FATF Greylisting could disrupt financial sector, investment flows

Papua New Guinea is facing the possibility of being placed on the Financial Action Task Force (FATF) grey list by the end of 2025, according to warnings from the Association of Certified Anti-Money Laundering Specialists (ACAMS) issued in late June. The potential greylisting has sparked concern among banking and business circles, as it could significantly impact the country’s international financial standing, investment climate, and access to global banking services.

[See link to webinar below]

The FATF grey list includes jurisdictions identified as having strategic deficiencies in their regimes to counter money laundering, terrorist financing, and other financial crimes, but which have committed to working with the FATF to address these issues. Countries placed on the grey list are subject to increased monitoring and may face reputational damage and heightened scrutiny from international financial institutions.

In its recent advisory, ACAMS flagged that Papua New Guinea is at risk of greylisting due to delays in implementing key reforms to its anti-money laundering (AML) and counter-terrorist financing (CTF) framework. The warning follows an earlier mutual evaluation report which noted PNG’s inadequate enforcement mechanisms, lack of effective supervision of designated non-financial businesses and professions, and limited capacity to trace illicit financial flows. The country has made some progress, including drafting amendments to relevant legislation and beginning capacity-building efforts in the financial intelligence unit, but ACAMS suggests these efforts may be insufficient to avert a listing without accelerated action.

Greylisting would likely have serious consequences for Papua New Guinea’s financial sector. Banks and financial institutions in the country could face additional compliance burdens, delayed cross-border transactions, and a reduction in correspondent banking relationships, particularly with institutions in the US, EU, and Australia. This would increase the cost and complexity of doing business and could deter foreign direct investment at a time when PNG is positioning itself as an emerging regional hub for trade, infrastructure development, and resource extraction.

For businesses, especially those engaged in international trade or reliant on foreign investment, the risk of greylisting raises the spectre of reputational harm and operational delays. Exporters and importers could face longer processing times and higher transaction fees, while potential investors may adopt a “wait-and-see” approach until PNG’s compliance standing stabilises.

The government has not yet publicly commented on ACAMS’ warning, but senior banking officials and financial regulators are reportedly holding internal discussions on how to accelerate compliance. Observers expect targeted reforms in enforcement and supervision, improved inter-agency coordination, and stakeholder engagement in coming months to address FATF concerns.

With major infrastructure and resource investment projects on the horizon, and Papua New Guinea’s ambitions to grow its non-resource economy through initiatives such as the Special Economic Zone policy, financial credibility will be crucial. A proactive response to the greylisting risk could not only avert reputational damage but also bolster investor confidence in Papua New Guinea’s broader economic governance framework.

Source: ACAMS, June 2025

• Understand what FATF grey listing means and how it differs from blacklisting
• Findings from the Papua New Guinea Mutual Evaluation and what steps the country is taking in response
• Gain insight into the expected impact on businesses, financial flows, and investor confidence on a Grey Listing
• Receive an expert analysis of current Papua New Guinea economic trends, sectoral performance, and forecasts

• A Westpac Papua New Guinea representative providing a detailed overview of the grey listing process and implications
• Justin Smirk, Westpac Senior Economist, offering an economic update and strategic insights into what this means for businesses operating in Papua New Guinea