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