FMU Presentation - Financial Monitoring Unit

Financial Monitoring Unit
A Brief Overview
Financial Monitoring Unit
 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.
Financial Monitoring Unit (FMU)
National Executive Committee (NEC)
 National Executive Committee is composed of:
 Minister for Finance or Advisor to the
Prime Minister on Finance/ Concerned Minister
 Minister for Foreign Affairs
 Minister for Law and Justice
 Minister for Interior
 Governor SBP
 Chairman SECP
 Chairman NAB
 Director-General FMU
Member & Secretary of NEC
 Any other member to be nominated by Federal Government
Financial Monitoring Unit (FMU)
General Committee (GC)
 General Committee is composed of:
 Secretary Finance
 Secretary Interior
 Secretary Foreign Affairs
 Secretary Law
 Governor SBP
 Chairman SECP
 Director-General, FCIW, NAB
 Director-General FMU
Member & Secretary of GC
 Any other member to be nominated by Federal Government
Financial Monitoring Unit (FMU)
Powers & Functions of FMU
(Core Functions)
 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
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.
Financial Monitoring Unit (FMU)
Powers & Functions of FMU
(General Functions)
 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
Financial Monitoring Unit (FMU)
FMU Core Functions
Internal & External
Reporting Entities
Law Enforcement
Other Authorities
Reporting Entities /
Financial Monitoring Unit (FMU)
Regulatory Bodies
Organogram of Financial Monitoring
Monitoring Unit
Strategy & Policy
Reports, Analysis
Financial Monitoring Unit (FMU)
Finance &
Strategy and Policy Division
 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
 Carry out Study of Best International Practices around
the world regarding AML/CFT Framework.
Financial Monitoring Unit (FMU)
Reports Analysis &
Dissemination Division
 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.
Financial Monitoring Unit (FMU)
Coordination Division
 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.
Financial Monitoring Unit (FMU)
Finance & Administrative Division
 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.
Financial Monitoring Unit (FMU)
Reporting Entities
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.
Financial Monitoring Unit (FMU)
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
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.
Financial Monitoring Unit (FMU)
• State Bank of Pakistan
• Securities & Exchange
Commission of Pakistan
•National Accountability
•Anti Narcotics Force
•Intelligence & Investigation –
• Federal Investigation Agency
• Commercial banks
• Islamic banks
• MFBs
• DFIs
• Exchange Companies
Non-Banking Financial
•Investment Banks
• Leasing Companies
• Assets Management
•Insurance companies,
•Stock Exchanges
•Brokerage Houses etc.
Financial Monitoring Unit (FMU)
•Law Enforcement Agencies
• Government agencies
• Regulators ,etc.
Thresholds of STRs/CTRs
 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.
Financial Monitoring Unit (FMU)
STR may generate if:
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 –
involves funds derived from illegal activities or is
intended or conducted in order to hide or disguise
proceeds of crime;
is designed to evade any requirements of AMLA
has no apparent lawful purpose after examining
the available facts including the background and
possible purpose of the transaction;
involves financing of terrorism:
Financial Monitoring Unit (FMU)
STR Analysis– Risk Based Approach
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.
Financial Monitoring Unit (FMU)
Process of STR Analysis
Reporting Entity
Receipt of STR
Data Capturing Unit
Preliminary Analysis
Preliminary Analysis
Detailed Analysis
Conclusion/ Approval
Refer Back for Review
Financial Monitoring Unit (FMU)
Archived After Detail Analysis
Electronic Data Capturing System (EDCS)
 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 .
Financial Monitoring Unit (FMU)

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