NAURU BLACKLISTED BANKS STILL IN OPERATION, warns ICC’s Financial Investigation Bureau

The International Criminal Court’s Financial Investigation Bureau (FIB) has issued a stark warning that several blacklisted Nauru-registered banks are still operating despite being designated as money laundering concerns by the US Department of the Treasury in 2002.

Background

In October 2001, the USA Patriot Act was introduced, targeting over 400 offshore banks with no physical or legal residence elsewhere. The designation followed the introduction of this act. The FIB has catalogued a complete list of all Nauru banks and financial institutions named by the US Department of the Treasury.

Concerns

FIB Assistant Director Jon Merrett expressed concern that some blacklisted Nauru financial institutions have re-emerged and are attempting to disguise their origins, hoping people would forget about the designation or believe they can persuade them they are dealing with a different entity. The prohibition on financial dealings between US financial institutions and any Nauru-licensed institution was put in place to address concerns about:

• Effective banking supervision
• Lack of customer identification records
• No obligation to report suspicious transactions

Exemption

The only exemption is the Bank of Nauru, which also serves as the Central Bank.

Warning

Merrett warned that some banks may be unwittingly trading with or maintaining correspondent relationships with blacklisted Nauru financial institutions, citing recent instances where US banks failed to realize they were dealing with a Nauru bank on the US Treasury list. He stressed that given the penalties for trading with discredited financial institutions, it is crucial to take steps to identify exactly who you are dealing with.

Recommendations

The FIB recommends that concerned financial institutions contact them for clarification and offers protective measures including:

• Tracking assets
• Exiting correspondent relationships in instances where they find themselves dealing with a blacklisted financial institution

To take advantage of this service, financial institutions can email fib@icc-ccs.org for full details.