Papua New Guinea -- Licensing Requirements Regulatory Overview

**Bank of Papua New Guinea (BPNG):** BPNG has previously issued warnings to the public regarding the risks associated with cryptocurrencies, including volatility, lack of consumer protection, and potential use for illicit activities. These warnings do not constitute a regulatory framework but indicate a cautious approach.

*BPNG Website:* https://www.bankpng.gov.pg/ (You would typically find press releases or advisories under their 'News' or 'Publications' section).

**Financial Analysis and Supervision Unit (FASU):** As the AML/CTF regulator, FASU is responsible for ensuring compliance with the Anti-Money Laundering and Counter Terrorist Financing Act 2015. While VASPs are not explicitly listed as "reporting entities" under this Act *yet*, the FATF standards imply that they should be.

*FASU Website:* Typically integrated within the BPNG site or linked from it. Information on the AML/CTF Act and reporting requirements can be found there.

**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.

**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.

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

**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.

**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.

**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.

**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.

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

**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.

**Pre-Application Consultation:** Discussion with BPNG/FASU.

**Submission of Application:** Detailed business plan, legal structure, ownership details, management profiles, capital adequacy proof, AML/CTF policies, risk management framework, technology infrastructure details.

**Due Diligence & Assessment:** BPNG/FASU would review the application, conduct interviews, and assess the suitability of the applicant.

**Fit and Proper Checks:** For all key personnel.

**Approval/Rejection:** Decision by the regulator.

**Ongoing Supervision:** Regular reporting, audits, and compliance checks post-licensing.

**Bank of Papua New Guinea (BPNG):**

*Note:* Specific advisories on crypto may be found under their "News" or "Media Releases" section, but these often change or are archived. There isn't a dedicated crypto regulation page currently.

**Anti-Money Laundering and Counter Terrorist Financing Act 2015:**

This is the foundational AML/CTF law. While it doesn't explicitly name VASPs, it's the framework FASU operates under. The Act can often be found on government legal websites or linked from FASU/BPNG.

*Example Search Term (you may need to search for the specific PDF):* "Papua New Guinea Anti-Money Laundering and Counter Terrorist Financing Act 2015"

**Financial Action Task Force (FATF) Recommendations:**

These are the international standards that PNG, as a member, is expected to implement. Recommendation 15 and its Interpretive Note specifically address VAs and VASPs.

*Specific Recommendation 15:* https://www.fatf-gafi.org/recommendations.html (Look for "Standards" or "Recommendations" and locate R.15 and INR.15 on Virtual Assets and VASPs).

**Bank of Papua New Guinea (BPNG)**:

**Role:** The central bank and primary financial regulator. It has consistently issued public warnings regarding the risks associated with cryptocurrencies. It is responsible for monetary policy, financial stability, and the oversight of the financial system.

**Official Website:** Bank of Papua New Guinea

**Financial Analysis and Supervision Unit (FASU)**:

**Role:** PNG's Financial Intelligence Unit (FIU), responsible for enforcing Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) laws. As a member of the Asia/Pacific Group on Money Laundering (APG), PNG is obligated to implement FATF recommendations, which include those related to virtual assets. While there may not be specific VASP regulations, FASU would be the body responsible for monitoring suspicious transactions involving virtual assets under existing AML/CTF frameworks.

**Official Website (Often linked via BPNG or government sites):** While FASU has a presence within the BPNG and government structures, a standalone public website with detailed guidance on crypto is not readily available. Information is usually found in broader government or BPNG publications.

**Securities Commission of Papua New Guinea (SCPNG)**:

**Role:** Responsible for regulating the capital markets and securities in PNG. If any virtual asset were deemed to constitute a security under PNG law, the SCPNG would have jurisdiction. However, given the current general stance, this is less immediately relevant than the BPNG's warnings.

**Official Website:** Securities Commission of Papua New Guinea

**Bank of Papua New Guinea Act 2000 (and subsequent amendments):** This act grants the BPNG its mandate to regulate and supervise financial institutions and maintain financial stability, which underpins its cautionary stance on cryptocurrencies. (A direct URL to the full, consolidated act is often through legislative databases, e.g., via the PNG National Parliament website or Pacific Islands Legal Information Institute (PacLII). For instance, an older version might be found on PacLII).

**BPNG Public Notices/Statements (e.g., 2018):** While not legislation, these public advisories represent the official regulatory stance. For example, a **2018 public notice from BPNG** warned against cryptocurrencies, stating they are not legal tender, are unregulated, and carry significant risks, including price volatility, cybersecurity risks, and use for illicit activities. These warnings have been reiterated over time. Finding a direct permalink to a specific public notice from 2018 can be difficult as BPNG's news archives may not go back that far online, but the content of these warnings is widely reported in news and financial advisories.

**Not Legal Tender:** The Bank of Papua New Guinea has explicitly stated that cryptocurrencies are **not recognized as legal tender** in PNG.

**Unregulated Environment:** There is **no specific regulatory framework** for cryptocurrency exchanges or trading platforms operating within PNG. This means such platforms are not licensed or supervised by PNG authorities.

**High Risk Warnings:** The BPNG strongly **advises the public against investing in or trading cryptocurrencies** due to the high risks involved, including:

Potential for fraud, scams, and cyber-attacks.

Lack of recourse or regulatory oversight.

Potential for use in money laundering and terrorist financing.

**No Official Ban on Ownership/Trading (but Discouraged):** While individuals are not explicitly forbidden from owning or trading cryptocurrencies, they do so at their own risk and outside of any regulatory safety net. Operating an exchange or offering crypto services *officially* within PNG would likely be challenging without a clear regulatory framework or specific licensing.

**AML/CTF Scrutiny:** Any large or suspicious transactions involving virtual assets could fall under the purview of the FASU and the AML/CTF Act 2015.