Money laundering threatens PNG

Business, Normal

The National, Friday July 6th, 2012

PAPUA New Guinea faces very serious risks of money laundering from various criminal activities including domestic corruption, which is considered a serious problem, according to an Indian financial expert.
Dr R Bhaskara, chief executive officer of the Indian Institute of Banking and Finance, told a PNG Institute of Banking and Business Management (IBBM) on Wednesday that PNG lacked resources and manpower to control money laundering.
“PNG is experiencing rapid economic growth, large scale foreign investment, and an escalating crime rate,” he said.
“ While the Financial Intelligence Unit (FIU) is building its capacity, there is no clear political level commitment to ‘follow the money’ to tackle corruption and other crimes, and no demonstrated commitment to regulate and supervise anti money laundering (AML) obligations by financial sector regulators, which severely hampers the authorities ability to tackle financial aspects of corruption.
Bhaskara said misappropriation of government funds occurred using government payments which, according to the authorities, were generally placed through the banking sector in PNG and used to purchase real estate, high-value vehicles, distributed in cash or moved offshore.
 “The techniques to launder proceeds from other large-scale crimes in PNG such as illegal logging, arms trafficking, and fraud are less clear,” he said.
“There is no indication of terrorist financing risks in PNG.”
Bhaskara said the FIU has minimal resources, having only three staff, after starting out three years ago with seven.
“It has not been given a formal structure within the police force,” he said.
“It cannot fulfil the role it should be playing in developing the national AML system and receiving, analysing and disseminating reports.”
 said despite hard work by the FIU and some initial results to pursue proceeds of crime by the OPP, the authorities lacked a systematic focus on the concept of ‘follow the money’ to tackle profit driven crime.
“The authorities have good information on the volume and techniques of laundering the proceeds of large scale corruption, but a lack of political will, poor inter-agency cooperation, lack of resources and concerns over undue influence undermine the efforts of the few agencies actively pursuing ML and proceeds of crime in PNG,” he said.
Bhaskara said PNG had formally required its financial sector to adopt basic anti-money laundering / combating the financing of terrorism (AML/CFT) preventive measures for several years, however the obligations are only heeded by the banking sector and postal service.
“In depth AML/CFT obligations have not been issued by any regulator and supervision and enforcement of the existing AML/CFT requirements has not yet taken place,” he said.

“In practice, the levels of implementation of customer due diligence (CDD), internal controls and suspicious transaction reporting in the banking sector are higher than the national requirements due to group-compliance policies (foreign subsidiaries) and efforts to adopt best practices.
“Papua New Guinea has not yet commenced supervision and enforcement of AML/CFT requirements and key regulators have been notably absent from efforts to regulate and supervise for AML/CFT.”