Background transparency

By default, FM imports the graphics with a white fill (likewise it also creates Anchored frames with a white fill as the default). First try setting the graphic and AFrame with no fill. If this doesn't work, then you need to use the methods described in the paper that Bob provided the link to.

What image format?

FM is pretty weak on this (and won't show it in preview during edit).
EPS vector line art can preserve transparency.
EPS raster art can have a clipping path honored.
(unsure about PDF and SVG for these cases)

For everything else: FM_transparency_rev1.pdf