Financial Crime World

Tokelau Takes Steps Towards Adhering to FATF Recommendations

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The Pacific nation of Tokelau has made significant strides in improving its compliance with Financial Action Task Force (FATF) recommendations aimed at preventing money laundering and terrorist financing.

Improved AML/CFT Programs for Financial Institutions

Financial institutions in Tokelau are now required to implement robust programs against money laundering and terrorist financing, including:

  • Policies and procedures for sharing information within the institution or group for anti-money laundering/counter-terrorism financing (AML/CFT) purposes
  • Group-wide AML/CFT programs that ensure foreign branches and subsidiaries apply measures consistent with home country requirements implementing FATF recommendations

Enhanced Internal Controls and Foreign Branch/Subsidiary Regulations

Tokelau has established internal controls and regulations for foreign branch/subsidiaries in line with FATF guidelines. Financial institutions must now have:

  • High Standards when Hiring Employees
    • Adequate screening procedures to mitigate risks associated with employee hiring
  • Ongoing Employee Training Program
    • Regular training sessions to educate employees on AML/CFT measures and policies
  • Independent Audit Function
    • An independent audit function to test the effectiveness of AML/CFT systems

Risk-Based Approach to Addressing Money Laundering and Terrorist Financing Risks

Financial institutions in Tokelau must assess money laundering and terrorist financing risks based on the type and extent of their business operations. They are required to implement measures commensurate with the identified risks.

Compliance with Home Country Requirements for Foreign Operations

For foreign operations, financial institutions in Tokelau must ensure that their branches and subsidiaries comply with home country requirements, even if host country laws and regulations permit less stringent measures. If additional measures are necessary to manage risks, financial groups should inform their home supervisors.

While significant progress has been made, there is ongoing work to be done by Tokelau’s financial institutions and regulatory bodies to fully adhere to FATF recommendations.