Bank to penalise companies

 TOUGHER penalties will be imposed on companies that do not comply with foreign exchange control directives issued by the Bank of Papua New Guinea early this month, Governor Loi Bakanai says. 

Bakani said breaches of the directives would be dealt with by the bank in accordance with the Central Banking (Foreign Exchange and Gold) Regulation and penalties would include fines and imprisonment.   

He said the directives were issued for those companies with vostro accounts that were accepting direct kina deposits by PNG residents, which was not permitted. 

Vostro accounts are usually owned by foreign banks that are doing banking businesses in the country through their Kina accounts held with domestic banks. 

The other two include offshore foreign currency accounts (approved by BPNG and established under project development agreements) and offshore foreign currency accounts (approved by BPNG without project development agreements). 

Bakani said for first two accounts: “What we (BPNG) are saying is, report to us your income for the three months and what you have to pay for the next three months. 

“Whatever that is in excess, you are required to bring it back to PNG and convert it to Kina through the authorised exchange dealers.”

He said for the other account: “We are giving you two months from March 5. Come declare yourself, that you have closed your offshore account. 

“If you want to open an account again then you will go through the normal process again and we will assess you again.

“These directives are not to frighten anybody or not to say that we are imposing those foreign exchange controls. 

“We are just refining them using our mandate under the foreign exchange regulation, where we implement either through a directive or guidelines.” 

He said the issue at hand was that supply of foreign currency was lower than demand that was why the BPNG had to intervene.