AML/CTF – Anti-Money Laundering & Counter Terrorist Financing
ANTI-MONEY LAUNDERING AND COUNTER TERRORIST FINANCING (AML/CTF)
Money laundering and counter financing of terrorism globally presents not only a problem for criminal justice systems but also a macro-economic problem because it has the capacity to destabilize financial institutions and financial systems. These global threats have led financial systems regulators and financial institutions to strengthen their vigilance in support of the efforts of governments to more easily detect attempts to launder money and finance terrorism and to minimise the possibility that their jurisdictions or institutions‟ becoming involved. Effective enforcement of regulations and policies to deter money laundering and the financing of terrorism should, inter alia, enhance the integrity of the financial system and reduce incentives for the commission of crime with a jurisdiction. The Central Bank of Papua New Guinea (the “Bank”), in furtherance of its responsibilities for the regulation and supervision of its regulated financial institutions under the various acts it administers is aligning itself as a lead national institution to carry out the AML/CTF reforms to meet international obligations that the Papua New Guinea (PNG) Government has committed itself too.
Financial Action Taskforce (FATF)
The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
FATF has developed a series of Recommendations that are recognized as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction. They form the basis for a co-ordinated response to these threats to the integrity of the financial system and help ensure a level playing field. First issued in 1990, the FATF Recommendations were revised in 1996, 2001, 2003 and most recently in 2012 to ensure that they remain up to date and relevant, and they are intended to be of universal application.
Asia Pacific Group on Money Laundering
PNG is a member of the Asia-Pacific Group on Money Laundering (APG). APG is a regional body mandated to assist countries in the Asia Pacific region to strengthen their anti-money laundering and counter terrorist financing (AML/CTF) regimes. This is achieved in a number of ways, including through member countries‟ effective participation in the FATF1 standard-setting process and implementation of those standards. PNG by virtue of its membership to APG is subjected to the FATF standard-setting process and implementation of those standards. Every member jurisdiction is subjected to the mutual evaluation process to meeting the FATF standards.
In 2010, PNG‟s AML/CTF regime was assessed against the 40+9 FATF Recommendations through the APGML mutual evaluation process. Significant deficiencies were identified in the Mutual Evaluation Report and among other recommendations; it was recommended that PNG improve its AML/CTF regulatory and supervision system. PNG was placed on enhanced follow-up and expedited reporting to APG in relation to
FATF Regional Review Group (RRG) Process.
In October 2013 the FATF through a review on PNG found that not much significant progress was made with its AML/CTF reforms and referred to be subjected to the FATF International Cooperation Review Groups (ICRG‟s) regional review group (RRG) process. In February 2014, The RRG made several recommendations, including the need to improve its AML/CTF regulatory and supervision system. These recommendations are identified as priorities in the PNG Strategic Implementation Plan. In February 2014, PNG agreed to an action plan with FATF in which it committed to implementing a comprehensive AML/CFT regulation and supervision regime by August 2015. PNG Prime Minister the Hon. Peter O‟Neill, on behalf of the Government of PNG made the undertaking that the reforms as required by the Action Plan,
and in accordance with domestic anti-corruption and anti-money laundering strategies are actively pursued by PNG through the National Coordinating Committee on AML/CTF.
National Coordinating Committee on AML/CTF
The National Coordinating Committee (NCC) have developed a strategic plan, also known as its Strategic Implementation Plan (SIP). This Strategy has been driven by the highest level of Government support – a vital ingredient to the successful reform of AML/CTF in PNG. The NEC (by virtue of the decision NG 8/2012 on 13 December 2012) endorsed the establishment of the AML/CTF National Coordinating Committee. This comprises of the heads of 15 Government agencies. The NEC noted the need to address the deficiencies in PNG’s AML/CTF regime identified in the Asia Pacific Group Mutual Evaluation Report and recognized the importance of ensuring that this reform is led at the highest levels of Government. The Committee meets regularly to ensure PNG continues to strengthen its AML/CTF System. Establishing a practical and effective AML/CTF system is a national priority. Ensuring that PNG’s AML/CTF system is robust will assist the Government to advance our security, economic and anti-corruption agencies.
The implementation of this Strategy is the responsibility of NCC which comprises heads of agencies from 15 different PNG institutions. This Committee is supported by a Technical Working Group comprised of technical officers of the same agencies, and a Secretariat comprised of officers from the Department of Justice and Attorney General, and the Bank of PNG. The Committee‟s role, with the support of the Working Group and Secretariat, is to ensure that agencies are undertaking activities to meet their obligations in the Strategy.
Developments on PNG’s National AML/CTF Framework.
Legal reforms, institutional rearrangements and capacity building are some of the key strategic developments perused to ensure that the AML/CFT national framework once fully developed will be able to function with some degree of efficiency. The Strategic plan outlines the vision for a strengthened AML/CTF system in PNG. It sets out the guiding principles and objectives for PNG‟s AML/CTF system. There are two components to the strategy. Part 1 is to build the National AML/CTF Framework. Five key objectives make up the strategy. These include: (1) National Coordination, (2) the Financial Intelligence Unit, (3) Legislative Reform, (4) Regulation, Supervision and Compliance, and (5) Law Enforcement. Part 2: The Action, is the implementation component of the strategy. It is a synopsis of key areas of responsibility for PNG agencies for the next three years, and breaks these down into “Action Items” with performance indicators. The Action is supported by additional agency documentation developed at the project level.
The Bank of PNG and DJAG as co-chairs to the NCC are responsible for coordinating the AML/CTF reforms perused by the NCC member agencies to ensure that PNG meets the FATF standards and its international obligations. State agencies including BPNG and DJAG have embarked on developing PNG‟s National AML/CTF framework. DJAG continues to take charge of and peruse the legislative reforms and amendments to the existing proceeds of crime act of 2005. Specific updates on the exact legislations will be done as and when a press statement is made in this regard.
The Bank of PNG has established a Financial Action Taskforce Project Office reporting to the Deputy Governor and it is charged with the responsibility of driving the implementation of the Banks efforts in improving AML/CTF supervision for the financial system. The bank has allocated resources and is currently building capacity to take on the responsibilities it will take on under the reforms. Institutional capacity building are been also perused under various donor agencies arrangements, providing technical assistance to relevant state agencies in this regard as well.
For further information regarding the national AML/CTF, you can call the Bank on its hotline 322 7200 or email [email protected]
What is Money Laundering?
Money Laundering is the process of making criminal assets or earnings of crime (cash and non-cash assets)
appear legitimate. Or in other words “cleaning dirty money or assets”. This is done by conducting one or more legitimate financial and commercial transactions so that the assets obtained at the end of the process looks clean or legitimate.
Criminals launder the proceeds of their crime so as to;
- hide the true source of their assets, thus giving the appearance that the assets were obtained from legal activities;
- to make detection of these assets by law enforcement agencies such as police difficult.
What is Terrorist Financing?
Terrorist Financing is the transfer of funds through a country‟s financial system ( e.g. banks; money remittance businesses etc.) to fund a terrorist group or activity. The funds used may be derived from lawful or unlawful means.
- BPS-253 KYC/CDD
- Various FIU Guidelines
- PNG‟s APG Mutual Evaluation Report
- Proceeds of Crime Act 2005
AML/CTF Legal Reform
PNG Department of Justice and Attorney General, in consultation with the Bank of PNG are currently reviewing PNG’s Anti-Money Laundering and Counter Financing of Terrorism (AML/CTF) legislation. The Government welcomes feedback from the community on the proposed legislation by July 22, 2015. Please download the draft legislation here and provide comments in the attached feedback form to [email protected].
Anti-Money Laundering and Counter Terrorist Financing Suite of Laws
The Anti-Money Laundering and Counter Terrorist Financing (AML/CTF) suite of legislations were passed on July 30th, 2015. The passed suite of legislations had to go through the process of clearance and certification by the Office of First Legislative Council (OFLC) before been gazetted by the Governor General’s Office through the Gazettal Notice issued on the February 4th, 2016.
The introduction of these laws were made by the co-chairs of Papua New Guinea’s National Coordinating Committee (NCC) on AML/CTF, Mr Loi M. Bakani, CMG, Governor of the Bank of Papua New Guinea (BPNG) and Mr Nichodimus Mosoro, Deputy Secretary, Department of Justice and Attorney General (DJAG). The introduction of these laws signifies that the laws are now operational to combat money laundering and terrorist financing in PNG.
The suite of laws which were passed and gazetted include;
1. Anti-Money Laundering and Counter Terrorist Financing Act 2015
2. Criminal Code (Money Laundering and Terrorist Financing) (Amendment) 2015
3. Mutual Assistance in Criminal Matters (Amendment) Act 2015
4. Proceeds of Crime ( Amendment ) Act 2015
5. United Nations Financial Sanctions Act 2015
These laws were designed to meet the Financial Action Taskforce (FATF) standards and were pursued by the PNG Government as part of its efforts to meet its international obligations on combating money laundering and terrorist financing.
Financial Sanctions in PNG–an overview
What are financial sanctions?
Sanctions are used world-wide as a measure to impose restrictions on activities that relate to particular countries, goods and services, or persons and entities. Financial sanctions involve a complete or partial interruption of economic relations. Read more
The Anti-Money Laundering and Counter-Terrorist Financing Act 2015 (AML/CTF Act) imposes ongoing reporting obligations on financial institutions. Read more
- Financial Action Taskforce
- Asia Pacific Group on Money Laundering
- World Bank and AML/CFT
- GPML: Global Program on Money Laundering