IFMP Anti-Money Laundering (AML/CFT) Certification, Pakistan flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Money laundering definition

The process of concealing or disguising the true origin, ownership or destination of proceeds of crime so they appear to come from a legitimate source, typically through placement, layering and integration.

Placement stage

The first laundering stage, where criminal cash or assets first enter the financial system, for example through deposits, cash-intensive businesses, or purchases of high-value goods or property.

Layering stage

The second laundering stage, using multiple transactions, accounts, entities or jurisdictions to obscure the audit trail and separate the funds from their criminal source.

Integration stage

The final laundering stage, where laundered funds are reintroduced into the legitimate economy as apparently lawful assets, investments or income, making the criminal origin hard to trace.

Financial Monitoring Unit

Pakistan's financial intelligence unit, established under the Anti-Money Laundering Act, 2010. It receives, analyses and disseminates suspicious transaction reports and coordinates with domestic and foreign authorities.

Suspicious Transaction Report

A report filed with the Financial Monitoring Unit when an institution knows, suspects or has reasonable grounds to suspect that funds are proceeds of crime or linked to terrorist financing.

Threshold Transaction Report

A report of transactions at or above a prescribed value, filed regardless of suspicion. In Pakistan the FMU receives CTRs and TTRs under the AML Act framework, separate from STRs.

Customer due diligence

The process of identifying and verifying a customer and beneficial owner, understanding the purpose of the relationship, and monitoring activity on an ongoing basis proportionate to risk.

Beneficial owner

The natural person who ultimately owns or controls a customer or the funds involved, or on whose behalf a transaction is conducted, including through ownership thresholds or control by other means.

Politically exposed person

A person entrusted with prominent public functions, domestically or abroad, plus family members and close associates, who presents higher corruption and money laundering risk requiring enhanced measures.

Enhanced due diligence

Additional measures applied to higher-risk relationships, such as PEPs or correspondent banking, including extra identity verification, source-of-funds checks and more frequent or intensive monitoring.

Simplified due diligence

Reduced CDD measures permitted only where risk is assessed as low, based on documented analysis, and never allowed where there is suspicion of money laundering or terrorist financing.

Tipping-off offence

Disclosing to a customer or unauthorised third party that a suspicious transaction report has been or may be filed, or that an investigation is underway, which is prohibited by law.

Structuring

Deliberately splitting transactions into smaller amounts to stay below reporting or identification thresholds, a classic red flag and an offence in many jurisdictions including Pakistan.

Shell company risk

A legal entity with no genuine operations, employees or physical presence, often used to hold accounts or move funds while concealing the real beneficial owner behind nominee arrangements.

Risk-based approach

Allocating compliance resources and controls proportionate to assessed money laundering and terrorist financing risk, so higher-risk customers and products receive more intensive scrutiny and review.

FATF Recommendation 10

The FATF standard requiring customer due diligence, including identifying and verifying customers and beneficial owners, and understanding the purpose and intended nature of the business relationship.

Record retention period

FATF standards require keeping CDD and transaction records for at least five years after the business relationship ends or the transaction date, available to competent authorities on request.

Terrorist financing definition

Providing or collecting funds, from any source, lawful or unlawful, with the intention or knowledge that they will be used to carry out terrorist acts or support terrorist organisations.

AML versus CFT focus

AML focuses on the criminal origin of funds, while CFT focuses on the intended terrorist destination, meaning legally earned small amounts can still constitute terrorist financing.

Targeted financial sanctions

Freezing of funds and economic resources of designated persons and entities, and prohibition of making funds available to them, required without delay and without prior notice.

UNSC Resolution 1267

A UN Security Council resolution establishing the Al-Qaida and Taliban sanctions regime, with a consolidated list to which states must apply asset freezes and travel and arms bans.

UNSC Resolution 1373

A UN Security Council resolution requiring states to criminalise terrorist financing, freeze funds of terrorists without delay, and deny safe haven, adopted after the September 2001 attacks.

FATF Recommendation 6

The standard requiring countries to implement targeted financial sanctions for terrorist financing, including freezing assets of designated persons and entities under UN Security Council resolutions.

FATF Recommendation 8

The standard on non-profit organisations, requiring risk-based supervision and outreach to protect the sector from terrorist abuse without disrupting legitimate charitable, religious or humanitarian activity.

NACTA

Pakistan's National Counter Terrorism Authority, which coordinates national counter-terrorism policy, maintains related databases and supports implementation of UN sanctions obligations domestically.

Hawala and hundi

Informal value transfer systems relying on trust and settlement between brokers rather than formal banking channels, leaving little paper trail and posing recognised terrorist financing risk.

Charity sector abuse

Exploitation of legitimate non-profit organisations by diverting donations, misusing funds or using charitable cover to raise and move money for terrorist purposes, a recognised CFT typology.

Sanctions screening

Comparing customer, beneficial owner and counterparty details against designated-person lists, with potential matches escalated for investigation, and confirmed matches frozen and reported.

False positive in screening

A name or data match that, after investigation, does not relate to the designated person, for example a common name or similar spelling, which must be documented and cleared.

Terrorist financing typology

A recurring pattern or method of financing terrorism, such as small cash donations, misuse of NPOs, informal value transfer, or use of student and low-income accounts as mules.

Freezing without delay

The CFT obligation to block designated funds immediately upon listing, without prior notice to the person and without waiting for a court order or separate administrative approval.