Mt Hagen AML Meeting: A Costly Smoke Screen as PNG Remains on FATF Grey List

by PAUL L. KEBAIJA

The Papua New Guinea Forest Authority’s decision to host the National Coordinating Committee and Technical Working Group meeting on anti-money laundering in Mt Hagen on 18-19 June was presented as a show of commitment. Acting Managing Director John Mosoro spoke of Timber Legality Standards, the Forest Sector Economic Modelling process, PNG Diwai Holdings, and the National Reforestation and Afforestation Programme. Director Wilson Onea of the Financial Analysis and Supervision Unit thanked the hosts. On paper it looked like progress. In reality, it was another expensive performance.

PNG was placed on the FATF grey list in February 2026 after its mutual evaluation revealed serious and persistent weaknesses in effectiveness. The forestry sector sits at the centre of those weaknesses. Bank of PNG’s own sectoral risk assessment identifies forestry as high-risk for money laundering, driven by widespread illegality, cash-based transactions, hidden beneficial ownership, and corruption involving both foreign operators and local officials. Yet the Mt Hagen meeting offered no concrete evidence that these structural problems are being confronted.

Foreign logging companies predominantly Asian operators from Malaysia and China have long treated PNG’s forests as an unregulated frontier. Many continue to operate outside the rules through under-declared volumes, transfer pricing, layered corporate structures that obscure true owners, and payments that bypass formal banking channels. These practices generate illicit proceeds that require laundering. The government’s repeated promises of “downstream processing” and “resource owner participation” have not changed the fundamental power imbalance: politically connected foreign concession holders and their local partners still dominate, while regulators struggle to impose meaningful oversight.

Mosoro correctly noted that stronger coordination is needed and that only the Chief Secretary can summon heads of agencies when policy implementation stalls. That observation exposes the real problem. If the system already requires the highest levels of political authority to function, why has enforcement remained so weak for years? The answer lies in the absence of political will to challenge the very interests that benefit from the current disorder. New entities such as PNG Diwai Holdings and reforestation programmes sound modern, but without transparent beneficial ownership registers, independent verification of concession holders, and genuine penalties for non-compliance, they risk becoming additional layers of controlled patronage rather than instruments of reform.

FATF grey listing is not a technical footnote. It signals to the international financial system that PNG cannot reliably prevent the proceeds of crime from entering legitimate channels. The consequences are already visible in higher compliance costs for banks, increased scrutiny of transactions, and a chilling effect on legitimate investment. More meetings and press releases will not remove those costs. Only demonstrated results prosecutions that reach major players, asset recoveries, and verifiable improvements in supervision of high-risk sectors will satisfy the FATF action plan.

The Mt Hagen gathering was well-organised and well-intentioned by those who participated. But good intentions and hotel conferences have become substitutes for the hard, politically costly decisions required to clean up the forestry sector. Until Asian operators and their domestic enablers are forced to operate under the same rules as everyone else, and until the government shows it can supervise and punish breaches regardless of who is involved, these events will remain what they appear to be: smoke screens that allow the underlying problems to continue while the country pays the price of grey-list status.