Financial Crime World

Tonga’s Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Framework: Areas of Concern

The Asia-Pacific Group on Money Laundering (APG) has assessed Tonga’s AML/CFT measures, highlighting several areas that require attention. This article outlines the main points of concern and suggests necessary improvements to strengthen Tonga’s AML/CFT framework.

Inadequate Regulations and Implementation

  • The current AML/CFT Act does not provide penalties or sanctions for non-compliance with its regulations.
  • The Act only applies to financial institutions, excluding other reporting entities.
  • There is a lack of training, expertise, and resources allocated to AML/CFT issues.

Risk Assessment and Understanding

  • Shortcomings in assessing risk and applying a risk-based approach have been identified.
  • Competent authorities, law enforcement agencies (LEAs), and private sector entities have a mixed understanding of money laundering (ML) risks.
  • There is a lack of understanding of terrorist financing (TF) risks within their own sectors.

National Risk Assessment

  • The National Risk Assessment (NRA) was adopted in October 2019, but much of the information collected for it was outdated by then.
  • Limited statistics were available, and consultation with the private sector was very limited.
  • Tongan authorities did not systematically consult regional stakeholders and partners in preparing the NRA.

Coordination and Improvements

  • The National AML/CFT Policy 2018-2022 is generally in line with identified ML/TF risks but lacks some priority areas, such as increasing resources for the Anti-Money Laundering and Counter-Financing of Terrorism Authority (the AML/CFT supervisor).
  • Tonga has increased efforts to improve national coordination by establishing a Cabinet Committee on Serious Financial Crimes.
  • Further work is needed to enhance understanding of risks, improve regulations, increase effectiveness, and coordinate among authorities.

Conclusion

These points highlight areas that need improvement in Tonga’s AML/CFT framework. Enhancing understanding of risks, improving regulations, increasing effectiveness, and coordinating among authorities will be crucial steps towards strengthening Tonga’s AML/CFT measures.