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Tonga’s Struggle with Money Laundering and Terrorist Financing: Dependence on Outdated Information and Limited Understanding of Risks

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A Concern for the Kingdom and the Region

A recent assessment by a reputable international organization has revealed that the Kingdom of Tonga is struggling to combat money laundering and terrorist financing due to outdated information and limited understanding of risks.

Incomplete Risk Assessment

The report highlights that much of the information collected for Tonga’s first Money Laundering/Terrorist Financing Risk Assessment (NRA) in 2019 was out-of-date by the time it was endorsed. The environment within Tonga and the Asia-Pacific region had likely changed significantly since 2015, making the risk assessment incomplete.

Limited Understanding of Risks

Moreover, the private sector, including financial institutions and non-financial businesses, displayed a lack of understanding of money laundering risks across predicate crimes and within their own sectors. The competent government authorities, law enforcement agencies, and private sector entities also lacked an appreciation for terrorist financing risks, both within their own sectors and more widely.

National AML/CFT Policy 2018-2022

The report further notes that Tonga’s National AML/CFT Policy 2018-2022 was endorsed by Cabinet during the on-site visit, but some priority areas were not included, such as increasing the allocation of resources to the TRA (the AML/CFT supervisor) to enable comprehensive risk-based supervision.

Urgent Action Required

Tonga’s authorities have been urged to improve their understanding of money laundering and terrorist financing risks, update their risk assessment, and enhance national coordination and cooperation with regional stakeholders and partners.

Experts’ Concerns

Experts say that Tonga’s struggle to combat money laundering and terrorist financing is a concern not only for the country itself but also for the region as a whole. It is essential that Tonga takes immediate action to address these shortcomings and improve its AML/CFT regime to prevent financial crimes and protect the integrity of its financial system.

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