Very simply put - pick pocket the guards with pouches on them. You can tell they have a pouch (sometimes more than one) by using focus to see that there would be a darker blue-ish tint around their belt area. Good thing to note is the guards in the city will refresh their pouches as you finish chapters and client jobs (the metal man and the carnie).
If you are thorough and pick pocket everything you see multiple times (take your time in the city, explore) you should have this achievement by Chapter 5.
For the running total of pick pockets, xWaZZySsiKnEsSx says ...
...go to the screen where the first option is "objectives" and select the player progress option, from there you can cycle through all missions with RB/LB and hit the "overall" progress screen where it shows total pickpockets...
ADDITIONAL NOTE: All picket pockets count whether it is in the story or in the city. There is a running total on the 'Objectives' screen for city, story, side, and total.
To answer the question of multiple packs on one guard (sometimes up to three on a person) - does it count for each pack or just the person being pick pocketed? It counts for each looted pack. If a guard has three packs on them, it is three separate pick pockets.
dainja rass adds... After chapter 8 you are given an option to continue exploring the City (pressing A) . It's what I did so I could go looking for collectibles and stuff , and noticed my overall pickpocket counter was still going up .