Papua New Guinea AML Report 2025: Key Trends, FASU Statistics & FATF Grey Listing Insights

Papua New Guinea’s AML/CFT Framework in 2025: A Deep Dive into FASU’s Strategy, Risks, and Enforcement Outcomes

Introduction: AML as a National Security Imperative

Money laundering, terrorist financing, and proliferation financing are no longer confined to financial misconduct—they are systemic threats to national security, governance, and economic stability. In Papua New Guinea (PNG), these risks are deeply intertwined with corruption, environmental crime, and transnational organised networks.

The Financial Analysis and Supervision Unit (FASU), operating under the Bank of Papua New Guinea, plays a central role in safeguarding the financial system by detecting, analysing, and disrupting illicit financial flows.

In 2025, PNG’s AML/CFT ecosystem reached a critical inflection point, marked by:

• Intensified regulatory enforcement
• Expanded financial intelligence capabilities
• FATF grey listing in February 2026
• Large-scale institutional reforms

Key AML Statistics and Financial Intelligence Metrics (2025)

PNG’s AML ecosystem saw significant growth in financial intelligence reporting and enforcement activity:

Core Reporting Volumes

• 8,336 Suspicious Matter Reports (SMRs) (↑ from 4,668 in 2024)
• 240,310 International Electronic Funds Transfer Reports (IEFTRs)
• 4,831,088 Threshold Transaction Reports (TTRs)
• Total reports analysed: ~4.79 million

Intelligence Dissemination & Enforcement

• 1,427 SMRs disseminated in bulk intelligence packages
• K283.6 million (~USD equivalent) in suspicious transactions identified
• 1,282 SMRs referred to law enforcement (fraud, corruption, bribery)

Supervisory and Compliance Activity

• 66 onsite inspections conducted
• 95 financial institutions + 199 DNFBPs under supervision

These figures highlight a maturing AML regime, where the focus is shifting from volume-based reporting to risk-based intelligence utilisation.

Dominant Money Laundering Threats in PNG

1. Corruption: The Primary Predicate Offence

Corruption remains the largest generator of illicit proceeds, producing hundreds of millions of Kina annually.

Key typologies:

• Collusion between public officials and private entities
• Misuse of government-issued cheques (now discontinued in 2024)
• Diversion of funds into company or intermediary accounts

2. Fraud and Financial Manipulation

Fraud schemes—especially involving:

• Travel allowance fraud
• Procurement manipulation
• Public sector misappropriation

Example:

Inflated travel invoices are created, with excess funds distributed as kickbacks.

3. Environmental Crimes and Resource Exploitation

High-risk sectors include:

• Illegal logging
• Illegal fishing
• Gold smuggling

Forestry Sector Losses:

• USD 2 billion lost (2014–2019) due to illicit activity
• Additional USD 800 million discrepancy in foreign currency inflows

These sectors demonstrate strong links between AML risk and ESG crime exposure.

4. Transnational Crime Networks

• Drug trafficking expansion
• Cross-border syndicate involvement
• Use of international fund transfers for laundering

Terrorist Financing Risk Profile

PNG maintains a low domestic terrorist financing risk, with:

• No recorded investigations, prosecutions, or convictions

However, vulnerabilities exist in:

• Cross-border electronic transfers
• Card-based payment misuse
• Trade-based financing involving conflict regions

FATF Grey Listing: Causes and Strategic Response

PNG was placed on the FATF grey list in February 2026, following gaps identified in its Mutual Evaluation.

Key Deficiencies

• Weak enforcement outcomes
• Gaps in institutional coordination
• Limited effectiveness in asset recovery
• Incomplete risk assessments

Strategic Response

PNG implemented a Strategic Implementation Plan (SIP) with:

• 73 recommended actions
• High-level political oversight
• Dedicated funding (K10 million)
• Whole-of-government coordination

Institutional Strengthening: The Role of FASU

FASU operates as:

• Financial Intelligence Unit (FIU)
• AML/CTF regulator and supervisor
• Central intelligence hub for enforcement agencies

Core Functions

• Risk identification and analysis
• Intelligence dissemination
• Regulatory supervision
• Policy development and coordination

Risk-Based Supervision Model

FASU uses a custom risk rating tool to:

• Classify entities from low to extremely high risk
• Prioritise supervisory resources
• Enhance compliance outcomes

Reporting Entities and Regulatory Coverage

Financial Institutions (95 total)

Includes:

• Commercial banks
• Insurance firms
• Superannuation funds
• Money remitters

DNFBPs (199 total)

Includes:

• Law firms (121)
• Accounting firms (37)
• Real estate agents
• Dealers in precious metals

These sectors are increasingly critical due to beneficial ownership opacity and misuse risks.

Enforcement Evolution: Taskforce ARROW

One of the most significant developments in 2025 was the creation of Taskforce ARROW, a multi-agency enforcement unit.

Participating Agencies

• FASU (financial intelligence)
• Royal PNG Constabulary (investigation)
• Office of Public Prosecutor (legal action)

Early Results

• K300,000+ seized in initial case
• Multiple restraint and forfeiture proceedings underway

This marks a shift toward intelligence-led asset recovery and prosecution.

International Cooperation and Intelligence Sharing

MoUs and Partnerships

• 32 MoUs signed (17 domestic, 15 international)

Key Partners

• AUSTRAC (Australia)
• APG / FATF
• INTERPOL
• UNODC

Regional Collaboration

Through the Pacific Financial Intelligence Community (PFIC):

• 13 member FIUs collaborate
• Joint intelligence operations and training conducted

Emerging Risks and Typologies

FASU identified several critical typologies in 2025:

1. Gold Smuggling Networks
2. Healthcare Sector Fraud
3. Travel Agency Fraud Schemes

Additionally:

• Rising child exploitation-linked financial flows
• Increasing digital connectivity-driven crime patterns

Compliance Challenges in DNFBPs

DNFBPs remain a key vulnerability due to:

• Weak AML controls
• Low reporting compliance
• Misuse of trust accounts

Regulatory actions:

• Show-cause notices issued to law firms
• Enforcement actions initiated for non-compliance

Technology and Capacity Building

FASU enhanced capabilities through:

• Advanced analytics tools
• Increased staffing expertise
• Training programs with AUSTRAC and UNITAR

Focus areas:

• Financial intelligence tradecraft
• Beneficial ownership analysis
• Cross-border financial tracking

Strategic Outlook: What AML Leaders Should Watch

1. Shift Toward Intelligence-Led AML

Quality of reporting now outweighs volume, with emphasis on:

• Pattern detection
• Network analysis
• Proactive intelligence

2. ESG-Linked Financial Crime Risks

Environmental crimes are becoming major AML priorities, especially in:

• Forestry
• Mining
• Fisheries

3. Regulatory Pressure from FATF

Grey listing will drive:

• Stronger enforcement expectations
• Increased scrutiny on financial institutions
• Faster regulatory reforms

4. Expansion of Public-Private Partnerships

Collaboration between:

• Regulators
• Financial institutions
• Law enforcement

will define future AML effectiveness.

Conclusion: A System in Transition

PNG’s AML/CFT framework in 2025 reflects a system undergoing rapid transformation under global pressure.

While challenges remain—particularly in enforcement effectiveness and corruption—the country has made meaningful progress in intelligence capabilities, institutional coordination, and regulatory reform.

For AML compliance leaders, PNG offers a case study in:

• Managing FATF grey listing
• Building intelligence-led AML systems
• Addressing high-risk sectors like environmental crime

The coming years will determine whether these reforms translate into sustained enforcement outcomes and eventual grey list exit.