At this stage, it appears that Papua New Guinea will likely be greylisted by the Financial Action Task Force in early 2026. Zanie Theron, Partner-in-Charge of KPMG’s South Pacific practice, shares what PNG has done so far on greylisting, and the steps the country still must take to address this very serious risk.

The Financial Action Task Force Secretariat is hosted at the OECD headquarters in Paris, France. Credit: MySociety / Creative Commons

At this time, it is clear that PNG will likely be greylisted by the Financial Action Task Force (FATF) in early 2026. When a country is greylisted by the FATF, it means that the country has been identified as having strategic deficiencies in its systems to combat money laundering, terrorist financing and proliferation financing.

Unlike the blacklist (which includes countries that are non-cooperative and pose a serious risk to the international financial system such as North Korea, Iran and Myanmar), greylisted countries have committed to work with the FATF to address these deficiencies within agreed timeframes.

The consequences of being on the FATF grey list include increased scrutiny by not only the FATF but also international financial institutions, increased reform pressure, reputational damage making the country less attractive to investors, higher transaction costs, and delays in international banking operations.

The imperative for PNG would clearly be to exit this greylisting status in the minimum amount of time.

Actions taken to prevent greylisting

Since 2017, PNG has taken a series of actions to address the risk of being greylisted by the FATF:

Government actions

In September 2017, PNG conducted its first National Risk Assessment to identify its most vulnerable sectors and channels for money laundering and terrorism financing. This assessment was led by the Bank of PNG through its Financial Analysis and Supervision Unit, with technical assistance from the Asian Development Bank. This informed the development of a national Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) strategy and laid the groundwork for PNG’s subsequent AML/CTF reforms.

PNG has updated its AML/CTF Act to align with FATF’s 2012 recommendations. It has also introduced beneficial ownership disclosure requirements and strengthened customer due diligence obligations for financial institutions.

In December 2024, PNG launched a multi-agency AML national Task Force to coordinate national efforts.

Key members include the Bank of PNG, the Royal PNG Constabulary, the Internal Revenue Commission, Customs, Immigration, the Independent Commission against Corruption, and the Auditor General’s Office. The task force focuses on intelligence sharing, joint investigations and asset recovery.

External stakeholder support

PNG has worked closely with the Asia-Pacific Group (APG) on Money Laundering, an FATF-style regional body, to undergo mutual evaluations and receive technical assistance.

International donors and development partners

Organisations such as the World Bank, IMF and the Australian Government have provided technical assistance, capacity building for regulatory and law enforcement, and support for digitising financial intelligence systems.

Business community engagement

Banks and financial institutions have enhanced their compliance frameworks, including Know Your Customer procedures, suspicious transaction report and staff training on AML/CTF obligations.

The PNG Business Council and Chambers of Commerce have participated in consultations on regulator reforms. In addition, some large businesses have adopted internal AML/CTF policies to align with international best practices.

Gaps remain

However, based on the 2024 mutual evaluation with the APG, it was noted that despite some progress having been made, PNG still demonstrates limited enforcement capacity, low conviction rates for financial crimes, weak supervision of non-financial businesses such as real estate companies, and gaps in beneficial ownership transparency.

One has only to look at countries that have recently exited their greylisting status to take guidance of what PNG would need to do to similarly exit this status within a relatively brief period.

For example, the Philippines, which exited the FATF grey list in February 2025, demonstrated that executive leadership (notably the executive orders issued by President Ferdinand Marcos Jr) played a crucial role in accomplishing this.

This country’s reforms included strengthening the supervision of non- financial business (e.g. lawyers, casinos, motor dealers), cracking down on illegal money transfer operators, improving access to beneficial ownership information and increasing investigations and prosecutions of AML/CTF cases.

Recommendations for PNG

It may appear that many of the reforms that PNG have introduced since 2017 are similar to what the Philippines has done, yet the difference in PNG lies in the successful execution of these reforms. Increased public and political sentiment would go a far way in driving the implementation, and there are a number of broad strategies to strengthen public and political sentiment in PNG.

Public education is key, and here targeted awareness campaigns should be launched that explain how financial crime affects ordinary Papua new Guineans, why it drives up prices, weakens services and deters investment.

A greater number of political leaders will need to be engaged, in that all parliamentarians and ministers should be briefed on the economic risk of greylisting. Countries like Panama, Jordan and the Cayman Islands, which were removed from the grey list in 2023, succeeded because their political leadership took ownership of the reform agenda.

In terms of empowering civil society and the media, journalists and NGOs should be trained to monitor and report on financial crime. Their voices can help hold institutions accountable and keep the public informed.

Financial inclusion should be promoted, as AML/CTF measures should not exclude people from the financial system. Reforms should therefore be paired with efforts to expand access to banking and digital finance.

PNG should continue to leverage international support. PNG is not alone, and the support thus far from external stakeholders should be leveraged and expanded upon.

Most importantly, PNG needs to show results. For example, not only should successful prosecutions, asset recoveries and enforcement actions increase, but also be publicised.

Public trust grows when people see action.

This first appeared in KPMG Kundu & Lali June 2025, under the heading, “From Grey to Great: What is required of PNG?.” Republished with permission.