Financial Crime World

Title: Papua New Guinea’s Struggle Against Money Laundering: ADB’s Assistance in Strengthening AML/CFT Regime

background

In October 2013, Papua New Guinea (PNG) turned to the Asian Development Bank (ADB) for aid in combatting Money Laundering (ML) and Terrorist Financing (TF) in the country. Following a peer review, PNG was identified as non-compliant with 14 FATF and APG recommendations in 2011, resulting in the country being ‘grey listed’ in February 2014.

project overview

  • Project Number: 47309-001
  • TA Number: 8515
  • Amount Approved: $225,000

context of grey listing

Grey listing publicly identifies jurisdictions with strategic AML/CFT deficiencies. The PNG Government was required to sign a Public Action Plan and rectify these deficiencies within 18 months to avoid being ‘blacklisted,’ which could have significant negative consequences for the country.

expected impact

Addressing the AML/CFT deficiencies allowed PNG to:

  • Improve transnational financial crime prevention
  • Provide a safer business environment
  • Be removed from the ‘grey list’

adb’s role: technical assistance from ADB

ADB’s technical assistance focused on drafting legislation to strengthen PNG’s AML/CFT framework and comply with FATF and APG standards. Outputs included:

  • Drafts of the AML/CFT Act
  • Proceeds of Crime Act
  • AML/CFT Regulation Act
  • CFT Listing and Freezing Act
  • Improved understanding of new legislation among key stakeholders

project results: strengthened regulatory framework

All legislative drafts were approved by Papua New Guinea’s Parliament and published by February 2016, enabling the country to be removed from the FATF grey list at the June 2016 Busan plenary. FATF recognized the ‘unprecedented reform and commitment’ of the highest standard by Papua New Guinea to strengthen its AML/CFT systems and prevent ML and TF activities.

future considerations

  • Prepare a National Risk Assessment in 2018
  • OGC to provide technical assistance
  • Close collaboration among various stakeholders, including Bank of PNG, PNG, and Australia