PNG’s Anti-Money Laundering Watchdog Boasts of “Strides” While Grey-Listing Deepens

By Paul L. Kebaija

The Financial Analysis and Supervision Unit (FASU) released its 2025 Annual Report on 31 March 2026 with the confidence of an agency that had turned the corner. Director Wilson Onea and Bank of Papua New Guinea Governor Elizabeth Genia hailed “significant strides,” doubled suspicious matter reports, a new forestry risk assessment, 32 memoranda of understanding and the launch of Taskforce Arrow. Yet the report’s glossy statistics cannot disguise a harsher reality: Papua New Guinea remains on the Financial Action Task Force (FATF) grey list, placed there on 13 February 2026, precisely because the systemic weaknesses the report itself documents have not been fixed.

The 28-page document is a textbook study in activity without impact. FASU reports analysing 8,336 Suspicious Matter Reports (SMRs) in 2025 double the 2024 figure along with 4.8 million Threshold Transaction Reports and 240,310 International Electronic Funds Transfer Reports. It disseminated 1,427 SMRs valued at K283.6 million to police, the Independent Commission Against Corruption and the Internal Revenue Commission. On paper, impressive. In practice, the report is silent on the one metric that matters to the FATF: actual prosecutions and convictions for money laundering or terrorist financing.

There have been none. The report acknowledges that “to date, there have been no recorded terrorist financing investigations, prosecutions or convictions in Papua New Guinea.” For money laundering, the picture is equally bleak. Taskforce Arrow, the much-vaunted inter-agency body launched only in August 2025 well after the 12-month post-observation period was under way claims one successful restraint order of just K300,000 and “five further restraint cases being progressed.” That is not the “increase in ML investigations and prosecutions” and “increase in freezing, seizing and confiscation” the FATF demands.

Corruption, the report correctly identifies as “the most serious financial crime in Papua New Guinea, generating hundreds of millions of kina in illicit proceeds each year.” It quantifies an estimated USD 2 billion lost through illicit forestry activities between 2014 and 2019 alone. Yet the remedial action remains embarrassingly thin. FASU issued show-cause notices to seven law firms after offsite inspections; only one responded adequately. Three firms remain non-compliant. A Legal Persons Risk Assessment finally began in June 2025. Three new typology reports were issued, but these are advisory documents, not enforcement outcomes. Designated Non-Financial Businesses and Professions (DNFBPs) lawyers, accountants, real-estate agents continue to receive what amounts to cosmetic supervision, the very vulnerability the FATF highlighted in PNG’s Mutual Evaluation.

Resource constraints make meaningful change impossible. At the end of 2025 FASU had only 46 staff: one executive, three middle managers and 32 operational officers. This tiny unit is expected to supervise 95 financial institutions and 199 DNFBPs in a country where corruption is described in the report as “systemic and deeply entrenched.” In the entire year FASU conducted just three domestic onsite inspections and one cross-border inspection. The updated National Risk Assessment is still only a draft. Pending memoranda of understanding with key government departments were deferred because FASU was “too busy coordinating the observation period.”

The timing of the reforms exposes the reactive nature of PNG’s response. Cheque reforms in 2024 simply shifted laundering methods. Taskforce Arrow arrived late. The High-Level National Coordinating Committee first met in May 2025. The Post-Observation Period Report was submitted in December 2025, after the window for decisive action had largely closed. The FATF’s February 2026 grey-listing decision was blunt: PNG must demonstrate effectiveness in risk-based supervision, particularly of higher-risk DNFBPs, politically exposed persons, suspicious transaction reporting and proliferation financing.

Instead of delivering results, the report offers rhetoric. Governor Genia speaks of “transparency and accountability.” Director Onea pledges FASU’s “full support” for graduating from the grey list. Yet the numbers tell a different story: more reports filed, more meetings held, more taskforces announced, but no measurable dent in the criminal proceeds that continue to flow through the financial system.

Papua New Guineans are paying the price. Grey-listing restricts access to international finance, raises compliance costs for legitimate businesses and damages the country’s reputation at precisely the moment it needs foreign investment. The FASU 2025 Annual Report is not evidence of progress; it is a detailed confession of why the grey list will not be a short stay. Without visible prosecutions, large-scale asset confiscations and genuine enforcement against the very sectors the report admits are rotten, Papua New Guinea will remain under increased FATF monitoring well into 2027 and beyond.

The report’s final irony is its own conclusion: “The actions we took in 2025 together with those we will take in 2026 and beyond will make PNG’s economy stronger.” After years of similar promises, the FATF and the people of Papua New Guinea are still waiting for proof.