Terminology and the International Framework
Domain 2 covers the vocabulary and international architecture that Pakistan's regime implements. The exam tests who sets standards, who evaluates, who receives reports, and which instrument creates a binding obligation.
Core rules
- FATF is the standard-setter; it does not supervise Pakistani banks or prosecute cases. APG is the regional body that conducts peer mutual evaluations.
- The Vienna Convention 1988, Palermo Convention 2000 and Terrorist Financing Convention 1999 are the main UN treaty bases; UNSC resolutions create binding freezing obligations.
- An FIU receives and analyses STRs; the Egmont Group is the global FIU cooperation network. The FMU is Pakistan's FIU.
- CDD, PEP, beneficial owner, STR, CTR, TFS, DNFBP and MVTS are defined terms, not loose descriptions.
- A VASP is a virtual asset service provider; FATF treats it as a regulated sector for AML/CFT.
Worked example
A customer argues that a UNSC 1267 listing cannot bind a Pakistani bank without a local court order. The correct answer is that the UNSC resolution is binding on states, and Pakistan implements it through its AML/CFT sanctions framework; the bank must screen and freeze without delay, then report. A local STR is a separate obligation and does not replace TFS.
Traps
- Mixing FATF (standards) with APG (evaluation) and Egmont (FIU cooperation).
- Thinking the FATF Recommendations are directly enforceable legislation; they are implemented through national law.
- Confusing a predicate offence with the ML offence itself.
- Using 'KYC' as a synonym for all CDD; CDD includes beneficial ownership, purpose and ongoing monitoring.