An ASX-listed South-Pacific banking group has caught the ire of the regulator in its global headquarters of Papua New Guinea for alleged serious breaches of AML rules, raising questions around the compliance implications of its involvement with two major Australian banks.
BSP Financial Group (BFL), which listed on the ASX earlier this year, is the largest bank in PNG with branches in six South-Pacific nations. On Monday, the central bank of PNG’s Financial Analysis and Supervision Unit announced it was taking regulatory action against the bank for non-compliance with the nation’s AML/CTF laws.
The range of sanctions issued against the bank by the FASU included a formal warning that BFL had contravened the laws, the requirement to update its AML policies, undertake staff training and conduct enhanced customer due diligence, and a request that the bank commence a process to remove its group chief executive.
The regulator also indicated it had obtained “detailed and compelling evidence” of BFL’s failure to prevent high-value payments of the local currency, PNG kina, to a political official, as well as failing to conduct due diligence on several customers who were previously charged with or alleged to have committed money laundering offences.
In response, BFL sought to downplay the seriousness of the allegations and said it “remains of the view that it has at all times complied with its AML/CTF obligations”.
“BFL will consider its legal options in relation to the sanctions which have been imposed,” the bank said.
“However BFL notes that the FASU has not sought to impose financial penalties or determined to commence criminal proceedings against BFL.”
Both Commonwealth Bank and NAB extend correspondent banking services to BFL in Australia, facilitating the transfer of money into and out of the country by the bank’s clients.
According to AUSTRAC guidance, banks providing correspondent services to international institutions are required to conduct “appropriate due diligence of the relationship” due to the high AML/CTF risks.
A NAB spokesperson told InvestorDaily the bank took its financial crime obligations seriously and cooperated with relevant regulators in Australia and overseas.
“We have an important role in monitoring and reporting suspicious activity and keeping Australia’s financial system safe,” the spokesperson said.
“We regularly conduct due diligence assessments on our clients, including our correspondent banks, in line with AML and CTF obligations.”
CBA was contacted for comment but did not respond before deadline.
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