Tonga’s Money Laundering Concerns: A Call for Action
Introduction
A recent report has raised concerns about Tonga’s vulnerability to money laundering and corruption. The financial system in the country is often used to launder illicit funds through the purchase of properties, vehicles, and payment of private school fees or donations to churches.
Preventive Measures: Strengths and Weaknesses
The report emphasizes the importance of strengthening preventive measures to prevent money laundering. However, it highlights several weaknesses, including:
- Inadequate customer due diligence requirements
- Insufficient resources
- Limited capacity to trace criminal proceeds
Confiscation of Corruption Proceeds: Strengths and Weaknesses
While Tonga’s Money Laundering (Prevention and Control) Act enables conviction-based confiscation of proceeds of crime, the report notes that there has been limited use of this regime. The authorities have mainly seized cash related to drug offenses, but have not yet restrained or confiscated assets related to other predicate offenses, such as corruption.
Recommendations for Action
To address these concerns, the report recommends several key actions:
- Review customer due diligence requirements: Ensure alignment with international standards.
- Strengthen confiscation framework: Expand provisions beyond conviction-based confiscation.
- Ensure Financial Intelligence Unit (FIU) capabilities: Adequate staffing, resources, and training to analyze corruption-related financial information.
- Improve information sharing: Between the FIU and anti-corruption agencies.
- Enhance cross-border cooperation: Build capacity for anti-corruption and anti-money laundering efforts.
Conclusion
The report concludes that a collaborative effort from all stakeholders, including legislatures, supervisory bodies, law enforcement, and the private sector, is essential to address Tonga’s money laundering and corruption risks.