Anti-Money Laundering (AML)
What the AML domain tests
The Anti-Money Laundering (AML) domain tests your ability to apply Pakistan's AML Act 2010 and the supervisory expectations of the Financial Monitoring Unit (FMU), the State Bank of Pakistan (SBP) and the SECP. The focus is not memorising definitions; it is showing that a reporting entity can identify, assess, mitigate and report money-laundering risk.
Core rules
- Risk-based approach. Design CDD and monitoring proportionate to customer, product, channel, geography and delivery risk. Higher risk needs enhanced due diligence (EDD); lower risk may allow simplified measures only where permitted.
- CDD before or during onboarding. Identify the customer, verify identity using reliable, independent sources, identify the beneficial owner and understand the purpose and intended nature of the relationship.
- PEPs. Screen for politically exposed persons and their associates; obtain senior-management approval, establish source of wealth and funds, and monitor closely.
- Reporting. File suspicious transaction reports (STRs) to the FMU through goAML with no minimum threshold. File currency transaction reports (CTRs) for qualifying cash transactions, e.g. the Rs 2 million bank threshold, but a CTR never replaces an STR.
- Recordkeeping and controls. Retain CDD and transaction records for the required period, appoint a compliance officer, train staff and run an independent audit.
Worked example
A branch receives three cash deposits of Rs 1.8 million on consecutive days from the same customer, split across two branches. Each deposit is below the Rs 2 million CTR threshold. The correct reasoning: the pattern is structuring to evade reporting. Aggregate the activity, complete EDD, preserve records and file an STR promptly. Do not simply file a CTR or close the account without reporting; do not tell the customer a report was made.
Traps
- Treating an STR as proof of criminality; it is a suspicion report, not a conviction.
- Deferring CDD until after the account is active.
- Confusing the beneficial owner with a nominee or front person.
- Tipping off the customer, which is an offence.
- Assuming a CTR satisfies the STR obligation.