Financial Intelligence Quarterly Reports for September 2020

During the December 2020 quarter, the unit noted a decrease in the number of reports filed in this quarter compared to the previous quarter. Tonga received a new timeline concerning its Mutual Evaluation (ME) process and the unit coordinated the review of the draft ME report by the members of the Working Group on Serious Financial Crimes. The unit also conducted its annual spot checks to the foreign exchange dealers as well as providing training to a few reporting entities.

1. Number of Reports Received

Type of Reports Filed Oct 20 Nov 20 Dec 20 Total
Dec 20
QTR
Sep 20
QTR
Dec 19
QTR

Suspicious Transaction Reports (STRs) 3 2 2 7 7 8
 
Currency Transaction Reports (CTRs)1 1,516 1,638 1,823 4,977 3,640 3,742
 
Border Currency Reports (BCRs)2 - - - - 1 18

1 - CTRs reporting is for transaction equal to and above T$10,000. Transactions include deposits and withdrawals in all types i.e. deposit, withdrawal, exchange of currency or other payment or transfer with the exemptions of government agencies and financial institutions transactions. Customers with established relationship with the reporting entity conducting transactions of that amount are also exempted if their background or business activities support the amount of the transaction.
2 - BCR reporting requires declaration at the border by any person entering or leaving the Kingdom with cash amounting to more than T$10,000 or its equivalent in foreign currencies.

The number of STRs remained the same compared to the last quarter. CTRs increased over the quarter as well as from the previous quarter. The FIU continues to receive information in these reports to assist in its data analysis function.

2. Types of STRs

STR by type Oct 20 Nov 20 Dec 20 Total
Dec 20
QTR
Sep 20
QTR
Dec 19
QTR

Unusual significant transactions 1 - 2 3 1 -
 
Large and rapid movement of funds - 2 - 2 5 5
 
Using personal accounts for business purpose 1 - - 1 1 -
 
Possible avoidance of Exchange Control requirements 1 - - 1 - -
 
Scam - - - - - -
 
Others - - - - - 3
 
TOTAL 3 2 2 7 7 8

Of the 7 reports received, 3 reports were related to unusual signification transaction, 2 reports related to large & rapid movements of funds and the remaining report was for using of personal account for business transactions and possible avoidance of regulatory reporting requirements. This indicates that majority of the reports were related to unusual significant transactions of customers.

3. Number of STRs disseminated

Following the analysis of the 7 STRs, only 2 reports were passed to law enforcement agencies for further tax and criminal investigations. The remaining reports were retained for future references due to suspicious indicators not confirmed.

Law Enforcement Agencies
Oct 20 Nov 20 Dec 20 Total
Dec 20
QTR
Sep 20
QRT
Dec 19
QTR

Ministry of Police 1 - - 1 - 3
 
Ministry of Revenue & Customs
1 - - 1 5 2
 
Foreign Affairs (Immigration)
- - - - - -
 
Other (reporting entity & other NRBT departments 1 2 2 5 2 3
 
TOTAL 3 2 2 7 7 8

4. CTR Data Analysis

  Oct 20
(TOP$M)
Nov 20
(TOP$M)
Dec 20
(TOP$M)
Totals
Dec 20
QTR
(TOP$M)
Sep 20
QTR
(TOP$M)
Dec 19
QTR
(TOP$M)

Inwards 27.80 31.39 33.98 93.17 60.30 62.76
Outwards
14.81 15.25 14.47 44.53 34.21 33.66
Transaction Purpose
Business
30.86 35.22 37.47 103.55 66.83 61.24
Personal 11.75 11.42 10.98 34.15 27.68 35.18
Transaction Type
TT
2.89 3.81 2.37 9.07 5.78 8.0
Cash 17.31 18.08 19.88 55.27 38.73 50.25
Cheque 15.08 17.52 17.24 49.84 31.45 25.96
Cash/Cheque 4.23 4.09 5.28 13.6 7.91 6.98
Other 3.10 3.15 3.67 9.92 10.64 5.26

The FIU received 4,977 reports in this quarter increasing from the previous quarter of 3,640 reports. 70% of total transactions were inward transactions in to the banking system and the remaining 30% were outward transactions. The 45% increase in volume of transactions from the previous quarter were seen mostly in the increase of business related transactions which were noted in the use of cash deposits followed by the use of cheques.

5. BCR Data

  Oct 20
(TOP$M)
Nov 20
(TOP$M)
Dec 20
(TOP$M)
Totals
Dec 20
QTR
(TOP$M)
Sep 20
QTR
(TOP$M)
Dec 19
QTR
(TOP$M)

Inbound - - - - - 0.04
Outbound
- - - - 0.78 16.19
Purpose of funds
Business
- - - - 0.78 16.22
Personal - - - - - 0.01

The FIU received no BCR this quarter from the Ministry of Revenue & Customs, in comparing to only 1 report from the previous quarter. This is due to the COVID-19 restricted flight diversions.

6. Meeting of the Working Group on Serious Financial Crime

In October 2020, Cabinet endorsed the request from the Working Group to return the Attorney General’s Office to its Co-chair position it was previously at in 2018. Pursuant to that Cabinet decision, the Working Group held its first meeting on 16th November 2020 at the Attorney General’s Office, to progress with matters relating to Tonga’s Mutual Evaluation process. The Working Group will meet again in early 2021 to provide a presentation to the members of the Working Group on their responsibilities in relation to fighting financial crimes in Tonga.

7. Tonga’s Mutual Evaluation (ME) update

Asia Pacific Group (APG) has provided new time frames for Tonga’s Mutual Evaluation process. Tonga’s response to outstanding questions from the onsite in 2019 and feedback on 2nd draft Mutual Evaluation report has been submitted. The Working Group expects to receive a 3rd draft report from the assessors in January 2021. Tonga requested for its face-to-face meeting to be moved to early 2021 and the APG and assessors agreed for the meeting to be held in February 2021. The Working Group and the assessors will continue to review and provide feedback on Tonga’s draft report until it is discussed at the next Mutual Evaluation Committee Meeting and the APG Plenary in mid-2021.

8. Annual Compliance Checks & AML Training for Foreign Exchange dealers

The FIU completed the FX dealers’ annual compliance review of their licensing condition relating to AML/CFT obligations in December 2020. The visit is part of the review process for the entities license renewal. The results were generally compliant other than a few FX dealers with instances on non-compliance in their record keeping as well as reporting obligations. The FIU continues to work together with the Non-Banks Division to ensure all entities are fully compliant with their licensing conditions before renewal of their license. The FIU also conducted a training upon request from one of the FEDs, to assist them with awareness and understanding of their AML related obligations.

9. Events

16 - 21 October 2020 Quarterly compliance checks with Foreign Exchange Dealers for the third quarter and also the Annual compliance checks on 30th November – 8th December 2020.
9 November 2020 Meeting with Pacific Forum on AML/CFT related issues
10 - 18 November 2020 Pacific Intelligence Fundamental Course/ Webinar
16 November 2020 Meeting with Pacific Forum on AML/CFT related issues
22 September 2020 Working Group on Serious Financial Crime & Law Enforcement Taskforce Meeting
30 November - 8 December 2020 Annual compliance Checks with Foreign Exchange dealers
8 December 2020 AML Training with Toumu’a Money Transfer
8 - 11 December 2020 Pacific AML/CFT Webinar
21 January 2021 Meeting of the Working Group on Serious Financial Crimes
29 January 2020 3rd draft Mutual Evaluation Report (MER) due from APG
15 February 2021 4th draft and Face-to-face (virtual) Meeting with Mutual Evaluation assessors
29 March 2021 Tonga comments on 4th draft MER due
16 April 2021 Prioritized comments on final draft MER and comments on Key Issues Document due
17 May 2021 Virtual Mutual Evaluation Committee and APG Plenary meeting

Financial Intelligence Unit Quarterly Reports Releases

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