‘FASU believes that there are reasonable grounds to determine that BSP has engaged in conduct that contravened requirements of the Act,’ says the FASU statement.

The regulator claims it has found ‘detailed and compelling evidence’ of BFL’s ‘failure to effectively implement and maintain an AML/CTF program.

By way of sanction, the Bank of PNG has issued BFL with a formal warning, requested that it ‘remove and replace certain executive management staff’, including Group Chief Executive Officer Robin Fleming, and demanded that BFL appoint an external auditor ‘to conduct an independent audit of BFL’s risk assessment and AML /CTF program’ for a period of at least six months.

Legal options

In response, BFL has reiterated its claim, first stated to markets last month, that it is compliant with its legal requirements.

‘BFL remains of the view that it has at all times complied with its AML/CTF obligations,’ said a BFL statement issued yesterday, ‘BFL will consider its legal options in relation to the sanctions which have been imposed.

‘However BFL notes that FASU has not sought to impose financial penalties or determined to commence criminal proceedings against BFL.’

Clarification

Governor Bakani’s media statement

In an extraordinary intervention late today, Bank of Papua New Guinea Governor Loi Bakani issued a ‘clarification’ claiming the FASU statement was made ‘independently’ and was not authorised.

‘The Bank of PNG (BPNG) disassociates itself from the statement made by FASU. The use of the Bank logo was not authorized and the statement was not endorsed or approved by BPNG. FASU should have consulted BPNG on the statement before releasing it,’ said the Governor’s statement.

‘BPNG is concerned about the adverse impact of the Media Statement by FASU on BSP, PNG’s largest bank and the stability of the financial system, which have been achieved and sustained well before the AML/CTF Act came into being.

‘Governor Bakani reassures the public that the banking system, including BSP, is sound and meets all regulatory requirements and standards under the Banks and Financial Institutions Act (BFIA) 2000.’