Papua New Guinea -- Travel Rule Implementation Regulatory Overview

Papua New Guinea (PNG), as a member of the Asia/Pacific Group on Money Laundering (APG), an FATF-Style Regional Body, is committed to implementing the FATF Recommendations. However, based on its most recent Mutual Evaluation Report (MER), PNG has significant work to do regarding the regulation of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs), and consequently, the FATF Travel Rule.

Status of FATF Travel Rule Implementation in Papua New Guinea:

As of its last published Mutual Evaluation Report (APG MER, 2021), Papua New Guinea had not yet fully adopted or implemented the FATF's requirements for Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs), including the Travel Rule (FATF Recommendation 16).

Here's a breakdown:

• Whether Adopted:

  • 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.

• Effective Date:

  • Since VASPs are not comprehensively covered by existing legislation, there is no effective date for the FATF Travel Rule as it applies to virtual asset transactions in PNG. Its implementation awaits legislative amendments.

• Threshold Amounts:

  • Given that the Travel Rule is not yet implemented for virtual assets, there are no specific threshold amounts mandated for virtual asset transfers under PNG law.
  • For traditional financial institutions, PNG's AML/CTF Regulations 2016 prescribe thresholds for reporting:
    • 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.

• Which VASPs are Covered:

  • None explicitly as reporting entities under the current AML/CTF Act 2015.
  • The APG MER highlighted this as a significant deficiency, stating that the scope of obligated entities does not include VASPs. Therefore, entities involved in activities such as exchange between VAs and fiat currencies, transfer of VAs, safekeeping of VAs, or participation in financial services related to VAs are not currently regulated as reporting entities.

• Technical Implementation Requirements:

  • As there is no current legal mandate for VASPs to implement the Travel Rule, there are no prescribed technical implementation requirements.
  • Once the framework is updated, PNG would likely look to international best practices for secure, interoperable data transfer solutions for Travel Rule compliance (e.g., using established protocols or standards from industry bodies).

• Penalties for Non-Compliance:

  • As VASPs are not currently designated as reporting entities for Travel Rule purposes, there are no specific penalties for VASPs for non-compliance with the Travel Rule itself.
  • However, the AML/CTF Act 2015 does provide for significant penalties for designated reporting entities (e.g., banks, financial institutions, casinos) that fail to comply with their AML/CTF obligations, which include:
    • Fines: Substantial monetary penalties can be imposed on institutions and individuals.
    • Imprisonment: Individuals responsible for non-compliance can face terms of imprisonment.
    • Loss of License: Regulated entities can face suspension or revocation of their operating licenses.
  • Once VASPs are brought under the AML/CTF regime, similar penalties would likely apply to them for non-compliance with their obligations, including the Travel Rule.

Reference Specific Legislation or Guidance:

The primary source for this information is Papua New Guinea's Mutual Evaluation Report, published by the Asia/Pacific Group on Money Laundering (APG):

• APG Mutual Evaluation Report of Papua New Guinea (2021):
  • Available on the APG website: https://www.apgml.org/mutual-evaluations/documents/default.aspx (Look for "Papua New Guinea MER")
  • Specifically, consult sections on Recommendations 15 (New Technologies) and 16 (Wire Transfers), and the Immediate Outcomes related to these.

While the full text of PNG's AML/CTF Act 2015 and Regulations 2016 may not be readily available online via a single official government portal, their content and deficiencies regarding VASPs are extensively analyzed in the APG MER. The Financial Analysis and Supervision Unit (FASU) of Papua New Guinea is the country's Financial Intelligence Unit, and its website might provide updates or guidance as the regulatory framework evolves.