Tongan Anti-Money laundering (AML) reform: only a matter of time

pacificlegalnetwork
Jul 31
5 min read

Updated: Aug 5

By Tevita Aho and Damian Kelly

Update 1 August 2025 - the Tongan Government has indicated that the Bill will be read before parliament and likely passed this month.

The National Reserve Bank of Tonga together with the Attorney General’s Office has been hard at work preparing legislation that would replace the Money Laundering and Proceeds of Crime Act [Cap 4.07] (MLPC Act) and address several recommendations made under Tonga’s Mutual Evaluation Report 2021 (Report) published by the Asia Pacific Group on Money Laundering (APG). The Money Laundering and Proceeds of Crime Bill 2024 (Bill) was disseminated for comment and feedback. The Bill, as currently drafted, will have a direct impact on financial institutions and “Designated Non-Financial Businesses and Professions”, and will also impact persons seeking finance and interacting with financial institutions and “Designated Non-Financial Businesses and Professions”.

Deficiencies identified in the Mutual Evaluation Report

The Report found that although Tonga had made steps toward developing and implementing an anti-money laundering and counter terrorist financing (AML/CTF) regime, there had been limited to no enforcement of the MLPC Act. For example, of six persons investigated for AML/CTF non-compliance, only one person was convicted of an offence[1] and the MLPC Act fails to require financial institutions and “Designated Non-Financial Businesses and Professions” to conduct AML/CTF risk assessments.[2]

What will the Bill do?

The Bill attempts to address the deficiencies identified in the Report through the creation of a new supervisory authority, additional reporting requirements and civil forfeiture powers for better enforcement. The National Bank of Tonga has indicated the following major reforms are addressed by the Bill:

Establishment of the Transaction Reporting Authority (TRA) - the Bill re-establishes the TRA which will be responsible for taking suspicious reports from “accountable persons”, providing information to government and intergovernmental organisations (e.g. APG), and enforcing the Bill. Although the TRA previously existed under the MLPC Act, the reformed TRA will have a broader role including the ability to work with foreign counterparts, and better investigate and enforce the AML/CTF regime;
Supervisory arrangement - the TRA is granted powers to conduct supervision, investigate suspicious activities and issue regulations for the improvement of the AML/CTF regime;
Risked based approach and enhancement of Preventative Measures provisions - currently not addressed in the MLPC Act, the new Bill requires supervisors to adopt a risk-based approach to AML/CTF supervision;
Accountable persons - the persons required to comply with the Bill is expanded as compared with the current MLPC Act;
Reporting obligations of accountable persons - revised to include several additional obligations on accountable persons;
Prohibition of unlicensed or unregistered virtual asset service providers - this will enable the AML/CTF framework to handle emerging technologies such as cryptocurrencies, and non-fungible tokens; and
Asset Confiscation - the Bill introduces civil forfeiture powers to deal with asset confiscation, providing the regulators with an efficient pathway to enforcement.

Who must comply with reporting obligations under the Bill?

There are two primary categories of persons that will be deemed “accountable persons” under the Bill required to comply with reporting obligations, namely:

Financial institutions; and
“Designated Non-Financial Businesses and Professions” (DNPFB’s), which include:

The category of service providers that fall into the definition of “accountable person” is significantly expanded under the Bill as compared with the MLPC Act. It is integral that accountable persons become aware of their responsibilities under the Bill, which will likely include, amongst other things:

Reporting to the Transaction Reporting Authority financial transactions valued equal to or above TOP $10,000 whether conducted in a single transaction or several transactions;[3]
Identifying, assessing and monitoring their money laundering, terrorism financing and proliferation financing risks;[4]
Undertaking customer due diligence;[5]
Implementing appropriate policies and procedures to deal with politically exposed persons;[6]
Developing and implement internal programs for the prevention of money laundering, terrorism financing;[7]
Applying enhanced due diligence procedures when engaging in transactions with or on the behalf of persons from high-risk jurisdictions;[8] and
Maintaining adequate records.[9]
Additionally, accountable persons may not rely on secrecy provisions under any law, regulation, administrative rule or contract to avoid complying with the Bill.[10]

Individuals and companies not deemed “accountable persons” are also required to comply with aspects of the Bill, such as ensuring they provide information requested of them including their true name when opening an account and not obstructing investigations being conducted under the Bill.[11]

Status of the Bill

With the resignation of former Prime Minister Hu’akavameiliku in late 2024, it is unlikely that the Bill will be considered until after full elections are held on or about November 2025. The Bill will likely face some form of scrutiny before being adopted. With international pressure mounting for Tonga to address deficiencies within its AML/CTF regime, it is anticipated that reform will be a priority for any incoming Government.

With the election fast approaching, it’s a smart move for businesses to consider the ways their operations will be affected by the enactment of the Bill and prepare for additional obligations that are likely to be imposed.

Get expert help for AML/CTF compliance

The AML/CTF regime is complex and has a lot of policies, procedures and training that will need to be introduced. The time to prepare relevant documentation and the costs involved to comply with the regime means there is little time to seek advice and be ready to comply with the legislation by the date for compliance.

Our trade teams are happy to assist with all or some of the following:

Advice on whether you need to comply and the steps you can be taking now to prepare for the legislation compliance dates.
Foundational AML/CTF training seminars for your business and staff, outlining how the regime will apply to your business.
Auditing your current products, services, practice and procedures, to ascertain the scope of the Bill.
Undertaking a risk assessment of your current business and helping you assess your business’ risk appetite.
Preparing the drafts of your required AML/CTF policies and documents.
Providing updates and communications to clients/customers on the AML/CTF changes.