Financial Crime World

Title: PNG Regulator Issues Formal Warnings to CBA, NAB, and BSP for Money Laundering Breaches

PNG’s Financial Analysis and Supervision Unit (FASU) Issues Formal Warnings

The Financial Analysis and Supervision Unit (FASU) of Papua New Guinea (PNG) has issued formal warnings to three major banks – Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), and BSP Financial Group – for their roles in money laundering violations in Papua New Guinea (PNG).

BSP’s AML Breaches and Consequences

  • BSP’s Violations: The largest lender in the Pacific, BSP Financial Group, has been under scrutiny once again for breaching anti-money laundering (AML) laws.
  • Senior Management Changes: The FASU has ordered the bank to remove and replace certain members from its senior management, including CEO Robin Fleming.
  • External Auditing: BSP must hire an external auditor to ensure ongoing compliance with AML laws.
  • Non-punitive Response: Although severe, the FASU opted for the “least punitive” response to address the systemic culture of non-compliance and safeguard PNG’s financialsystem integrity.

Facilitation of Money Transfers by Australian Branches of CBA and NAB

  • Identification of Australians Banks: The Australian branches of CBA and NAB have been identified as facilitating money transfers in and out of Australia for BSP’s clients via correspondent banking services.
  • Due Diligence Assessments: These banks have been mandated to implement due diligence assessments on their correspondent banks, including BSP, to prevent money laundering.

Extended Banking Operations of BSP

  • Countries: BSP’s banking operations extend beyond PNG to countries such as the Solomon Islands, Tonga, Samoa, Fiji, the Cook Islands, and Cambodia.
  • Correspondent Banking Relationships: The bank holds correspondent banking relationships with Bank of America and Wells Fargo.

Potential Weaknesses in the System

  • NAB Contract Workers: Reports have emerged that NAB contract workers received little or no AML training, highlighting potential weaknesses in the system.

Formal Warnings and Next Steps

The formal warnings serve as a reminder for the banks to strengthen their AML procedures and reaffirm their commitment to upholding transparency and integrity in the financial sector.