The Bank of PNG has noted a reduction in the opening of new accounts with commercial banks. Governor Loi Bakani has linked that to the stringent banking processes.
East Sepik Governor, Allan Bird, recently outlined in a Parliament sitting that ordinary citizens are “harshly dealt with by the banking system” when it comes to depositing large sums of money. He drew attention to the cash-based informal sector, where 80 percent of Papua New Guineans operate in.
Bakani agreed with Bird’s sentiments, saying: “If the commercial banks know the profile of the company, and if they’re producing documents to justify the deposits they’re making, they shouldn’t be asking more questions.”
Bakani further noted that the banks are complying with the Anti-Money Laundering and Counter Terrorist Financing Act 2015, which comes under the BPNG’s Financial Analysis and Supervision Unit (FASU). However, its negative effects can be seen on ground.
“Commercial banks are required to make sure that, for any client that comes in to deposit or withdraw, they have to do due diligence on the client – knowing the source of funds, knowing who they’re making the payments to, why they’re making the deposit – all those questions were never there before.
“The impact I’m seeing at the moment is, when you question a small person coming to place a deposit, when they encounter a lot of questions, they say ‘I might as well keep my cash. Forget the bank account, I’ll hold my cash.’
“This is the rippling effect that we see on a lot of people.”