Financial Crime World

Tonga Fights Money Laundering and Corruption: A Comprehensive Review

Introduction

In a bid to combat the interlinked threats of corruption and money laundering, Tonga has reaffirmed its commitment to the region’s anti-corruption vision, Teieniwa. This follows from the research report, “Corruption and Money laundering in the Pacific: Intertwined Challenges and Interlinked Responses.”

Tonga’s AML Framework: Strengths and Weaknesses

Tonga’s Anti-Money Laundering (AML) legal framework is primarily composed of:

  • The Money Laundering and Proceeds of Crime Act 2000: This act provides the foundation for Tonga’s AML regime.
  • The 2010 MLPCA Amendment Act: This amendment aimed to strengthen the country’s AML framework by introducing new measures to prevent money laundering.
  • The Money Laundering and Proceeds of Crime Regulations 2010 (as amended): These regulations provide specific guidelines for implementing the AML act.
  • The Counter Terrorism and Transnational Organised Crime Act 2013: This act aims to combat terrorism and transnational organized crime, which often involve money laundering activities.
  • The Mutual Assistance in Criminal Matters Act 2000 (as amended): This act facilitates international cooperation in criminal matters, including anti-money laundering efforts.

However, despite the existence of these regulations, Tonga lacks resources and capacity to effectively address money laundering. Designated Non-Financial Businesses and Professions (DNFBPs) have limited understanding of their AML obligations.

Strengthening the Fight Against Corruption

To improve the effectiveness of the country’s anti-corruption efforts, several key recommendations are proposed:

Enhance Customer Due Diligence Requirements

  • Review customer due diligence requirements to ensure alignment with FATF
  • Enhance due diligence requirements to make them clearer

Strengthen Confiscation Framework

  • Review and enhance the framework around the confiscation of criminal proceeds
  • Ensure the use of this framework is effective in combating money laundering

Improve FIU Capacity

  • Ensure the Financial Intelligence Unit (FIU) is adequately staffed, resourced, and trained to enable them to analyze corruption-related financial information
  • Build improved capacity for cross-border cooperation in anti-corruption and AML

A New Era of Cooperation

Tonga’s commitment to combating money laundering and corruption marks a significant step towards enhancing the country’s reputation as a stable and secure jurisdiction. The proposed recommendations demonstrate a willingness to address existing weaknesses and improve collaboration between stakeholders, including legislatures, supervisory bodies, law enforcement, and the private sector.

By working together, Tonga can build a stronger, more resilient economy that is better equipped to withstand the challenges of financial crime.