Tonga Struggles with Money Laundering and Terrorist Financing Risks

Assessment Reveals Lack of Understanding of ML and TF Risks

Nuku’alofa, Tonga - A recent assessment has found that Tonga’s authorities lack understanding of money laundering (ML) and terrorist financing (TF) risks. The report highlights the country’s struggles to effectively combat these threats.

Mixed Understanding of ML Risks

According to the assessment, Tonga’s competent government authorities, including law enforcement agencies, have a mixed understanding of ML risks, with a focus primarily on predicate crimes. Similarly, private sector reporting entities, excluding banks, displayed little understanding of the nature of ML within their own sectors.

Lack of Understanding and Appreciation of TF Risks

The report also notes that Tonga’s competent authorities and private sector entities displayed a lack of understanding and appreciation of TF risks, both within their own sectors and more widely.

Areas for Improvement

The report highlights several areas where improvement is needed:

• Assessing risk and applying a risk-based approach
• Improving understanding of ML/TF risks
• Increasing allocation of resources to the TRA (the AML/CFT supervisor) to enable comprehensive risk-based supervision

Failure to Consult with Regional Stakeholders

In addition, the assessment notes that Tonga’s authorities did not consult systematically and regularly with regional stakeholder and partner organizations in the preparation of its National Risk Assessment (NRA), despite the international dimension of many of the identified high-risk predicate crimes.

Recommendations

The APG (Asia-Pacific Group on Money Laundering) has called for Tonga to address these concerns and strengthen its efforts to combat ML/TF risks. The organization recommends:

• Conduct a thorough review of the National Risk Assessment (NRA) and update the information collected.
• Consult systematically and regularly with regional stakeholder and partner organizations in the preparation of the NRA.
• Increase allocation of resources to the TRA to enable comprehensive risk-based supervision.
• Improve understanding of ML/TF risks, including assessing risk and applying a risk-based approach.

Conclusion

Tonga’s authorities must take immediate action to address the concerns highlighted in this report. The country’s efforts to combat money laundering and terrorist financing risks are hampered by a lack of understanding of these threats and inadequate resources. Strengthening Tonga’s AML/CFT framework is crucial to preventing the misuse of its financial system and protecting its economy from criminal activities.