Financial Crime World

Financial Institutions in Nauru Must Obtain Licenses to Operate

The Nauruan government has reaffirmed its commitment to ensuring that financial institutions operating in the country comply with anti-money laundering and combating the financing of terrorism (AML/CFT) obligations. This is outlined in the AML-TFS Act 2023, which requires financial institutions to obtain licenses under various Acts.

Licensing Requirements

Financial institutions must obtain licenses under:

  • Business Licenses Act 2017
  • Business Names Registration Act 2018
  • Corporations Act 1972 (if they are companies)
  • Register with the Nauru Financial Intelligence Unit (FIU)
  • Comply with AML/CFT obligations

Compliance Requirements

Financial institutions must also implement:

  • Customer due diligence measures
  • Ongoing monitoring of customers and transactions
  • Reporting of suspicious activity

Failure to comply with these requirements can result in penalties of up to $200,000 or 2 years imprisonment, or both, for individuals, and $1,000,000 for corporate entities.

Prohibited Activities

The government has prohibited dealings with shell banks, which are defined as banks that lack a physical presence or real business operations. Financial institutions must ensure they do not establish or maintain relationships with shell banks.

Senior Management Responsibilities

Senior management of financial institutions must be aware of their obligations under the AML-TFS Act 2023 and take responsibility for ensuring compliance with these requirements. Directors and other members of senior management may be held liable for any breaches of the law.

Implementing Agencies

The government has established several agencies to implement the AML/CFT policy, including:

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

International Standards

Nauru has committed to adopting international standards and principles, such as:

  • Basel Committee on Banking Supervision Principles (Basel Principles)
  • International Association of Insurance Supervisors (IAIS) standards
  • However, Nauru is not a member of the IAIS or International Organisation of Securities Commissions (IOSC).

Importance of Compliance

The government has emphasized the importance of financial institutions in the development of Nauru’s economy and society. It has also warned that non-compliance with AML/CFT requirements can lead to money laundering and terrorist financing activities, which can have serious consequences for the country.

Contact Information

For further information on the AML/CFT policy, please contact: