Financial Crime World

Financial Institutions Required to Obtain Business Licences in Nauru

Under the Business Licences Act 2017, financial institutions operating in Nauru are now required to obtain business licences. This development follows the passage of the Anti-Money Laundering and Terrorism Financing (AML-TFS) Act 2023, which has expanded the definition of financial institutions beyond traditional banks.

AML/CFT Obligations

Financial institutions operating in Nauru must comply with AML/CFT obligations as outlined in Part 4 of the AML-TFS Act 2023. These obligations include:

  • Ongoing compliance requirements
  • Customer due diligence requirements
  • Electronic currency transfer reporting
  • Targeted financial sanctions

Penalties for Non-Compliance

Non-compliance with these regulations can result in severe penalties, including:

  • Fines of up to $200,000 or two years’ imprisonment for individuals
  • Fines of up to $1 million for corporate entities
  • Senior management officials may also be held liable for non-compliance

Agencies Involved in Implementation

The implementation of this policy is led by the following agencies:

  • Minister for Finance
  • Registrar of Banks
  • Nauru Financial Intelligence Unit (FIU)
  • Registrars of Business Names, Corporations, Partnerships or Trusts
  • Authority established under the Beneficial Ownership Act 2017

Basel Committee on Banking Supervision Principles

Nauru has adopted the Basel Committee on Banking Supervision Principles through the Banking Act 1975. This move aims to promote transparency and accountability in the banking sector.

International Associations and Organizations

While Nauru is not a member of international associations such as the International Association of Insurance Supervisors (IAIS) or the International Organisation of Securities Commissions (IOSC), it remains committed to upholding their principles and standards. The country is also open to adopting standards and principles developed by these organizations through laws regulating insurance and securities service providers.

Conclusion

The role of financial institutions in any society is critical, contributing to economic development and bringing numerous benefits to individuals and the country as a whole. However, vulnerabilities in the financial system can be exploited by those engaged in illegal activities. The AML-TFS Act 2023 and associated policy aim to prevent money laundering and terrorist financing by requiring financial institutions to comply with strict regulations.

For further information on this policy, please contact: