Financial Crime World

Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Policy for Financial Institutions in Nauru

=====================================

Definition and Scope

Financial institutions operating in Nauru must be licensed under the following Acts:

  • Business Licenses Act 2017: Regulates the licensing of businesses in Nauru.
  • Business Names Registration Act 2018: Requires registration of business names in Nauru.
  • Corporations Act 1972: Governs the incorporation and operation of companies in Nauru.

AML/CFT Obligations

Financial institutions must comply with ongoing compliance obligations, including:

Customer Due Diligence

  • Identify and verify customers
  • Obtain customer information
  • Conduct risk assessments

Electronic Currency Transfer Regulations

  • Monitor electronic currency transfers
  • Report suspicious transactions

Reporting Obligations for Suspicious Activities

  • Report suspected money laundering or terrorist financing activities to the Nauru Financial Intelligence Unit (FIU)

Targeted Financial Sanctions

  • Comply with international sanctions and restrictions

Shell Banks

Nauru has prohibited dealings with shell banks. Financial institutions must ensure that their respondent entities do not permit accounts to be used by shell banks.

Sanctions

Financial institutions must be aware of AML/CFT obligations and corresponding penalties, including:

  • Up to $200,000 or 2 years imprisonment, or both, for individuals
  • Up to $1,000,000 for body corporates

Senior Management Liability

Members of senior management may be held liable for offenses where they have actual knowledge or reckless disregard of the offense or gave their authority, permission, or consent to the act or omission constituting the offense.

Agencies Involved in Implementing the Policy

The agencies responsible for implementing this policy include:

  • Minister for Finance: Oversees the implementation of AML/CFT policies.
  • Registrar of Banks: Regulates banks operating in Nauru.
  • Nauru Financial Intelligence Unit (FIU): Receives and analyzes reports of suspicious transactions.
  • Registrars of Business Names, Corporations, Partnerships, or Trusts: Ensure compliance with registration requirements.
  • Authority established under Beneficial Ownership Act 2017: Regulates the disclosure of beneficial ownership information.

Status of Application of Basel Committee on Banking Supervision Principles

Nauru’s position on the application of Basel Principles to banks operating in Nauru is provided for under Section 7(1)(a)(iii) of the Banking Act 1975.

International Association of Insurance Supervisors (IAIS)

Nauru is not a member of the IAIS, but it remains committed to creating an enabling environment for insurance service providers in Nauru and will adopt IAIS standards or principles through laws developed to regulate insurance service providers in Nauru.

International Organisation of Securities Commission (IOSC)

Nauru is also not a member of the IOSC, but it remains committed to upholding the principles of the IOSC should securities service providers set up business in Nauru.

The policy concludes by emphasizing the importance of financial institutions following the requirements of the law to prevent and detect money laundering and terrorist financing activities that can harm Nauru and its citizens.