This post has been previously published by The Australian Financial Review

The largest lender in the Pacific, BSP Financial Group, has been ordered to remove senior managers following breaches of anti-money laundering laws in Papua New Guinea, putting further pressure on Commonwealth Bank of Australia and National Australia Bank to cut ties with the troubled institution.

BSP, which listed on the ASX in May and trades as the Bank of South Pacific, was found by the PNG regulator to have committed dozens of violations of anti-money laundering laws, running to thousands of individual breaches.

An enforceable undertaking is being sought with the bank to “remove and replace certain executive management staff”. This is understood to include chief executive Robin Fleming.

BSP will also be required to hire an external auditor to ensure it complies with anti-money laundering laws in the future.

The Financial Analysis and Supervision Unit (FASU), which sits within the PNG central bank, said it could have brought criminal and civil charges against BSP given the seriousness of its non-compliance. Instead, it issued the bank with a “formal warning”, saying this was the “least punitive” response.