What are Financial Intelligence Units (FIUs)?

One of the key elements of AML/CFT regimes is the requirement for financial institutions and other designated non-financial businesses (DNFBPs) to report transactions they deem suspicious of being related to criminal or terrorist activity. Because of confidentiality traditionally attached to financial transactions and because reporting entities do not always have the means to substantiate their suspicion, it proves difficult to report it directly to the authorities in charge of enforcing criminal laws. It is therefore necessary for governments to establish a specialized agency, the Financial Intelligence Unit (FIU), focused on processing financial information that may be related to criminal or terrorist activity.

In their simplest forms, FIUs are agencies that receive reports of suspicious transactions from financial institutions and other persons and entities, analyze them, and disseminate the resulting intelligence to local law-enforcement agencies and FIUs to combat money laundering. As government agencies, FIUs must retain sufficient independence to accomplish their objectives without undue interference or influence.

According to The Egmont Group, the informal international association of FIUs, 101 countries are currently recognized as operational FIU units, with others in various stages of development. The FATF 40+9 Recommendations call for countries to operate FIUs that meet the Egmont Group’s definition.

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