Nauru’s Anti-Money Laundering (AML) and Combating Terrorist Financing (CFT) Regime: An Analysis

Overview

This report provides an analysis of Nauru’s AML/CFT regime, based on several sources including the Financial Action Task Force (FATF), the International Narcotics Control Strategy Report (INCSR), and the European Union’s White list of Equivalent Jurisdictions.

Key Findings

Nauru’s AML/CFT Regime

• Nauru’s AML/CFT regime is broadly commensurate with the risks and threats facing the country, although there is a need for additional controls in the offshore sector.
• The Government of Nauru (GON) should ensure that the Nauru Agency Corporation, a state-owned incorporation agent, and Nauru Trustee Corporation, which registers trusts, focus their AML/CFT efforts on providing controls for the offshore sector.

Offshore Sector

• Attracting a Banking Institution: Nauru should try to attract a banking institution to ensure a wider range of financial services are available to Nauruan citizens, and that entity should be subject to AML/CFT controls.
• Supervising Alternative Remittance Providers: The GON should supervise alternative remittance providers.

Legislation

• Nauru’s legislation does not conform with regard to:
  • Criminalizing beyond drugs (nondrug-related money laundering)
  • Arrangements for asset sharing
  • Cooperating with international law enforcement
  • Being a state party to the UN 1988 Convention against illicit traffic in narcotic drugs and psychotropic substances

EU White List

• Nauru is not currently on the EU White list of Equivalent Jurisdictions.

Conclusion

While Nauru has made progress in its AML/CFT efforts, there are still areas for improvement, including strengthening legislation to cover nondrug-related money laundering and ensuring that the offshore sector is adequately regulated.