Crypto ATM / kiosk operator in Tonga

Virtual Asset (VA): Defined broadly to mean a digital representation of value that can be digitally traded or transferred and used for payment or investment purposes. It does not include digital representations of fiat currencies, securities, or other financial assets that are already covered by other laws.

Exchange between virtual assets and fiat currencies.

No specific "crypto license" is issued. Instead, if your business activity falls under the definition of a VASP (which exchanges, custody providers, and payment processors dealing with virtual assets invariably do), you will be treated as a "reporting entity" under the Money Laundering and Terrorist Financing Act 2020.

What this means: While you don't apply for a specific "Tonga Crypto License," you must register your business in Tonga, notify the relevant supervisory authority (likely the NRBT or FIU, depending on the specifics and which body is designated for VASP oversight under the Act's implementation), and demonstrate full compliance with AML/CFT obligations.

Registration Regime (AML/CFT focused): For VASPs, Tonga operates more of a registration and compliance oversight regime rather than a bespoke licensing regime. VASPs are categorized as "reporting entities" under the MLTFA 2020.

Money Laundering and Terrorist Financing Act 2020:

Traditional Licensing: If your VASP business also conducts activities that fall under traditional financial services (e.g., money remittance using fiat currency), then you would also need to seek appropriate licenses from the National Reserve Bank of Tonga for those specific activities.

Money Laundering and Terrorist Financing Act 2018 (as amended): This is the foundational law establishing the AML/CFT framework, defining offenses, setting out reporting obligations, and granting powers to authorities. It likely includes definitions that capture VASPs or their activities.

Identification and Verification of Customer Identity:

Identification and Verification of Beneficial Owners (UBOs): Taking reasonable measures to identify and verify the identity of the ultimate beneficial owners of the customer, especially for legal entities and trusts.

Understanding the Purpose and Intended Nature of the Business Relationship: Gathering information about the customer's intended activities and the purpose for which the VASP's services will be used.

Ongoing Monitoring: Continuously monitoring the business relationship and transactions to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile, including, where necessary, the source of funds.

Enhanced Due Diligence (EDD): Applying enhanced measures for higher-risk situations, such as:

No Monetary Threshold: STRs must be filed regardless of the amount of the transaction.

"Tipping Off" Prohibition: VASPs and their employees are prohibited from disclosing to the customer or a third party that an STR has been or will be filed.

Duration: Records must generally be kept for a period of at least five (5) years after the business relationship has ended or after the date of an occasional transaction.

FATF Standards: Tonga, as a member of the Asia/Pacific Group on Money Laundering (APG) (a FATF-style regional body), is expected to implement FATF Recommendations, including Recommendation 15 (New Technologies) and its interpretative note, which specifically addresses VASPs and the "Travel Rule" (requiring VASPs to obtain and transmit originator and beneficiary information for virtual asset transfers above a certain threshold).

December 2023: The NRBT reiterated warnings about crypto investments, noting their unregulated nature and high risks, following a trend of public advisories. This was part of their general consumer protection mandate.

June 2022: The NRBT issued a comprehensive warning about the risks of virtual assets, emphasizing that they are not legal tender in Tonga and are unregulated.

February 2021: A warning was issued regarding crypto scams and the inherent risks of dealing with unregulated entities.

Tonga has not yet established a comprehensive regulatory framework specifically for virtual assets, which means that enforcement actions related to licensing or specific crypto laws are limited.

Tonga is a member of the Asia/Pacific Group on Money Laundering (APG), indicating its commitment to AML/CFT standards. However, the implementation of these standards for virtual assets is an ongoing challenge for many small jurisdictions.