A senior law enforcement official from Papua New Guinea has criticised Australian financial institutions for turning a blind eye to money laundering involving at least six "politically exposed persons" — or PEPS — from the jurisdiction. Sam Koim, chair of the PNG Anti-Corruption Task Force Sweep, said during a meeting organised by the Australian anti-money laundering regulator that more than half of the country's A$3.6 billion development budget was being looted by corrupt officials. Koim told the Austrac meeting that Australia was the laundering destination of choice for PNG PEPs and banks were failing to conduct appropriate levels of due diligence to determine the source of these funds.He described Australia as the "Cayman Islands" of the region, in reference to the ease with which PNG officials can launder and invest the proceeds of corruption. According to Aaron Batten, the Asian Development Bank's country economist, investment in Australia from Papua New Guinea peaked at A$1.2 billion in 2010 — equal to 13 per cent of gross domestic product.Koim said that not all these investments could possibly be derived from legitimate funds and that it is self-evident that the banking industry in Australia is facilitating the laundering of illicit funds."Your closest neighbour [PNG] has so many leakages that they've created a pool of illicit money floating around its territorial banks in search of an opening offshore. We believe that Australia has passively allowed those illicit funds to be channelled into this country," Koim told a closed-door meeting of Austrac's largest regulated entities in Sydney.Earlier this year, for example, a Cairns newspaper reported that PNG residents are the largest investors in the far north of Queensland, based on figures from the Registrar of Titles. Koim said that six known politicians have invested in million-dollar properties in the region worth a total of $A11.5 million — $A3.8 million, $A1.9 million, $A2.3 million, $A2 million and $A1.45 million, respectively.He said that while this was the tip of the iceberg in terms of tracking the embezzled funds, it did demonstrate that PEPs were investing figures way out of kilter with their demonstrable sources of wealth. He said that enhanced due diligence by Australian banks should pick up the discrepancies between the PEPs' reported incomes and the amounts being invested in Australian financial institutions.Koim said that the PNG government's attitude to corruption had changed in recent years and it would be lobbying Australian authorities to ensure they are enforcing the country's money laundering laws. He said his taskforce had been instructed to "lean on your country's authorities" to ensure that the laundering of PNG funds is not taking place under the radar."Until we see our offenders cease using Australia as a 'Cayman Islands' we will continue to increase the pressure," he said. Koim said that reporting entities should also go beyond their basic due diligence obligations and conduct a "means test" on transfers involving PEPs."We believe that you won't go wrong if you do one on every Papua New Guinea derived transaction. Western Union Money transfers, chartered