1. UNSC AND DOMESTIC DESIGNATIONS
Part III of the Sanctions Act establishes the offences for prohibitions, including (1) dealing with assets and (2) making assets and financial services available to designated persons or entities. Part III of the Sanctions Act also provides for the process to be adhered too in enabling a person to seek authorisation to act in contravention of a prohibition, namely, to deal with frozen assets or make an asset or financial service available in certain circumstances.
2. PROHIBITION AGAINST DEALING WITH ASSETS
This prohibition makes it an offence to deal with an asset. The term “deal” is defined as transferring, converting, disposing, moving and using assets that are owned by a designated person or entity.
The scope of the prohibition is applicable to assets that are also owned, controlled or held (directly or, indirectly, in whole or in part) by designated persons or entities themselves, or on their behalf.
As the definition of assets in the Sanctions Act includes “income or value accruing from, generated by or derived from such asset, ” the prohibition includes assets derived or generated from funds or other assets owned or controlled directly or indirectly by designated persons or entities.
There are two penalties for breaching the prohibition subject to that person’s mental state. The first penalty is the greater of the two penalties and is applied to persons who know that the asset in their possession is owned, controlled or held (directly or, indirectly, in whole or in part) by designated persons or entities and still contravenes the prohibition. The second penalty is lesser than the first penalty and applies to a circumstance where the person who deals with the asset may not have actual knowledge that an asset in their custody is owned, controlled or held (directly or, indirectly, in whole or in part) by designated persons or entities however, is reckless to that fact and contravenes the prohibition.
3. PROHIBITION AGAINST MAKING ASSETS AND FINANCIAL SERVICES AVAILABLE
This prohibition operates by preventing a person from making assets or financial services available to, or for the benefit of, designated persons or entities or persons or entities owned, controlled or acting on their behalf. It is immaterial whether the assets are located inside or outside of PNG. As long as the designated person or entity has some level of ownership or control over those assets, a breach of this prohibition would be an offence under the Sanctions Act.
The prohibition includes assets derived or generated from funds or other assets owned or controlled directly or indirectly by designated persons or entities.
There are two penalties for contravening the prohibition subject to the person’s mental state. The first penalty is the greater of the two penalties and is applied to persons who knowingly make an asset or financial service available to or for the benefit of, by designated persons or entities or persons or entities owned, controlled or acting on their behalf.
The second penalty is lesser than the first penalty and applies to circumstances where the person who makes an asset or financial service available may not have actual knowledge that it is made available to or for the benefit of, by designated persons or entities or persons or entities owned, controlled or acting on their behalf but, is reckless in doing so, therefore, committing an offence.
3. (A) PROHIBITION WITHOUT PRIOR NOTICE
The prohibition on dealing with or providing assets or financial services to designated persons or entities (or persons or entities controlled directly or indirectly by designated persons or entities) must be implemented without prior notice to the person or entity.
Reporting entities should not inform a customer or their beneficial owner (s) or authorised representative (s) that assets will be frozen or assets or financial services will not be provided prior to any prohibition action.
All other persons and entities in the country should also undertake the prohibition action without prior notice to their customers, suppliers or any other persons or entities with whom they transact.
3. (B) REVOCATION AND AUTHORISATION
All persons and entities in Papua New Guinea should ensure they do not apply the prohibitions to persons and entities removed from the Sanctions Lists (Consolidated List) by the UNSC or one of its Committees, or by the Prime Minister or a court in Papua New Guinea.
They should also not apply some or all the prohibitions to a person or entity that has been issued a Sanctions Permit by the Prime Minister or a court pursuant to Section 17 (5) of the Sanctions Act or by the UNSC or one of its Committees.
4. WHAT DO I DO IF THERE IS A MATCH TO THE CONSOLIDATED SANCTIONS LIST?
All persons and entities in Papua New Guinea should ensure that their customers, beneficial owners and any authorised representatives or parties to any transactions are not on any UNSC or domestic Sanctions Lists – the Consolidated List. If you hold, possess or control the asset of a designated person or entity, you must freeze the asset immediately.
5. REPORTING OBLIGATIONS
Reporting entities are reminded of their obligations under the Anti-Money Laundering and Counter-Terrorist Financing Act 2015 (AML/CFT Act) to undertake customer due diligence and submit suspicious matter reports (SMRs) to FASU.
In terms of reporting instances of matches against the Consolidated Sanctions List (or persons or entities controlled directly or indirectly by designated persons or entities), reporting entities are required to submit an SMR to FASU in accordance with Section 41 of the AML/CFT Act. In accordance with Section 41 (4) of the AML/CFT Act, the SMR must be submitted as soon as reasonably practicable and, in any event, within five working days from the date the suspicion first arose.
Failure to report may result in a fine, imprisonment or both under Section 41 (8-10) of the AML/CFT Act.
Address: P.O. Box 121 Port Moresby 121, National Capital District, Papua New Guinea
Telephone: (675) 327 7200
Fax: (675) 321 1617/321 4151
The URL to the SMR Form is as follows:
6. FALSE POSITIVE
False positives are potential matches to designated persons and entities, either due to the common nature of the name or due to ambiguous identifying data, which prove not to be matches on examination. In some cases, a false positive may result in a person or entity mistakenly having their assets frozen. Where a person or entity believes that their assets have been frozen in error, they should immediately contact the asset holder (e.g. financial institutions and designated non-financial businesses and professions (DNFBPs) ) directly.
7. POLICE ASSISTANCE
The asset holder must immediately assess the complaint by the person or entity whose assets have been frozen against the UNSC Sanctions Lists. The various UNSC Sanctions Lists (Consolidated List) should contain the names of persons and entities that the UNSC has sanctioned. If the asset holder is unable to determine whether the person or entity is an actual match, the asset holder must write immediately to the Police Commissioner requesting further assistance to verify whether it is an actual match or a false positive.
8. ASSISTANCE FROM THE SANCTIONS SECRETARIAT
The affected person or entity may also contact the Sanctions Secretariat for advice on the required information and any forms to be completed to seek “deactivation of frozen assets”.
The email contact for the Sanctions Secretariat is: email@example.com.
9. ENFORCEMENT OF PROHIBITIONS
There are penalties in sections 14 and 15 of the Sanctions Act for failure to comply, including fines, imprisonment or both.
The Sanctions Secretariat, FASU, the Police and the Office of the Public Prosecutor (OPP) collaborate closely to enforce the Sanctions Act.