A Presentation of the Papua New Guinea Financial Intelligence Unit

1. A Presentation of the Papua New Guinea Financial Intelligence Unit Crime no longer pays!

2. Presentation Overview • Global Back ground to AML system • PNG’s AML System • Establishment of the PNG FIU • Roles & Functions of an FIU • Implementation Update • Achievements • Constraints Crime no longer pays!

3. Background to the Global AML System • G7 - Response to Money Laundering, and • Recognising the threat posed to banks & financial institutions • Financial Action Task Force (FATF) – formed • Examine ML techniques & trends • Review action taken - national & international • Set out measures to combat ML Crime no longer pays!

4. FATF • 1990 - issued Forty Recommendations –to fight ML • 2001- issued Eight Special Recommendations- to fight terrorist financing • 2003 – Publishing of Ninth Special Recommendation – 40 + 9 Recommendations. Crime no longer pays!

5. FATF • Membership of 34 countries & territories • 2 regional organisations • 8 regional bodies - similar to FATF (FSRBs) • Asia Pacific Group on Money Laundering (APG) • Membership • Mutual Evaluation • Egmont Crime no longer pays!

6. Proceeds of Crime Act 2005 New Legislation- Proceeds of Crime Act 2005 enacted: • To combat money laundering (corruption) • New offence • Creation of Financial Intelligence Unit • Manage Proceeds of Crime • Restrain and Forfeit proceeds of Crime Crime no longer pays!

7. Proceeds of Crime Act • New sources of intelligence – Cash Dealers • Wide definition of cash dealers-eg. Includes banks, finance companies, insurers, lawyers, accountants, dealers in precious metals and stones, real estate companies, gambling house-casino- lottery, etc (s3, 1) Crime no longer pays!

8. Definition of an FIU “A central, national agency responsible for receiving, analysing and disseminating to the competent authorities, disclosures of financial information: (i) concerning suspected proceeds of crime and potential financing of terrorism, or (ii) required by national legislation or regulation, in order to combat money laundering and terrorism financing.” (Egmont Group) Crime no longer pays!

9. Other FIUs • AUTRAC - Australia • FinCEN - US • SIFIU – Solomon Islands • NZFIU – New Zealand • STRO - Singapore • AMLO – Philippines • JFIU – Hong Kong Crime no longer pays!

10. Role & function of FIU • Receives and analyses • Investigate into and trace criminal assets to recoverproceeds of crime • Conduct onsite Compliance • Provide training to employees of reporting entities • Conduct outreach session • Coordinate domestic & international cooperation Crime no longer pays!

11. 4 Implementation • 2 Stage Approach–cash dealers • Major cash dealers –(eg. Banks) commenced reporting in December 2007 • Other cash dealers (eg. Finance companies, Lawyers, Accountants, Real Estate; etc) to report in second stage Crime no longer pays!

12. Current level of financially motivated crime in PNG • Current level of financially motivated crime in PNG • Half or close to half of the government budget lost to fraud – all of it laundered through PNG banks • Much of it conducted by cheque Crime no longer pays!

13. Current level of financially motivated crime in PNG • Often no attempt to hide the source or application because of the low perceived risk of being detected. • General impression that ‘everyone else is doing it so why shouldn’t I ?’ particularly among government employees Crime no longer pays!

14. Current strategies and focus • Crime prevention using financial intelligence as opposed to crime detection, investigation and prosecution • Investigation and prosecution is a poor method of crime prevention, • preventing people committing offences has not been neglected in the past resulting in rampant financially motivated crime   • Is this a new approach ? Yes, • Why is this only happening now? We didn’t have the financial information/intelligence to be able to be pro-active in crime prevention before Crime no longer pays!

15. Current Strategies • Risk-based approach to activities (where are the largest offences occurring and where can our largest impact be) • Identification of persons conducting suspicious transactions and; • Restriction of access to banking facilities for persons who are committing offences Crime no longer pays!

16. Current Strategies • Utilisation of the Proceeds of Crime Act to assist banks to refuse transactions, close accounts and provide information to support restraint of proceeds of crime and, if necessary , prosecution. • A LOT more is being asked of the banks, and they are, largely, coming to the party. • Proceeds of Crime restraint and forfeiture • Issue of guideline on government cheques and payments to assist banks to avoid laundering proceeds of crime Crime no longer pays!

17. Successes to date • Commencement of receipt of suspicious transaction reports (STRs) from commercial banks • Commencement of receipt of cash transactions reports (CTRs) and international fund transfer information • Analysis of financial reports to identify methods of financial offending and commencement of procedures to prevent offences Crime no longer pays!

18. Success to date • Commencement of work with the banks to identify and question government employees who are banking excessive amount • This has resulted in a significant reduction in transactions by identified persons • Restraint of K5.1 million • Return of K1.3 million to the government – 16th July 2010 Crime no longer pays!

19. Success to date • Issue of newspaper and TV ads to alter behaviour • Signing of MOU with Solomons to allow information sharing • Consultation underway with Taiwan, Philippines, Singapore, Japan, Malaysia Crime no longer pays!

20. What's next for the PNGFIU • Expansion of process to identify and deal with government employees banking vast amounts of unexplained money • Expansion of process to identify other criminals using the banking system • Expansion of restraint of proceeds of crime action Crime no longer pays!

21. What's next for the PNGFIU • Modification of processes as criminal behaviour changes eg; greater use of corporate entities to hide funds and move them offshore • Expansion of work with international counterparts to restrain criminal assets in other countries and prevent criminals moving money from PNG to other countries • Expansion of reporting to other cash dealers Crime no longer pays!

22. What's next for the FIU • Expansion of enforcement of POCA reporting obligations • Expansion of information sharing to combat transnational crime, organised crime and terrorist financing • Build Database • Training of Computer Forensics Crime no longer pays!

23. 6 Constraints • Inadequate staff • Inadequate resources • Inadequate operational funds • Inadequatecommunication facilities Crime no longer pays!

24. Thank you Any Questions Papua New Guinea Financial Intelligence Unit Ph: 321 1691 Mobile:7690 6612 Email: png_fiu@police.gov.pg Crime no longer pays!

25. PNG’s AML system RESTRAIN $? FORFEIT? BANKS FIU INVESTIGATOR PROSECUTOR COURT OTHER CASH DEALERS OTHER COUNTRIES Crime no longer pays!