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Cleaning Up the Finances: A Guide to Laundered Money

As part of our ongoing efforts to promote transparency and accountability in the financial sector, we’re shedding light on a critical issue: money laundering. But before we dive into the details, let’s start with some good news. Our financial institutions have made significant strides in implementing anti-money laundering (AML) and combating the financing of terrorism (CFT) measures.

What is Money Laundering?

Simply put, money laundering is the process of disguising the source of illegally obtained funds to make them appear legitimate. This can be done by depositing the cash into a bank account, moving it between accounts and credit cards, and investing it in assets like real estate or jewelry.

Laws in PNG

In Papua New Guinea (PNG), the Criminal Code (Money Laundering and Terrorist Financing) (Amendment) Act 2015 has strengthened laws to combat money laundering. Section 508B makes it a crime for individuals and corporations to knowingly deal with property that is criminal property. Meanwhile, Section 508C penalizes anyone who deals with property where it’s reasonable to suspect it’s criminal property.

Methods of Money Laundering

But how do criminals launder their dirty money? One common method is self-laundering, where they clean their own proceeds. Another approach is third-party laundering, where they involve an intermediary who wasn’t directly involved in the crime.

The Consequences

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Money laundering is a serious offense punishable by up to 25 years imprisonment and fines of K500,000 for individuals and K1,000,000 for corporations (Section 508B). Dealing with property suspected of being criminal property can lead to penalties of up to three years imprisonment and fines of K100,000 for individuals and K200,000 for corporations (Section 508C).

Terrorist Financing

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But what about terrorist financing? It’s equally serious and can take many forms. For instance, providing or collecting funds with the intention or knowledge that they’ll be used to finance a terrorist act is illegal. This can occur through donations, legitimate or illegitimate means.

In PNG, Section 508J of the Criminal Code Act makes it a crime for individuals and corporations to provide or collect property with the intent or knowledge that it will be used to finance terrorism. The penalties are equally severe: up to 25 years imprisonment and fines of K500,000 for individuals and K1,000,000 for corporations.

Protecting Our Finances

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So how can we protect our financial system from these threats? By implementing robust risk assessments and AML/CTF programs, our financial institutions can identify potential risks and take proactive measures to prevent money laundering and terrorist financing.

In Part II, Division 1 of the Act (Sections 6-14), our obligations are clear. We must conduct regular risk assessments to identify vulnerabilities and implement effective AML/CTF programs to mitigate those risks.

Conclusion

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Money laundering and terrorist financing are serious issues that require constant vigilance from our financial institutions and regulatory bodies. By working together, we can create a safer, more transparent financial system for everyone. Stay informed, stay vigilant – let’s keep our finances clean!