Papua New Guinea Faces Serious Money Laundering Risks, Report Warns
Rapid Economic Growth and Corruption Contribute to Risk
Papua New Guinea is facing significant risks of money laundering from a range of criminal activities, including domestic corruption and misappropriation of public funds, according to a report by the World Bank. The country’s rapid economic growth, large-scale foreign investment, and escalating crime rate have created an environment conducive to money laundering.
Lack of Political Commitment Hampers Efforts
The Financial Intelligence Unit (FIU) is working to build its capacity, but there is currently no clear political commitment to tackling corruption and other crimes through effective regulation and supervision of anti-money laundering (AML) obligations by financial sector regulators. This lack of commitment severely hampers the authorities’ ability to combat financial aspects of corruption.
Misappropriation of Government Funds a Significant Problem
The report highlights that misappropriation of government funds is a significant problem in Papua New Guinea, with authorities stating that these funds are often placed through the banking sector and used to purchase real estate, high-value vehicles or distributed in cash. Some of these funds may also be moved offshore.
Areas for Improvement Identified
The World Bank’s Financial Sector Assessment Program (FSAP) report provides an overview of the AML/Combating the Financing of Terrorism (CFT) measures in place in Papua New Guinea at the time of the mission or shortly thereafter. The report identifies several areas where the country needs to improve its AML/CFT regime, including:
- Strengthening its regulatory framework
- Enhancing cooperation between financial institutions and law enforcement agencies
Urgent Action Required from Government
Papua New Guinea’s government has been warned that it must take immediate action to address these concerns and demonstrate a clear commitment to regulating and supervising AML obligations. Failure to do so could have serious consequences for the country’s financial stability and reputation.
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