A tight deadline nears as PNG works to fix anti-money laundering & anti-terror financing systems
lekmak
Posted On May 30, 2025
With just five months left until an October 2025 deadline, PNG faces a critical challenge: significantly strengthen its anti-money laundering (AML) and counter-terrorist financing (CTF) systems, or risk being placed on the Financial Action Task Force’s (FATF) dreaded “greylist.”
This isn’t new territory for PNG; we were under FATF’s increased monitoring in 2014 before successfully being removed in 2016. However, a recent assessment by the Asia Pacific Group on Money Laundering (APG) has flagged persistent shortcomings. While we’ve made progress in putting the necessary laws and regulations in place (what’s called ‘technical compliance’), the real hurdle lies in effectively implementing and enforcing them.
The Core of the Problem: Weak Enforcement
According to analysts, the heart of the issue is a glaring lack of effective prosecution and punishment for money laundering and terrorism financing. High-risk sectors like corruption, fraud against government programs, illegal logging, illicit fishing, and tax evasion remain largely untouched by successful legal actions. Even recent large-scale drug hauls have unfortunately highlighted existing flaws in our financial detection systems. There are also significant capacity gaps within key agencies like the Royal Papua New Guinea Constabulary and the Office of the Public Prosecutor.
A Direct Order from the Top
Prime Minister James Marape has put the Treasury Minister, Ian Ling-Stuckey, in charge of a taskforce specifically designed to fix PNG’s current issues. Speaking in Parliament, the Prime Minister revealed his no-nonsense approach.
“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 greylisted,” Prime Minister Marape stated. “This review comes around every five years. We have only three or four areas that are outstanding that we must dispatch forthwith.”
What’s at Stake: The Devastating Implications of Greylisting
The consequences of being greylisted are potentially devastating for a developing nation like ours, heavily reliant on foreign investment and international financial flows.
As Deputy Opposition Leader James Nomane warned in Parliament, “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:
- Declining Investment: 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 Freda River Mines, could face delays or even be halted as investors become wary of the increased financial and reputational risks.
- Increased Cost of Business: The cost of doing business in PNG would undoubtedly rise. International correspondent banks – the vital conduits for cross-border transactions – might ‘de-risk’ by cutting ties or significantly scaling back operations with PNG financial institutions. This “de-risking” would make it more expensive and complex for both businesses and individuals to conduct international transactions, leading to higher fees and increased scrutiny.
The next five months are crucial. Our government and all relevant agencies must work tirelessly to demonstrate concrete progress. Failure to do so would not only inflict significant economic pain but also severely damage PNG’s international standing, making it harder to attract investment and access global finance, ultimately hindering our nation’s progress and prosperity.
