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Big bank in money laundering claims

Bsp
Bank South Pacific in Port Moresby

SARAH KENDELL
| Investor Daily

SYDNEY - A Papua New Guinea-based banking group listed on the Australian Securities Exchange (ASX) has caught the ire of the regulator for alleged serious breaches of Australia’s anti-money laundering rules.

BSP Financial Group (BFL), which listed on the ASX earlier this year, is the largest bank in PNG with branches in six South Pacific nations.

The issue has also raised questions around the compliance implications of its involvement with two major Australian banks.

On Monday, the PNG Central Bank’s financial analysis and supervision unit announced it was taking regulatory action against the BFL for non-compliance with the nation’s anti-money laundering and counter-terrorism financing laws.

BFL was issued a formal warning that it had contravened the laws and required to update its anti-money laundering policies, undertake staff training, and conduct enhanced customer due diligence.

It was also asked to establish a process to remove its group chief executive.

The financial analysis and supervision unit indicated it had obtained “detailed and compelling evidence” of BFL’s failure to prevent high-value kina payments to a political official.

The bank was also accused of failing to conduct due diligence on several customers who were previously charged with, or alleged to have committed, money laundering offences.

In response, BFL sought to downplay the seriousness of the allegations, saying it “remains of the view that it has at all times complied with its anti-money laundering and counter-terrorism financing obligations.”

“BFL will consider its legal options in relation to the sanctions which have been imposed,” the bank said.

“However BFL notes that the financial analysis and supervision unit has not sought to impose financial penalties or determined to commence criminal proceedings against BFL.”

The Commonwealth Bank and National Australia Bank extend correspondent banking services to BFL in Australia, facilitating the transfer of money into and out of the country by the bank’s clients.

According to AUSTRAC guidance, banks providing correspondent services to international institutions are required to conduct “appropriate due diligence of the relationship” due to the high risks of money laundering and terrorism financing.

A NAB spokesperson told Investor Daily the bank took its financial crime obligations seriously and cooperated with relevant regulators in Australia and overseas.

“We have an important role in monitoring and reporting suspicious activity and keeping Australia’s financial system safe,” the NAB spokesperson said.

“We regularly conduct due diligence assessments on our clients, including our correspondent banks, in line with anti-money laundering and counter-terrorism financing obligations.”

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