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Nauru Takes Measures to Combat Proliferation Financing and Terrorist Activities

The government of Nauru has introduced new measures to strengthen its financial systems, aimed at combating proliferation financing and terrorist activities.

Strengthening Financial Systems

Under the new regulations, reporting entities are required to identify suspicious activities and report them to the Financial Intelligence Unit (FIU) immediately. A system for reporting suspicious activities must be prescribed by the reporting entities. Nauru is considered a low-risk jurisdiction for proliferation financing or activity, but it is still important for reporting entities to incorporate proliferation financing risks into their business plans.

Reporting Requirements

As a reporting entity or supervisory authority, if you come into possession or control of any assets belonging to a listed person or entity, you must report this immediately to the FIU and the Supervisory Authority.

  • The list of designated persons or entities should be easily accessible to staff on a daily basis.
  • Routine reporting requirements for terrorist activities are also expected to be implemented in the future, with reports due every six months.

Designated Persons or Entities

The High-Risk Countries Guideline outlines the countries considered high-risk, including North Korea, Iran, and Myanmar. The United Nations Security Council (UNSCR) consolidated list contains designated persons, which can be accessed through the FIU Notice.

List Updates

There is no fixed schedule for updating the lists, but the FIU will be aware of any changes due to its constant contact with relevant authorities and UN bodies.

Delisting

The process for delisting is outlined in the Regulations. The UNSCR can delist entities or persons, while individuals or groups meeting the requirements for delisting in Nauru may apply to the Minister using Form 4 of Schedule 8 of the AML-TFS PF Regulations.

Asset Freezing

Under Nauruan law and FATF Recommendations 6 and 7, assets owned or controlled by designated persons must be frozen. This means prohibiting the transfer, conversion, movement, disposition, assignment, or pledging of such assets.

  • When freezing an asset, reporting entities must ensure that all avenues of access are blocked if it is within their control.
  • The FIU will typically notify reporting entities of any freezing orders, and they may also receive requests from other supervisory authorities.

Unfreezing Assets

Assets frozen by UNSC Resolutions can only be unfrozen when the UNSC changes its resolution. Assets frozen by court order cannot be released unless there is a subsequent court order, while assets frozen by administrative act of the Minister remain frozen until the Minister decides to unfreeze them.

Authorizing Access to Funds

As a general rule, reporting entities are prohibited from releasing funds belonging to listed persons or entities. Any requests to release funds should be referred to the FIU for consideration by the Minister. Alternatively, applicants can apply to the court or Minister for authorization to access frozen funds.

Legitimate Circumstances for Releasing Funds

There are recognized circumstances in which frozen funds can be released, such as when a listed person or entity is no longer considered a threat. However, these releases must be authorized by the FIU and/or the Minister.