Neither, because both are terms invented by Eugene Nida, who used the term "formal" to look down on literal methods.
One author wrote, “The label ‘formal equivalence’ is often used by defenders of dynamic equivalence theory, perhaps in part because this makes it so easy to caricature and thus dismiss essentially literal translation theory as a theory that places too much emphasis on the order of words in the original language” (Wayne Grudem, Chapter One, "Are Only Some Words of Scripture Breathed Out By God?" in Translating Truth, p. 10).
Nida himself wrote, "literalness: quality of a translation in which the form of the original is reproduced in the receptor language in such a way as to distort the message and/or the patterns of the receptor language” (Eugene Nida and Charles Taber, The Theory and Practice of Translation, p. 203).
As for functional equivalence, it has been described by both secular and Christian scholars as leading to or becoming a form of paraphrase. So I disagree with it.