Banks see positive side to Papua New Guinea’s greylisting

The Financial Action Task Force (FATF) is expected to formally place Papua New Guinea on its grey list in February*, bringing the country under increased monitoring while it works to improve its anti-money laundering and counter-terrorism financing (AML/CTF) framework.

This follows an FATF evaluation, reported on by Business Advantage PNG last January, which found that PNG lacked the ability and willingness to detect, prosecute and punish money laundering and terrorism financing effectively.

“[Greylisting] might affect how people perceive the risk in PNG, although I don’t think it [actually] changes the risk.”

Elizabeth Genia, Governor of the Bank of Papua New Guinea, said at the central bank’s inaugural AML/CTF Conference in October that PNG has made “some progress” on addressing its deficiencies, with legislative changes underway which will “strengthen our ability” to take action and the appointment of an Anti-Money Laundering Joint Taskforce.

“The government has given its full commitment at the highest level to drive these reforms, [and] cabinet has endorsed AML/CFT as a national priority,” Genia said. However, she emphasised that success will ultimately be measured “by criminals being held to account and the proceeds of crime recovered.”

Last month, the Independent Commission against Corruption announced the arrests of several individuals alleged to have misappropriated K1.7 million from the Papua New Guinea Sports Foundation, in what it said was the “beginning of several major investigations” involving prominent public figures and business entities.

Banks welcome reforms

Mark Robinson, Chief Executive of BSP Financial Group, says he welcomes the government’s commitment to address the problems identified by the FATF.

“I think that’s very important for investor confidence in the country and for the financial health of the country,” he tells Business Advantage PNG.

Andrew Cairns, Chief Executive of Westpac PNG, says the banking sector must work with the authorities to advance reforms.

“The strength of Papua New Guinea is built around its relationships and its desire to collaborate and move as a whole,” he tells Business Advantage PNG. “I think that this [greylisting] gives us the opportunity to work as a collective.”

Danny Robinson, CEO of CreditBank PNG, shares with Business Advantage PNG that the chief executives of all of the country’s licenced banks have had monthly meetings with the Bank of PNG’s Financial Analysis and Supervision Unit, which polices the country’s financial system.

“We know that the greylisting is coming, and we know that it’s going to take some time to complete all the actions that need to happen,” he says. “Our hope is that the government moves quickly to address those issues.”

Low risk to existing business

Kina Bank’s Ivan Vidovich. Credit: BAI

A greylisting can have significant consequences for a country – 21 jurisdictions around the world are currently being monitored in this way – but these can be mitigated.

“From a macro perspective, greylisting presents a potential risk, in areas such as foreign investment or investor confidence,” Ivan Vidovich, CEO of Kina Bank, tells Business Advantage PNG.

“However, pleasingly, we don’t see any significant impact to our business operations,” Vidovich says. “The correspondent banks which we engage with have experience in working in emerging markets and have appetite to continue to operate through a greylisting.”

Westpac’s Cairns says greylisting will affect the cost and availability of capital.

“It might affect how people perceive the risk in PNG,” he adds, “although I don’t think it actually changes the risk.”

Similarly, BSP’s Robinson says it will lead to more scrutiny of – and higher costs for – international transactions, which could be perceived negatively by new investors into PNG.

However, he is confident that investors already involved in big projects in PNG hold enough of a long-term view that their planned “additional investments” would not be impacted by the greylisting.

Managing the impact

Herbert Maguma, Managing Partner at Deloitte PNG, whose firm advises a range of corporations, including financial institutions, says PNG’s banks have been doing their due diligence for some time.

“They’ve factored in the risks of a potential greylisting… and hence they’ve elevated their compliance programs and processes to be above what is required, in part to make sure that they cater for that risk,” he says.

Moni Plus, a licensed financial institution with ambitions to one day acquire a banking licence, is already holding regular AML/CTF training sessions, its CEO Aho Baliki reveals to Business Advantage PNG.

“We are trying to make sure that all our staff are aware of AML and CTF guidelines – from the board level down to the staff – and that we are compliant with government and Bank of PNG guidelines,” he says.

Vidovich notes that “even mature banks like Kina Bank continue to incrementally invest to uplift our [AML/CTF] capability.”

“If you look at the inherent risks in operating in a frontier or emerging market, then you need to absolutely have your eyes on key compliance risks and elements such as anti-money laundering.”

*PNG’s greylisting was confirmed by the FATF on 13 February.

What is the ‘grey list’?

The Financial Action Task Force (FATF) is an intergovernmental organisation based in Paris, France, with a mandate to combat money laundering and terrorism financing. When the FATF places a country or jurisdiction under increased monitoring, it means that jurisdiction has committed to resolve AML/CTF deficiencies within agreed timeframes and is subject to increased monitoring.

Countries can be removed from the grey list after addressing deficiencies, as was the case with The Philippines, which was removed from the grey list in February 2025.

The following countries and jurisdictions currently appear on the FATF grey list.

• Algeria
• Angola
• Bolivia
• Bulgaria
• Cameroon
• Côte d’Ivoire
• Democratic Republic of Congo
• Haiti
• Kenya
• Laos
• Lebanon
• Monaco
• Namibia
• Nepal
• South Sudan
• Syria
• Venezuela
• Vietnam
• Virgin Islands (UK)
• Yemen

The grey list should not be confused with the FATF’s black list, which is for countries that present a serious risk of money laundering or terrorism financing. Only three countries appear on this list: Iran, Myanmar and North Korea.