Countries/Jurisdictions of Primary Concern - Tonga
Tonga is an archipelago located in the South Pacific. With only three commercial banks, Tonga is neither a financial center nor an offshore jurisdiction. Although remittances from Tongans living and working abroad have declined in recent years, they remain the largest source of hard currency earnings, followed by tourism.
Historically, Tonga has not been a major narcotics transit point, but during 2012, a substantial amount of cocaine was recovered, apparently en route to Australia. There were allegations that Tongan citizens may have links to transnational drug cartels, but the scale of this is unknown. Local police authorities deem Tonga to be vulnerable to smuggling and money laundering due to inadequate border controls.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR ILLEGAL DRUG SALES THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
KNOW-YOUR-CUSTOMER (KYC) RULES:
Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO
KYC covered entities: Banks, foreign exchange dealers, money lenders, Tonga Development Bank, credit unions, insurance companies and intermediaries, Retirement Fund Board, accountants, lawyers, real estate agents, securities dealers, casinos, sellers of payment instruments, and trustees
Number of STRs received and time frame: 14: January - November 2013
Number of CTRs received and time frame: Not available
STR covered entities: Banks, foreign exchange dealers, money lenders, Tonga Development Bank, credit unions, insurance companies and intermediaries, Retirement Fund Board, accountants, lawyers, real estate agents, securities dealers, casinos, sellers of payment instruments, and trustees
MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:
Prosecutions: Not available
Convictions: Not available
RECORDS EXCHANGE MECHANISM:
With U.S.: MLAT: NO Other mechanism: NO
With other governments/jurisdictions: NO
Tonga is a member of the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.apgml.org/members-and-observers/members/details.aspx?m=ca53cb77-4860-4c42-8fe1-2e059b71d54b
ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:
The Tongan Transaction Reporting Authority (TRA) is generally vested with the authorities of a financial intelligence unit, although there are some serious limitations in its powers. The TRA functions under the Money Laundering and Proceeds of Crime Act (MLPCA). TRA has received assistance in its analysis and intelligence management skills from various international experts. TRA has provided awareness training to banks and foreign exchange dealers, as required by the MLPCA.
Of the 14 suspicious transaction reports (STRs) filed in the current calendar year, seven were forwarded to the police for further investigation. Other STRs were forwarded to other law enforcement authorities, such as the Minister of Revenue for possible tax evasion, and Immigration for possible breach of immigration laws. The signing of a memorandum of understanding among the members of the Cabinet Committee on AML/CFT could result in the dissemination of STR information to other law enforcement agencies, which should help to improve the sharing of information and assist with the enforcement of AML/CFT-related laws and regulations. Tongan authorities expect this MOU may be signed by January 2014.
Relevant Tongan legislation regarding money laundering and terrorism financing does not expressly provide for international cooperation and coordination, which is therefore based on policy and practice. In practice, information sharing with some parts of the international community has been good.
The primary limitation to detecting money laundering in Tonga is the lack of technical and experienced staff and staffing restraints at key AML/CFT agencies, including the TRA and the Tonga Police Transnational Crimes Unit. The lack of resources results in a lack of monitoring and in-depth investigation of suspicious transactions, and an absence of prosecutions. A related issue is that the investigators may not be aware of new money laundering methodologies.
The Government of Tonga should become a party to the United Nations Convention against Corruption and the United Nations Convention against Transnational Organized Crime.