Financial Crime World

Tonga Struggles with Money Laundering and Terrorist Financing Risks Amidst Limited Understanding of Threats

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Tonga, a Pacific island nation, is facing significant money laundering (ML) and terrorist financing (TF) risks due to the limited understanding of these threats among government authorities, law enforcement agencies, and private sector entities.

Limited Understanding of Money Laundering Risks

A recent assessment by an international organization revealed that Tonga’s competent government authorities, including law enforcement agencies, have a mixed understanding of ML risks. They primarily focus on predicate crimes rather than understanding the nature of ML within their own sectors.

Private Sector Entities’ Understanding of Money Laundering

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Private sector reporting entities, with the exception of banks, displayed little understanding of ML within their own sectors. This lack of understanding makes it challenging for them to identify and report suspicious transactions effectively.

Limited Understanding of Terrorist Financing Risks

The assessment also highlighted a lack of understanding and appreciation of TF risks among competent authorities, law enforcement agencies, and private sector entities, including banks and designated non-financial businesses and professions (DNFBPs).

National AML/CTF Policy 2018-2022

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Tonga’s National AML/CTF Policy 2018-2022 acknowledged the importance of improving national coordination to combat ML/TF risks. However, some priority areas were not included in the policy, such as increasing the allocation of resources to the Tonga Revenue and Customs Authority (TRA) to enable comprehensive risk-based supervision.

Recommendations for Improvement

The assessment recommended that Tonga:

  • Improve its understanding of ML/TF risks by conducting a more comprehensive national risk assessment.
  • Strengthen national coordination and supervision to combat these threats effectively.
  • Prioritize resource allocation to ensure that the necessary expertise and training are available to tackle money laundering and terrorist financing.

Resources

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  • International organization assessing Tonga’s anti-money laundering and counter-terrorist financing measures.
  • Tonga Revenue and Customs Authority (TRA).
  • National AML/CTF Policy 2018-2022.