Asset Recovery as a National Security Strategy for Papua New Guinea

Security & Intelligence Research Group
Edith Cowan University

“The greatest risk to Papua New Guinea is not that the “grey listing” but that the country treats stolen and unexplained wealth as a compliance problem rather than what it is: a serious national security one.”

A Warning and an Opportunity

Papua New Guinea’s (PNG) grey listing is more usefully read as a national opportunity than as a simple international sanction. On 13 February 2026 the Financial Action Task Force (FATF) placed PNG on its list of Jurisdictions Under Increased Monitoring, commonly referred to as the ‘grey list’, following the FATF Plenary in Mexico City.¹

The decision means PNG is now expected to address strategic weaknesses in its systems for countering money laundering, terrorism financing and proliferation financing. The Bank of Papua New Guinea has confirmed the listing and noted that the country has agreed to a FATF Action Plan setting out specific benchmarks and timelines.² The listing is, in fact, a return: PNG was previously placed under increased monitoring between 2014 and 2016 before being de-listed, making the present moment a test of whether reform can be made durable rather than cyclical.²

This grey listing is not merely a technical compliance issue, it affects national reputation, financial confidence, correspondent banking, investment risk and the way international partners assess a country’s ability to protect its own financial system.^3,4 For PNG, however, the moment can become more than a reputational setback. It can become the point at which the country begins a serious national recovery effort against stolen wealth, unexplained assets and criminal proceeds.

Papua New Guinea’s Independent Commission Against Corruption (ICAC) has stated publicly that the country may be losing up to four billion kina (K4 billion) every year to corruption, a figure advanced by Commissioner Andrew Forbes at the Department of Prime Minister and National Executive Council’s launch of the Anti-Fraud, Anti-Corruption and Whistle-Blower Policy in Port Moresby on 17 August 2023.⁵ ICAC explicitly linked the erosion of public confidence to the risk of FATF grey listing a risk that has now materialised.⁵

Whatever its precision, a figure of that order gives a workable basis for modelling three broad responses: no meaningful action, partial action, and a coordinated, intelligence-led campaign of recovery and disruption. Stolen money does not sit still; it is put to work. Proceeds of corruption buy influence and protection, finance the intimidation of witnesses and the capture of officials, and move offshore into assets that are hard to trace and harder to recover. Left undisturbed, that wealth becomes the working capital of the very networks that produced it.

Corruption as a National Security Problem

Corruption is often discussed as a governance issue, a financial issue or a public administration issue. At the scale being described in PNG, it must also be treated as a very serious national security issue. Papua New Guinea’s 2017 National Risk Assessment identified corruption and bribery, fraud against government programs and activities, illegal logging and fishing, and tax evasion as the country’s major money-laundering threats, findings reaffirmed by the Asia/Pacific Group on Money Laundering (APG) in its 2024 Mutual Evaluation Report.⁶ They are linked to organised networks, enabling professionals, weak supervisory controls, the offshore movement of funds, political influence and exploiting gaps in enforcement capacity. The same APG evaluation found the country’s use of financial intelligence ineffective, its supervision of vulnerable sectors inadequate, and its record of asset confiscation poor.⁶

The evidentiary record underscores the point. Independent analysis has found that since adopting FATF standards, PNG has secured only a handful of successful money-laundering prosecutions and none in the sectors identified as highest risk^7,8 despite its financial intelligence unit referring thousands of cases.^9,10

When public money is stolen or diverted, the immediate harm is the loss of public services. The greater harm comes later, as the proceeds are reinvested in the structures that shield the original offence, buying silence, funding legal delay, and preserving access to those who make decisions. Corruption of this kind becomes self-financing, and the longer it runs the more entrenched and the more costly it is to unwind.

For PNG this bears directly on its sovereignty, understood not in the narrow sense of borders and formal independence but as the practical capacity of the state to safeguard public resources, enforce its own laws, and keep criminal networks from shaping national outcomes.

Modelling the Choice: Three Strategic Hypotheses

The national impact of stolen wealth, unexplained assets and criminal proceeds can be assessed through three clear hypotheses. The first is that nothing meaningful changes. The second is that PNG takes partial action and recovers or freezes around ten per cent of the estimated annual loss. The third is that PNG aggressively implements a coordinated, intelligence-led recovery and prosecution model, recovering, freezing or denying more than forty per cent of illicit funds while dismantling the networks behind them.

They are built on ICAC’s upper-bound estimate of ‘up to’ K4 billion per year, and the true figure is uncertain: PNG’s own 2017 National Risk Assessment estimated annual laundering proceeds in a range of roughly US$560 million to US$1.4 billion.⁶ The exercise is concerned with proportion rather than precision: its purpose is to show what is at stake across plausible policy paths. The figures that follow are best read as illustrative orders of magnitude, not projections.

Hypothesis A: No Meaningful Action

On these assumptions, continued inaction implies losses of up to K4 billion a year as much as K20 billion across five years. This money is not a line item on a page, it is money withdrawn from policing, health, education and provincial services, retained instead by those who diverted or laundered it, or who were paid to look the other way. Schools and hospitals will go unfunded roads unable to be repaired and a country needing to borrow when it has enough wealth to sustain itself.

Grey listing already places the country under heightened scrutiny; banks, investors and development partners will now look closely for practical progress. The Bank of Papua New Guinea has itself acknowledged that listing can reduce investor confidence and make it harder for PNG businesses and individuals to send and receive money overseas, with implications for correspondent banking relationships.^2,4 If no serious action follows, the listing may harden perceptions that PNG is a high-risk financial environment.

Criminal proceeds become the operating budget for organised crime, political interference and the exploitation of weakly governed borders. Because enforcement that removes individuals rarely reaches the money, the networks regenerate: arrests are made, but the financial base survives intact. The loss under Hypothesis A with each year of inaction erodes the state’s momentum, its standing with partners, and its control over the criminal economy.

Hypothesis B: Partial Action (10% recovered or frozen)

PNG implements selected recommendations, strengthens key institutions, improves compliance and begins recovering or freezing some stolen wealth. Recovering or freezing around ten per cent of the K4 billion estimate would return or restrain approximately K400 million per year roughly K2 billion over five years.

K400 million a year is far from symbolic: it could fund financial-investigation and prosecution capacity, strengthen frontline policing and border control, and signal that stolen wealth is no longer beyond reach. Recoveries on this scale would also give PNG something concrete to put before the FATF, the APG and regional partners evidence of effect rather than legislative intention.

As the Global Initiative Against Transnational Organized Crime observes, the effectiveness of any enforcement regime turns ultimately on the independence, funding and technical capacity of the agencies charged with implementing it; absent these, even well-drafted reform tends to remain symbolic.¹¹

Even with ten per cent recovered or frozen, up to K3.6 billion a year as much as K18 billion over five years would remain lost, concealed or in active circulation. Well-resourced actors adapt quickly, sheltering wealth behind proxies, offshore structures and front companies, and exploiting legal delay and political access. Partial action slows the outflow without altering the underlying balance.

Hypothesis C: Aggressive, Intelligence-led Action (+ 40% recovered, frozen or denied)

PNG aggressively implements the recommendations including a coordinated, intelligence-led recovery and prosecution model and recovers, freezes or denies more than forty per cent of illicit funds while dismantling the networks behind them. On the K4 billion estimate, a forty per cent recovery or freeze would equal at least K1.6 billion per year, or at least K8 billion over five years.

The aim is not the retrospective recovery of money once the damage is done, but the disruption of the networks themselves mapping facilitators, tracing beneficial ownership, restraining unexplained wealth and pursuing assets offshore, so that the structures sustaining corruption and organised crime are dismantled rather than merely fined.

This policy principle is well established in the international literature: criminal enterprises are not defeated by arresting low-level actors alone, but by removing their money, protection, access, influence and ability to rebuild. The recovery of stolen assets the focus of the joint World Bank–UNODC Stolen Asset Recovery (StAR) Initiative both denies criminal capital and returns value to the state, while research on grand corruption shows that illicit wealth consistently seeks shelter in larger, more stable economies and through professional intermediaries.^12,13,14 A serious approach would therefore draw financial intelligence, asset tracing, company-ownership and procurement records, and international cooperation into a single line of effort, directed at a small number of high-value targets rather than dispersed across opportunistic cases.

Recoveries on the order of K1.6 billion a year would be transformational, returning resources to the state, denying working capital to criminal networks and establishing a credible deterrent. Once it is understood that stolen wealth can in fact be found, restrained and confiscated, the risk–reward calculus shifts. PNG could then be seen less as a jurisdiction under scrutiny than as one using grey listing as the catalyst for national recovery, deepening its engagement with the FATF and the APG and with partners such as Australia, New Zealand and the multilateral development banks.¹⁵

Comparing the Three Futures

The three hypotheses set out the scale of what we are facing and how the reaction will impact the country.

Scenario	Five-year outcome (illustrative)	Strategic effect
A. Inaction	Up to K20 billion lost	Networks strengthen; public trust declines; sovereign risk worsens.
B. Partial action (~10%)	~K2 billion recovered or frozen; up to K18 billion remains	A valuable start and proof of concept, but the deeper criminal economy stays largely intact.
C. Intelligence-led (>40%)	Potentially up to K8 billion recovered, frozen or denied	Materially disrupts the financial base of corruption and organised crime; resets the risk-reward calculus.

Note: figures are illustrative orders of magnitude derived from ICAC’s upper-bound estimate, not forecasts.

From Compliance to Recovery: Building the Model

Grey listing is better understood as a warning that international confidence cannot be assumed, and as an opportunity to act deliberately to recover stolen wealth, restore confidence and reinforce the systems meant to protect the country from future harm. Realising Hypothesis C requires translating political intent into operational effect across five connected lines of effort:

1. Coordinated national tasking. Financial intelligence, police, prosecutors, the anti-corruption agencies and the revenue, customs and border authorities must work against shared targets rather than in isolation. The 23-agency National Coordinating Committee provides a foundation, but coordination has to translate into joint operations and measurable outcomes, not reporting alone.
2. Financial investigation from the outset. Every major corruption or organised-crime investigation should include an asset-recovery strategy from inception proceeds-of-crime action, unexplained-wealth proceedings and beneficial-ownership analysis built in early, not added at the end. The money trail often maps the network more reliably than surveillance.
3. Reach across borders. Because illicit wealth seeks safety in larger economies, mutual legal assistance, extradition and information-sharing with partners must be made practically functional so that offshore assets can be traced, restrained and repatriated.¹⁵
4. Effectiveness over symbolism. Progress should be judged by prosecutions secured, assets restrained and value returned the precise effectiveness measures on which the APG evaluation found PNG wanting rather than by legislation passed.
5. Integrity and insider-threat safeguards. Specialist units and intelligence holdings require vetting, oversight, secure systems and trusted reporting channels. Networks that profit from corruption will actively seek to penetrate the agencies pursuing them; that reality must be designed in, not addressed as an afterthought.

The objective can be stated plainly: recover the money, restrain the assets, prosecute the offenders and return the proceeds to the people of Papua New Guinea. Framed this way, the public account changes.

The Greatest Risk is Inaction

PNG cannot afford to treat stolen money, unexplained wealth and criminal proceeds as secondary issues. They sit at the centre of national development, public confidence, financial integrity and national security. If nothing changes, corruption continues to drain the state while criminal enterprises grow stronger. If partial action is taken, PNG begins to recover money and confidence, but the deeper networks may survive. If aggressive, intelligence-led action is taken, the country has the opportunity to change its national risk environment altogether recovering funds, freezing assets, dismantling operations and denying offenders the benefit of wrongdoing.

Recovered wealth does more than vindicate the work of police, intelligence and anti-corruption agencies. For the departments and communities that lost it, it is transformative the means to reinvest in services, rebuild institutions and close off future criminal opportunity.

Papua New Guinea’s greatest risk is failing to use this moment to act decisively. Handled properly, grey listing can become the trigger for national recovery: the point at which PNG strikes back against stolen wealth, removes any possible benefit of wrongdoing, and begins to reclaim the public value that belongs to its people.

Authors

Dr Warren Doudle (PhD), Dr Nicola Lockhart (LLB, PhD), Dr Michael Coole (PhD), Dr Gavin Briggs (PhD) and Mrs Jennifer Medbury (MSA) are members of the Security & Intelligence Research Group at Edith Cowan University. The Group conducts applied research into intelligence, counterterrorism, financial and organised crime, security, critical infrastructure protection, countering foreign interference and national security, with a focus on the Indo-Pacific region.

REFERENCES

1. Financial Action Task Force (2026). Jurisdictions under Increased Monitoring – Outcomes of the FATF Plenary, Mexico City, 13 February 2026. Paris: FATF. Available at: https://www.fatf-gafi.org.
2. Bank of Papua New Guinea (2026). FATF Places Papua New Guinea on the Grey List (Media Statement, 17 February 2026). Port Moresby: BPNG / National Coordinating Committee on AML/CTF/CPF. Available at: https://www.bankpng.gov.pg/fatf-places-papua-new-guinea-grey-list.
3. Maslen, C. (2023). The Impact of Grey Listing by the Financial Action Task Force: A Regional Focus on Sub-Saharan Africa. Bergen / Berlin: U4 Anti-Corruption Helpdesk, Transparency International.
4. de Koker, L., Howell, J., & Morris, N. (2023). Economic Consequences of Greylisting by the Financial Action Task Force. Risks, 11(5), 81. https://doi.org/10.3390/risks11050081
5. Independent Commission Against Corruption (Papua New Guinea) (2023). PNG May Be Losing Up to 4 Billion Kina in Corruption (statement by Commissioner Andrew Forbes at the DPMNEC launch of the Anti-Fraud, Anti-Corruption and Whistle-Blower Policy, Port Moresby, 17 August 2023). Available at: https://www.icac.gov.pg/news/.
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12. World Bank & United Nations Office on Drugs and Crime (2007–present). Stolen Asset Recovery (StAR) Initiative. Washington DC: World Bank / UNODC.
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