A Brief Overview

Financial Monitoring Unit

Financial Monitoring Unit
Financial Monitoring Unit (FMU)

Financial Monitoring Unit is an independent Federal
Government entity initially established in October 2007 in
terms of section 6 of the Anti Money Laundering Ordinance, 2007
(now AML Act, 2010), with an aim of combating against money
laundering and terrorist financing.

The FMU works under the supervision of National Executive
Committee and General Committee.






National Executive Committee (NEC)
Financial Monitoring Unit (FMU)
National Executive Committee is composed of:
Minister for Finance or Advisor to the
Prime Minister on Finance/ Concerned Minister
Chairman
Minister for Foreign Affairs
Member
Minister for Law and Justice
Member
Minister for Interior
Member
Governor SBP
Member
Chairman SECP
Member
Chairman NAB
Member
Director-General FMU Member &
Secretary of NEC
Any other member to be nominated by Federal
Government

General Committee (GC)
Financial Monitoring Unit (FMU)
General Committee is composed of:
Secretary Finance
Chairman
Secretary Interior
Member
Secretary Foreign Affairs
Member
Secretary Law
Member
Governor SBP
Member
Chairman SECP
Member
Director-General, FCIW, NAB
Member
Director-General FMU Member &
Secretary of GC
Any other member to be nominated by Federal
Government

Powers & Functions of FMU
(Core Functions)
Financial Monitoring Unit (FMU)
To receive Suspicious Transaction Reports (STRs) and
Currency Transactions Reports (CTRs) from reporting
entities.
To analyze STRs and CTRs and to seek additional
information in this respect.
To disseminate STRs to Regulatory Authorities and Law
Enforcement Agencies wherever there is an element of
Money Laundering or Terrorist Financing.
To maintain database of STRs and CTRs and related
information.
DG-FMU may order to freeze assets which are
reasonably believed to be involved in money laundering
or financing of terrorism for a maximum period of fifteen
days.
Powers & Functions of FMU
(General Functions)
Financial Monitoring Unit (FMU)
To cooperate with Financial Intelligence Units of other
countries.

Represent Pakistan on regional / international forums.

Provide recommendations to the regulatory authorities
relating to issuance of regulations in the context of
AML/CFT.

To frame regulations in consultation with regulators for
ensuring STRs/CTRs.

Financial Monitoring Unit (FMU)
FMU Core Functions
FMU
Reporting Entities /
Persons
Reporting Entities
Other Authorities
Law Enforcement
Agencies
Regulatory Bodies
Internal & External
Databases
Information
Collection
During
Analysis
Dissemination Analysis
Receipt
Organogram of Financial Monitoring
Unit
Financial Monitoring Unit (FMU)
Financial
Monitoring Unit
Strategy &
Policy Division
Reports,
Analysis
Dissemination
Division
Coordination
Division
Finance &
Administration
Division
Strategy and Policy Division

Financial Monitoring Unit (FMU)
Strategy and Policy Division is mainly responsible
for reviewing/framing of laws & regulations
relating to the AML/CFT Regime.
Devising the National Strategy for Combating
Money Laundering and Terrorism Financing.
Keeping record of NEC / GC meetings and follow-
up actions.
Carry out Study of Best International Practices
around the world regarding AML/CFT
Framework.












Reports Analysis &
Dissemination Division
Financial Monitoring Unit (FMU)
This division is performing the core function of receipt,
analysis and dissemination of the STRs and CTRs.

Maintaining database of STRs/CTRs.

Seeking Information from FIs, LEAs, Regulators and
Others.

Disseminate STRs or CTRs to LEAs/Regulatory
authorities.

Coordination Division
Financial Monitoring Unit (FMU)
Coordination Division deals primarily with domestic and international
cooperation.
It is a contact point of FMU for coordination with APG, FATF and
other regional / international bodies.
Coordinates with the domestic stakeholders to collect status of
developments in respect of legal, regulatory, law enforcement and
international cooperation in the domain of AML/CFT and, accordingly,
prepares reports and updates for onward submission at the different
forums.
On the other hand, the Division disseminates documents /
information being received from regional / international forums
regarding international standards, interpretive notes, best practices
and other reports & studies, to raise AML/CFT awareness amongst
the domestic stakeholders.
Arrange Capacity Building Programs.

Finance & Administrative
Division
Financial Monitoring Unit (FMU)
Finance & Administrative Division is the integral
Division of FMU and responsible for subjects
concerning HR, Budget & Finance, procurement, IT
and other day-to-day administrative matters.

IT Unit
Provide IT & infrastructure support to FMU.
acquire computer equipment and necessary
software / database tools
Maintenance and security of IT systems.
Development of website and electronic
reporting.


Reporting Entities
Financial Monitoring Unit (FMU)
Banks, DFIs & Exchange Companies: These are regulated by State
Bank of Pakistan. These entities include Commercial Banks, Islamic Banks,
MFBs, DFIs and Exchange companies.

Non Banking Entities: These are regulated by Securities Exchange
Commission of Pakistan (SECP). The broad categories are NBFCs,
Investment Banks, Leasing Companies, Assets Management Companies,
Modarabas, Insurance companies, Stock Exchanges and Brokerage Houses
etc.




Role of Reporting Entities
The reporting entities are required to have system in
place to capture STR and CTR;
The reporting entities are required to file STR and
CTR with FMU within prescribed period.
Confidentiality is to be ensured (NO TIPPING-OFF)
The reporting entity to maintain all records of
STR/CTR reported by them for at least five years.
Focus on High Risk Customers, Products, Delivery
Channels, etc
Explicit protection has been provided to FMU,
reporting entities and their officers from legal
proceedings against them for filing STR or providing
information under the AML Act
Financial Monitoring Unit (FMU)
Law Enforcement Agencies (LEAs/
Regulators
Financial Monitoring Unit (FMU)

At Present, Law Enforcement Agencies designated
under AMLA 2010 includes:
National Accountability Bureau (Corruption Cases),
Anti Narcotics Force (Drugs Related Cases),
Intelligence & Investigation FBR (Smuggling),
Federal Investigation Agency (Other predicate crimes).

Likewise Regulators include SBP (banking institutions)
and SECP (non banking institutions).



Financial Monitoring Unit (FMU)
Role of Law Enforcement Agencies
After dissemination of STR by FMU, the Investigation Agency
evaluates the financial intelligence report of FMU
The LEA can exercise the powers of search, seizure,
attachment, arrest, etc. as given to them in the AML Act, 2010
read with AML rules 2008.
The financial intelligence report is confidential and is not
supposed to be disclosed in further proceedings.
Capacity constraints in interpreting the financial intelligence
and converting it into successful investigation
Trainings required
LEAs need to develop capacity to investigate ML/TF
offences.
REGULATORY AGENCIES
State Bank of Pakistan
Securities & Exchange
Commission of Pakistan

REPORTING INSTITUTIONS
Banks:
Commercial banks
Islamic banks
MFBs
Non-Banking Financial
Companies:
Investment Banks
Leasing Companies
Assets Management
Companies,
Modarabas,
Insurance companies,
Stock Exchanges
Brokerage Houses etc.
LAW ENFORCEMENT
AGENCIES
National Accountability
Bureau
Anti Narcotics Force
Intelligence & Investigation
FBR
Federal Investigation Agency
FOREIGN FIUs
FINANCIAL
MONITORING UNIT
DFIs
Exchange Companies
Others:
Law Enforcement Agencies
Government agencies
Regulators ,etc.
Financial Monitoring Unit (FMU)
Thresholds of STRs/CTRs
Financial Monitoring Unit (FMU)
Under AMLA, 2010, every financial institution is
required to file the STR with FMU in 7 days after
forming suspicion of funds being laundered or related
to terrorist financing. STRs do not have any
threshold.

CTRs are reported with FMU in 7 days having a
threshold of Exceeding PKR 2.5 Million per
transaction.


STR may generate if:
Financial Monitoring Unit (FMU)
The financial institution and reporting entity knows, suspects, or has
reason to suspect that the transaction or a pattern of transactions of which
the transaction is a part
(a) involves funds derived from illegal activities or is
intended or conducted in order to hide or disguise
proceeds of crime;
(b) is designed to evade any requirements of AMLA
2010
(c) has no apparent lawful purpose after examining
the available facts including the background and
possible purpose of the transaction;
(d) involves financing of terrorism:
STR Analysis Risk Based
Approach
Financial Monitoring Unit (FMU)
FMU has framed a risk-based procedure for analyzing Suspicious
Transactions Reports (STRs). It includes

- Identification of High, Medium and Low risk STRs

- The STRs with the greater risk or cases more prone to ML and TF risk
receive higher attention and are processed on priority.
Process of STR
Analysis
Financial Monitoring Unit (FMU)
Reporting Entity
Receipt of STR
Data Capturing Unit
Preliminary Analysis
Archived
Preliminary Analysis
Detailed Analysis
Conclusion/ Approval
Archived After Detail
Analysis
Dissemination
Refer Back for
Review
LEAs
Regulator
s
Electronic Data Capturing System
(EDCS)
Financial Monitoring Unit (FMU)
FMU has introduced Electronic Data Capturing System to
receive STRs and CTRs electronically from financial
Institutions.

With EDCS, the reporting entities are submitting STR/CTR in
much lesser time compared to sending STR/CTR
physically/manually.

EDCS also provides basic analysis tools as well as work flow
diary to record the status of STRs.

Besides, we are also in a process of procuring sophisticated
Analytical Software .