Anti-money laundering financing plan set

The National Business, Uncategorized

According to the Money Laundering and Financing of Terrorism National Risk Assessment 2017, the level of money laundering in Papua New Guinea was between K1.8 billion and K4.4 billion. Acting business editor PETER ESILA looks at the Anti-Money Laundering/Counter Terrorist Financing Plan 2023-02027 launched in Port Moresby on Tuesday.

Money laundering and financing of terrorism national risk assessment 2017
There was a significant gap in the statistics collected by law enforcement agencies in PNG.
The national crime statistics provided by the police failed to provide details of offences, other than in relation to broad categories, and did not indicate, in most cases, the value of the offence.
The domestic crime rate in PNG is relatively high but much of the crime which occurs do not generate large amount of funds which need to be laundered.
As is the case in many developing economies with major law enforcement challenges, criminals may not feel the need to launder funds to hide the criminal source because they do not fear the likelihood of arrest and prosecution.
Areas of criminal activity considered to provide significant money laundering threats to PNG are:

  • CORRUPTION and bribery;
  • FRAUD against government programmes and activities;
  • ILLEGAL logging and fishing;
  • TAXATION and revenue fraud;
  • OTHER environment-related offences;
  • ILLICIT drug importation and distribution.

Most of these crimes are likely to have domestic and offshore components. Many are facilitated through the involvement of corrupt practices.

Value of predicate offences
It has not been possible to determine the value of proceeds generated by the main types of predicate offences.
There is widespread corruption at senior levels of the bureaucracy and extensive reliance on facilitation payments across government. Bribery of officials is common.
With a Gross Domestic Product (GDP) of K88.9 billion, based on the International Monetary Fund, estimate of money laundering is between 2 per cent and 5 per cent of GDP. The possible level of laundering in PNG would range between K1.8 billion and K4.4 billion.

Trend today same as in 2017
Financial Analysis Supervision Unit (Fasu) deputy director Wilson Onea said on Tuesday: “The number of cases today is in the couple of thousands that needs to be investigated and prosecuted.
“There is capacity (in fighting this). Do I think that there is more that needs to be done? Absolutely! I believe that it is about a sense of ownership by the relevant agencies to effectively administer their mandate under their respective acts. And when you collaborate between the different agencies, you can minimise financial crimes.
“Law enforcement agencies, Customs, Immigration and the Tax Office have stepped up their efforts to ensure those foreign entities operating on our shores are abiding by those relevant agencies, their jurisdiction, and those enforcement efforts set up by those agencies have collected some revenue that is potentially squandered by entities operating in PNG.
“From Customs reports, there needs to be a lot more done in prosecuting money laundering. We (at Fasu) just refer cases based on disseminations to law enforcement.
The Strategic Plan 2023-2027 is a blueprint of how the government agencies could work together to address the issue.

Anti-money laundering (AML) and counter-terrorist financing (CTF) national coordinating committee
Committee co-chair and Bank of PNG acting Governor Elizabeth Genia said: “If our nation is to have an economy and a financial system in which we can all have confidence, PNG must have an effective and robust AML/CTF set of rules and rigorous processes, and a clear way forward to implement and monitor those rules and processes.
“To this end, we have developed the National Anti-Money Laundering and Counter Terrorist Financing Strategy Plan 2023 – 2027.
“The ongoing commitment of the Government and its agencies to a cooperative working relationships is key to our ability to combat money laundering and terrorist financing effectively. We will also continue to seek the strong support of our international partners.

Background
As with the other two previous plans, the strategic plan 2023-2027 has been produced through the work of the National Coordinating Committee (NCC) on anti-money laundering and counter terrorist financing.
Maintaining an effective and efficient AML/CTF system to combat the most financially-motivated crimes affecting PNG remains a national priority. Such a system, in alignment with the PNG Anti-Corruption Strategy 2010-2030, will assist all sectors of the PNG economy and society to safe guard our nation’s financial security and economic growth, and reduce the impact of corruption.

Accountability
Responsibility for implementing the AML/CTF Plan 2023 – 2027 is held by the heads of the 21 state agencies who comprise the membership of the NCC.
Accountability is built into the Plan, as each agency is required to report every quarter on their progress towards completing their action items.

Strategic objectives
Seven strategic objectives will be addressed over the course of the AML/CTF strategic plan 2023-2027.

Execute a nationally-coordinated risk assessment approach to detect and disrupt financially-motivated crime in PNG
Continuous, real-time assessment of money laundering and terrorist financing activities will provide intelligence that can be acted upon law enforcement and regulatory authorities, aiming to target the individuals, entities, methods, products and services and jurisdictions that are the most significant contributors to financially- motivated crime.
Coordination will ensure that PNG directs action to areas likely to produce the greatest returns on AML/CTF investment and effort. It will also help formulate effective activities that will disrupt financial crime while limiting unintended consequences.

Ensuring all NCC agencies adopt this approach to detection and disruption, cooperatively and in a coordinated manner
In the long term, efforts at addressing money laundering and terrorist financing are, at best, disruptive, unlikely to eliminate all such offences.
Jailing offenders and confiscating their assets may well deter those individual offenders from re-offending.
But others will have developed methods that avoid the mistakes of the people who have been caught and incarcerated.
Furthermore, prosecution of offenders for complex financially-motivated crime is time-consuming, expensive and very often impeded by corruption.
This has meant that PNG has very few successful prosecutions for complex financially-motivated crime, despite there being numerous credible allegations of such offences reported every year.
Similarly, PNG has seen no confiscations of illicit assets in recent years.
There is no reason to think that the challenges that have prevented successful prosecutions and confiscations are likely to be addressed in the next five years,” she said.
Unless there is a change in the approach, the majority of offenders will continue to receive no law enforcement attention, emboldening other offenders, and continuing to drive poverty and social division in PNG.
PNG authorities must aim to stop as many offenders as possible with the limited resources available.
This requires establishment of a nationally coordinated and cooperative approach to disrupt the activities of those offenders and the people and entities that help them offend.

Meet FATF requirements and other international obligations
The immediate objective for PNG in the context of FATF requirements is to avoid being on the FATF grey list.
The Mutual in 2023 is a key timing point to ensure PNG meets and satisfies FATF’s requirements.
Being on the FATF grey list caused PNG to outlay massive amounts of resources. A much better use of limited resources will be to apply them to achieve the reduction of financially-motivated crime in PNG.

Implement a monitoring and evaluation process to measure the effectiveness of PNG’s AML/CTF system
To dates, PNG’s AML/CTF regime has been driven by the FATF Recommendations.
It has never been evaluated in the context of effectiveness, for example measured by levels of investigation and prosecution success. Establishing an effective monitoring and evaluation process must be implemented.

Stop offenders from accessing illicit assets held offshore, through international assistance and cooperation
Storing illicit assets in a foreign jurisdiction is a common method of money laundering.
It places a barrier between the authorities that might be motivated to confiscate the money and the assets. It slows down confiscation orders due to legal and diplomatic hurdles that are likely to exist.
PNG authorities have known for decades that illicit assets, such as proceeds of crimes committed in PNG, are located in jurisdiction such as Australia, Singapore and Hong Kong. To date, no illicit assets have ever been repatriated to PNG from any foreign jurisdiction.

Development processes to stay-to-date with evolving offender behaviour and new methods of financially motivated crime
Offender behaviour evolves over time to circumvent AML/ CTF controls. The AML/CTF regime must proactively stay on top of emerging methods of financially-motivated crime.

Expand the operations of the Fasu
Fasu will need to be expanded to deal effectively with the proposed increased scope of activities, to facilitate pro-active, intelligence-led, evidence-based operations.