Regulatory Alerts2021-04-30 | Circular No.01Red Flags Indicators of Financial Activities related to Drug Trafficking
The Financial Monitoring Unit mandates that reporting entities fulfill their obligations under the Anti-Money Laundering Act 2010 by filing Suspicious Transaction Reports for activities potentially linked to drug trafficking proceeds. While individual red flags are not conclusive evidence of criminal activity, they serve as a practical aid for identifying Money Laundering or Terrorism Financing when analyzed alongside a client's broader financial profile. Institutions should use these specified indicators in combination to effectively assess and flag suspicious financial behavior for regulatory review.
FINANCIAL MONITORING UNIT (FMU) GOVERNMENT OF PAKISTAN 2ND FLOOR, SBP MAIN BUILDING, I.I. CHUNDRIGAR ROAD, KARACHI 4400 FMU-Circular No. 01 of 2021 April 30, 2021 All Reporting Entities Dear Sirs/Madams, Red Flags Indicators for Financial Activities related to Drug Trafficking. In terms of Section 7 (1) of Anti-Money Laundering Act, 2010, the reporting entities are required to promptly report Suspicious Transactions Reports (STRs) to Financial Monitoring Unit for potential Money Laundering (ML) / Terrorism Financing (TF) / Proliferation Financing (PF) related activities. 2. In order to identify a suspicion that could be indicative of Money Laundering (ML) or Terrorism Financing (TF) activity through drug trafficking proceeds, FMU has prepared the red flags indicators that are specially intended as an aid for the reporting entities, which are attached as “Red Flags Indicators for Financial Activities related to Drug Trafficking”. 3. These red flags may appear suspicious on their own; however, it may be considered that a single red flag would not be a clear indicator of potential ML / TF activity based on drug trafficking proceeds. However, a combination of these red flags, in addition to analysis of overall financial activity and client profile may indicate a potential ML / TF activity. Encl: “Red Flags Indicators for Financial Activities related to Drug Trafficking”. Yours truly, Sd/- (Sumera Baloch) Additional Director Copy to: The Governor, State Bank of Pakistan The Chairman, Securities and Exchange Commission of Pakistan The Director General, Federal Board of Revenue DNFBPs Directorate The President, Institute of Chartered Account Pakistan (ICAP) The President, Institute of Cost and Management Accountant Pakistan (ICMAP) The Director General, Central Directorate of National Savings (CDNS) The Director General, Anti-Narcotics Force Pakistan