With all the setbacks of recent years, Vanuatu’s citizenship sale schemes should be dead in the water — instead they are thriving, and geopolitical chaos is playing a part.

The citizenship-by-investment sector is the biggest single revenue earner for Vanuatu’s government, but lingering issues of integrity cast a shadow over it.

In 2024, when Vanuatu became the first country to lose its European Union visa-free access over concerns about its golden passport scheme, there were fears it would be a huge blow to the sector.

But designated agents for Vanuatu’s citizenship programmes have told RNZ Pacific this has not necessarily hurt them much, as their product has other benefits and passport holders can still apply to access Europe.

However, Vanuatu’s continued inclusion on an EU anti-money laundering blacklist hurts more, Francesca Grillon of approved agent Yawha & Associates said.

Currency hassles
Grillon said the decision to stop visa-free entry was not a major downfall for the citizenship programme.

“I think the main issue we are having is the blacklisting from Europe, because that that is an obstacle for receiving funds in foreign currency,” she said.

This issue came to a head last September when the Commonwealth Bank of Australia — which served as the correspondent bank for the National Bank of Vanuatu — advised it would no longer facilitate transfers for certified agents in the citizenship programmes

Melten Menauke of Smart Citizenship Vanuatu explained that this left the government in a bind over how it collects the donations and fees that foreign applicants pay.

“The National Bank is still looking for a correspondent bank to accept US dollars. I don’t know what is happening with the Commonwealth Bank of Australia.

“US currency was the first one they blocked, and now they are no longer accepting [Australian dollars]. They’re only accepting Japanese yen,” he said, adding that this created costly hurdles for agents and applicants alike.

But integrity issues are not just creating pressure on Vanuatu’s citizenship sector internationally.

‘Nobody trusts anyone’
A Commission of Inquiry into the citizenship programmes was initiated by Vanuatu’s government in 2024 following concerns about corrupt practices involving the sale of citizenship and misuse of the programmes for personal and political gain.

But the inquiry report has still not been made public, eight months after it was officially handed to the government. As calls for its release continue, Jenny Ligo, the chairperson of Women Against Crime and Corruption in Vanuatu, said citizenship schemes had been misled by political interests.

“That programme needs to be taken out totally. Because most of the projects under programmes in Vanuatu, it always ties in with pollitics and politicians,” Ligo said.

“This is all wrong. We need neutral people to run these programmes. But at the moment nobody trusts anyone.”

Vanuatu’s government has had a lot to contend with in the last few years, including responding to major disasters — earthquakes and cyclones — and the challenge of creating much-needed political reform. However, addressing the integrity problems of the citizenship-by-investment schemes is high on its priotiy list

Grillon said the government had been taking the right steps to improve compliance with regulations and rules, including strengthening the Financial Intelligence Unit which screens applicants.

“There’s a lot of effort, both from the high level government and directorship and public servants, in trying to really follow the international advice, and the newly introduced laws and doing everything properly.”

In demand
Overall, the sector is doing well. According to the Vanuatu Daily Post, citizenship sale receipts made up the bulk of the US$31 million in revenue in the past year — 24.3 percent more than what was forecast, with around 2000 foreigners granted citizenship last year.

Interest remains strong in several foreign markets, Norman Joseph of JG Marketing, Consulting and Recruitment Agency said.

“We have Chinese, we have Indonesians, we have Russians. Most of them are from different countries but they also have passports from different countries,” Joseph said.

“So they come in, for example, some might be Chinese but they also have a Mexican passport, so they apply from a Mexican passport.”

Ros Stanford of designated agent Stanford Knight said the Vanuatu passport was attractive for a variety of reasons.

“So, either for visa free travel — so global mobility is one option; for those that actually physically want to reside for tax benefits; and then we have a lot of clients currently who just want a safe like a Plan B, a safe alternative residence, in case things turn to custard globally.”

On the latter reason, Stanford said they had seen an uptick in the last couple of years, a reflection of ongoing ruptures in the global geopolitical order.

Even without visa-free access to Europe, and despite the concerns of ni-Vanuatu about its commodification, Vanuatu Citizenship is in demand — and agents tout it as one of the fastest citizenships to get any where in the world.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

Papua New Guinea has five months remaining to fix its anti-money laundering and counter-terrorist financing (AML/CTF) systems or face the severe repercussions of being placed on the Financial Action Task Force’s (FATF) “grey list”.

The FATF has imposed an October 2025 deadline, and the government is scrambling to prove its commitment to global partners.

Speaking in Parliament, Prime Minister James Marape said Treasury Minister, Ian Ling-Stuckey had been given the responsibility to lead a taskforce to fix PNG’s issues associated with money laundering and terrorist financing.

“I summoned all agency heads to a critical meeting last week giving them clear direction, in no uncertain terms, that they work day and night to avert the possibility of us getting grey listed,” Marape said.

“This review comes around every five years.

“We have only three or four areas that are outstanding that we must dispatch forthwith.”

PNG is no stranger to the FATF grey list, having been placed under increased monitoring in 2014 before successfully being removed in 2016.

Deficiencies highlighted
However, a recent assessment by the Asia Pacific Group on Money Laundering (APG) highlighted ongoing deficiencies, particularly in the effectiveness of PNG’s AML/CTF regime.

While the country has made strides in establishing the necessary laws and regulations (technical compliance), the real challenge lies in PNG’s implementation and enforcement.

The core of the problem, according to analysts, is a lack of effective prosecution and punishment for money laundering and terrorism financing.

High-risk sectors such as corruption, fraud against government programmes, illegal logging, illicit fishing, and tax evasion, remain largely unchecked by successful legal actions.

Capacity gaps within key agencies like the Royal Papua New Guinea Constabulary and the Office of the Public Prosecutor have been cited as significant hurdles.

Recent drug hauls have also highlighted existing flaws in detection in the country’s financial systems.

The implications of greylisting are far-reaching and potentially devastating for a developing nation like PNG, which is heavily reliant on foreign investment and international financial flows.

Impact on economy
Deputy Opposition leader James Nomane warned in Parliament that greylisting “will severely affect the economy, investor confidence, and make things worse for Papua New Guinea with respect to inflationary pressures, the cost of imports, and a whole host of issues”.

If PNG is greylisted, the immediate economic fallout could be substantial. It would signal to global financial institutions that PNG carries a heightened risk for financial crimes, potentially leading to a sharp decline in foreign direct investment.

Critical resource projects, including Papua LNG, P’nyang LNG, Wafi-Golpu, and Frieda River Mines, could face delays or even be halted as investors become wary of the increased financial and reputational risks.

Beyond investment, the cost of doing business in PNG could also rise. International correspondent banks, vital conduits for cross-border transactions, may de-risk by cutting ties or scaling back operations with PNG financial institutions.

This “de-risking” could make it more expensive and complex for businesses and individuals alike to conduct international transactions, leading to higher fees and increased scrutiny.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

The Bank of Papua New Guinea’s Financial Analysis and Supervision Unit has reported more than 5000 cases as a result of anti-money laundering and counter terrorist financing investigations still awaiting prosecution.

Acting governor for BPNG Benny Popoitai said the FASU had identified persons of interest and companies and referred them to the Police Fraud Unit for further investigation and prosecution. However, none have yet been prosecuted.

He said at this stage FASU, under BPNG, did not have the powers to prosecute these cases.

“We have a real issue, we have not been prosecuting anyone under the Anti-Money Laundering (AML) law.

“We have cases of leaders being prosecuted, that we have sent to the Ombudsman Commission and others to the police.

“If it’s a tax matter we refer them to the IRC [inland Revenue Commission], If it is Customs it goes to Customs.

“The issue is, we do not have the prosecution powers so we send the information to the law enforcing agencies to enforce,” Popoitai said.

Risk of being ‘greylisted’
He also cautioned that FASU was also at risk of being “greylisted” for doing business with corresponding banks.

“PNG joined the rest of the Anti-Money Laundering and Counter Terrorist Financing with the rest of the world in 2008.

“As a result of their review of our AML, they grey listed us in 2014 and so we got out of the grey list.

“They are going to visit us, to see if we are not ready, they will put us down [on] the grey list and doing business will be really tough because of the correspondence relationship with the banks.

“Some of the international correspondents will walk away,” he said.

Popoitai said the AML business was now under the National Coordination Committee chaired by himself and the Secretary for Justice to oversee what other government agencies do.

Marape calls for prosecutions
Prime Minister James Marape has asked if those who are found to be breaking the AML laws be referred to the Independent Commission Against Corruption Act (ICAC) for prosecution.

Popoita said they could only do that once ICAC was established.

AML law introduced a robust regulatory framework consistent with the Financial Action Task Force (FATF) standards to prevent money laundering and terrorist financing.

Under the Act, the Financial Analysis and Supervision Unit (FASU) collects, analyses and disseminates financial intelligence, and supervises financial institution and Designated Non-Financial Businesses and Professions (DNFBPs)

Members of Parliament under this Act are classified as the politically exposed persons (PEP) meaning their conduct of business for themselves, their family and employees are important as this is how the Act governs and ensures the PNG economy is protected.

Lorraine Wohi is a PNG Post-Courier journalist. Republished with permission.

Article by AsiaPacificReport.nz

Papua New Guinea’s biggest bank — Bank South Pacific with major branch networks across the Pacific region — is the subject of regulatory action by the country’s banking regulator BPNG over failure to comply with anti-money laundering regulations, reports the PNG Post-Courier.

The Financial Analysis and Supervision Unit (FASU) of the Central Bank yesterday took regulatory action against the BSP Financial Group Ltd for alleged non-compliance.

The action includes the issuance of a formal warning under section 100 of the Anti-Money Laundering and Counter Terrorist Financing Act 2015, an enforceable undertaking from BSP that it will remove and replace certain executive management staff and for the BSP to engage an external auditor to determine the full extent of the underlying good governance and best business practice issues that were identified during the onsite inspection by FASU.

The external auditor’s examination will cover enhanced customer due diligence practices employed by BSP on all high risk and politically exposed people who are customers of BSP.

The director of the Financial Analysis and Supervision Unit of the Central Bank, Benny Popoitai, said in a media release: “The nature of BSP’s non-compliance is serious enough for FASU to have issued an infringement notice, however, FASU has chosen to apply a formal warning instead, making this the first occasion of regulatory action undertaken by FASU against BSP.”

Among the alleged breaches detailed by FASU were BSP’s alleged failure to:

• conduct ongoing due diligence in respect of all of its business relationships in contravention of section 17(1) of the Act;
• ensure that transactions carried out on behalf of its customers are consistent with its knowledge of the customer, the customer’s commercial or personal activities and risk profile contrary to section 17(2)(b) of the Act;
• ensure that ongoing enhanced due diligence is conducted with respect to politically exposed persons in accordance with section 29(b) of the Act;
• conduct enhanced customer due diligence in accordance with the requirements of sections 27 and 28 of the Act where it had taken the view that the customer was a politically exposed person contrary to section 26(1) of the Act;
• obtain information relating to the source of the assets or the wealth of the customer when conducting enhanced due diligence contrary to section 27(b) of the Act;
• take reasonable steps to verify information relating to the source of the assets or the wealth of the customer contrary to section 28(b) of the Act; and
• take all reasonable steps to identify whether a customer or beneficial owner is a politically exposed person contrary to section 29(1) of the Act.

According to Wikipedia, BSP has 35 branches throughout Papua New Guinea and in eight other countries.

Outside PNG, the bank’s operations span Cambodia, Cook Islands, Fiji, Laos, Samoa, Solomon Islands, Tonga and Vanuatu. It also has correspondent banking relationships with Bank of America and Wells Fargo.

Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) provide correspondent banking services to BSP in Australia, providing a gateway for BSP’s clients from across the Pacific to transfer money in and out of Australia.

BSP employs more than 3000 people and services more than 650,000 business banking customers throughout the Pacific.

On site inspections
The FASU media release said the unit had conducted on site inspections on BSP in 2019 and late last year it had issued the bank with a “show cause notice” requiring it to explain why FASU should not impose enforcement action.

BSP’s response to FASU was a blanket denial without any acknowledgement of the deficiencies highlighted.

This, said Popoitai, had left FASU with no choice but to apply regulatory measures.

He also said: “FASU expects BSP to co-operate with the regulatory measures imposed.”

Penalties for breaching this Act are a fine of up to K500,000 (NZ$205,000) or imprisonment for a term not exceeding 5 years or both, or a fine of K1 million (NZ$410,000) for a body corporate, for each offence.

When contacted, BSP’s chief executive officer Robin Fleming told the Post-Courier: “At this stage BSP is unable to comment.”

However, in a later statement to the Australian Securities Exchange today, the BSP group insisted it has complied with the regulations and was considering its “legal options”.

According to the Australian Financial Review, an enforceable undertaking is being sought with the bank to “remove and replace certain executive management staff”. This is understood to include Fleming.

BSP will also be required to hire an external auditor to ensure it complies with anti-money laundering laws in the future.

Article by AsiaPacificReport.nz