Papua New Guinea has entered what authorities describe as an exhibition or observation period as part of the Financial Action Task Force’s review of anti-money laundering and counter-terrorism financing standards. The period allows the government and the financial sector to demonstrate progress on regulatory strengthening to avoid the possibility of grey listing. Business groups and financial institutions are paying close attention, as grey listing can lead to higher compliance costs, slower transaction processing and greater scrutiny from correspondent banks.
The Bank of Papua New Guinea, the Department of Justice and Attorney General and the Financial Analysis and Supervision Unit are coordinating the national response. Officials have emphasised that improving compliance involves more than legislative change and requires consistent implementation across reporting entities including commercial banks, superannuation funds, foreign exchange dealers and accountants. For financial institutions, maintaining stable correspondent banking relationships with major Australian and Asian partners is a key priority, given their importance for trade financing and international payment flows.
Several banks have begun internal compliance reviews and enhancements to due diligence procedures. Industry associations are encouraging businesses to review their documentation, record-keeping and transaction reporting processes to avoid delays. In the short term, firms may experience longer settlement windows for cross-border payments, particularly for transactions involving multiple counter parties.
Australia, New Zealand and multilateral partners have expressed support for Papua New Guinea’s efforts, reflecting shared interest in maintaining a stable and well-connected regional financial system. For government, the review is occurring alongside broader fiscal and economic policy considerations, including revenue reform and economic diversification.
The outcome of the exhibition period will depend on how effectively reforms are applied in practice. While the situation does not imply immediate disruption, it is becoming a central factor in business planning. Companies involved in international trade, remittances, procurement or import–export activity may benefit from forward planning and communication with banking partners. The coming months will be important for demonstrating progress and maintaining confidence in the financial system.
