Centralized exchange in Papua New Guinea

Cryptocurrency Exchanges: Would fall into this gap. If a business sought to offer traditional securities exchange services, it would require licenses under the Securities Commission of Papua New Guinea (if established for this purpose) or relevant financial market laws. However, crypto assets are not typically classified as securities under existing PNG law.

Currently, neither a specific registration nor a licensing regime exists for VASPs.

Local Presence: For foreign entities, a local physical presence, a local board of directors, or a local registered company structure is often a requirement for financial licenses.

Anticipated Future: Based on FATF recommendations, it is highly probable that PNG will eventually adopt a licensing regime for VASPs. The FATF standards recommend that VASPs be licensed or registered, and subject to effective systems for monitoring and ensuring compliance with AML/CTF requirements. Licensing typically implies a more rigorous pre-approval process and ongoing supervision than simple registration.

AML/KYC (Anti-Money Laundering / Know Your Customer): This is the most certain requirement. Future regulations will mandate VASPs to:

Identify and verify customers (KYC).

Conduct ongoing customer due diligence.

Monitor transactions for suspicious activity.

Report suspicious transactions to FASU.

Implement robust risk-based AML/CTF programs.

Adhere to the "travel rule" for VA transfers, requiring information sharing between VASPs.

Consumer Protection: Rules around disclosures, clear terms of service, dispute resolution mechanisms, and safeguarding of client assets.

Technology & Security: Requirements for secure systems, data protection, and measures against cyber threats.

Anti-Money Laundering and Counter Terrorist Financing Act 2015 (AML/CTF Act 2015): This Act provides the legal basis for identifying, freezing, and confiscating assets related to money laundering and terrorist financing. It obligates financial institutions and designated non-financial businesses and professions (DNFBPs) to implement AML/CTF measures. While it pre-dates specific crypto regulation, its broad definitions and principles are applied to virtual asset activities where deemed appropriate by regulators.

Designated Person/Entity Screening: VASPs must screen their customers (both at onboarding and on an ongoing basis) against the UN Consolidated Sanctions List, which includes individuals and entities designated under various UN sanctions regimes (e.g., terrorism, proliferation, specific country regimes).

Asset Freezing: If a VASP identifies that it holds assets (including virtual assets) belonging to a designated person or entity, it must immediately freeze those assets and report the match to FASU.

Prohibition on Dealing: VASPs are prohibited from making funds or economic resources available to, or for the benefit of, designated persons or entities.

Suspicious Transaction Reporting (STR): Any transaction involving designated persons, or transactions suspected of being related to money laundering or terrorist financing, must be reported to FASU.

No, not fully adopted for VASPs/Travel Rule. PNG's Anti-Money Laundering and Counter Terrorist Financing Act 2015 (AML/CTF Act 2015) and its associated Regulations 2016 do not comprehensively define Virtual Assets (VAs) or Virtual Asset Service Providers (VASPs) in line with FATF Recommendation 15.

Consequently, VASPs are not explicitly designated as "reporting entities" or "financial institutions" under the current AML/CTF framework. This means they are generally not subject to AML/CTF obligations, including the Travel Rule.

The APG MER specifically notes that PNG needs to take steps to license or register VASPs and subject them to the full range of AML/CTF obligations.

Cash Transactions: Financial institutions must report any cash transaction equal to or exceeding PGK 20,000 (approx. USD 5,000) or its equivalent in foreign currency.

Electronic Funds Transfers: Financial institutions are required to record and retain information for electronic funds transfers equal to or exceeding PGK 1,000 (approx. USD 250). However, this is for traditional transfers and does not currently extend to VA transfers.

None explicitly as reporting entities under the current AML/CTF Act 2015.

Bank of Papua New Guinea - Public Notice on Digital Currencies, Virtual Assets and Cryptocurrencies (PDF)

Entity Targeted: General public, financial institutions, individuals considering or engaging with cryptocurrencies. Violation Type (Implied): Engaging in unauthorized financial activities; lack of consumer protection for speculative investments; potential for financial crime. Penalty Amount: N/A (This was a public warning, not an enforcement action with a specific penalty).

Date: August 12, 2021 (The most prominent public warning in recent years)

Outcome: The BPNG clarified that cryptocurrencies are not legal tender in PNG. They highlighted risks such as volatility, lack of regulation, potential for scams, and use in illicit activities. The statement advised the public to exercise caution and warned that losses would not be protected by PNG laws. It also indicated the BPNG's intention to develop appropriate regulations for digital assets in the future. This warning has generally underpinned the BPNG's ongoing stance.

Custody Providers: Similarly, no specific license for crypto custody. Traditional trust or financial services licenses might be considered, but these are not designed for digital assets.

Payment Processors: While payment services generally require licensing under BPNG (e.g., National Payment Systems Act 2013), this applies to fiat currency payments and remittances. Processing crypto-to-crypto or crypto-to-fiat payments without being a licensed traditional financial institution operating in fiat would be in a grey area.

Management & Governance: Fit and proper tests for directors and senior management, robust governance structures, internal controls, and risk management frameworks (including cybersecurity).

Capital Requirements: Financial institutions, including future VASPs, are typically required to maintain a certain level of minimum paid-up capital to demonstrate financial stability and ability to absorb losses. The exact amount would be determined by BPNG based on the scope and risk of services offered.