessing risk before and during a financial relationship.
COSO Framework
Internal control framework published by the Committee of Sponsoring Organizations used for assessing and improving organizational controls.
Conflict of Interest
Situation where personal interests or competing loyalties may improperly influence professional judgment or decision-making.
D
Differential Privacy
Mathematical framework adding noise to data or model outputs to provide formal privacy guarantees.
Dodd-Frank
U.S. financial reform law enacted in 2010 expanding regulation of financial institutions, derivatives, and consumer protection.
Due Diligence
Systematic investigation of a business or investment to verify facts and identify material risks before closing.
E
EDD (Enhanced Due Diligence)
More intensive customer due diligence applied to higher-risk customers, including PEPs and high-risk jurisdictions.
EMV Chip
Payment card microprocessor chip generating a unique cryptogram for each transaction, preventing card fraud.
Explainable AI
AI systems and techniques making model decisions interpretable and transparent to human users.
F
FATF Guidelines
International standards from the Financial Action Task Force setting AML and counter-terrorism financing requirements.
Federated Learning
Machine learning approach training models across distributed datasets without centralizing raw sensitive data.
Fiduciary Duty
Legal obligation to act in another party's best interest, arising in relationships of trust and confidence.
G
I
Intelligent Document Processing
AI-powered technology combining OCR, NLP, and machine learning to automatically extract, classify, and process data from complex financial documents.
Internal Controls
The policies, procedures, and practices designed to safeguard assets, ensure financial accuracy, prevent fraud, and promote operational efficiency.
K
N
P
PCI DSS
The Payment Card Industry Data Security Standard — a set of security requirements for organizations that handle cardholder data, mandated by card networks.
Prevailing Wage
Minimum wage rate for construction and service workers on government-funded projects, set by the Department of Labor.
R
S
SAR (Suspicious Activity Report)
Confidential report filed by financial institutions with FinCEN when they detect potentially illegal activity.
SOC 2
A security audit standard developed by the AICPA assessing a service company's data security, availability, processing integrity, confidentiality, and privacy controls.
SOX Compliance
Adherence to the Sarbanes-Oxley Act requirements for financial reporting controls and auditor independence for public companies.
Sanctions Screening
Process of checking customers, counterparties, and transactions against government sanctions lists to prevent prohibited activity.
Segregation of Duties
An internal control principle requiring different people to handle different stages of a transaction to prevent fraud and errors.
T
Tokenization
Replacing sensitive payment data with a non-sensitive substitute token that has no exploitable value.
Transfer Pricing
The pricing of goods, services, and intellectual property exchanged between related entities within a multinational company, governed by the arm's length principle.