NAURU REGULATORY EXPECTATIONS FOR FINANCIAL INSTITUTIONS: A LOOK AT THE COUNTRY’S COMPLIANCE WITH INTERNATIONAL STANDARDS

Strengthening Regulatory Frameworks for Financial Institutions

The Republic of Nauru, a small island nation in the Pacific Ocean, has been making strides to strengthen its regulatory framework for financial institutions. In line with international standards set by the Financial Action Task Force (FATF), Nauru has implemented various laws and regulations aimed at preventing money laundering and combating terrorism financing.

The Role of the Financial Intelligence Unit

At the heart of Nauru’s anti-money laundering efforts is the Financial Intelligence Unit (FIU), a statutory body established under the Anti-Money Laundering and Targeted Financial Sanctions Act 2023. The FIU operates within the Department of Justice and Border Control, working closely with other government agencies to ensure compliance with international standards.

Nauru’s Mutual Evaluation

In preparation for its Mutual Evaluation (ME) by the FATF, Nauru underwent a peer review process that assessed the country’s compliance and effectiveness in preventing money laundering and combating terrorism financing. The FIU collaborated with the Office of the Legislative Drafter to draft new laws and amend existing ones, with technical assistance provided by the Asia Pacific Group on Money Laundering (APGML).

Standard Operation Procedures for Financial Institutions

To ensure effective implementation of anti-money laundering regulations, Nauru has established standard operation procedures for financial institutions. Some key guidelines include:

• Anti-Money Laundering and Targeted Financial Sanctions (Parallel Financial Investigation) Regulations 2024
• Proceeds of Crime Act 2004 & Regulations
• Trusts (Trustee Duties) Regulations 2023
• Counter Terrorism and Transnational Organised Crime (Amendment of the Schedule) Regulations 2023

Best Practices for Non-Profit Organizations

Nauru has also established guidelines for non-profit organizations to ensure compliance with anti-money laundering regulations. The Circular – Non-Profit Organizations or Non-Profit Organizations Best Practice Guide provides best practices for these organizations to follow.

Strengthening Compliance

To further strengthen its regulatory framework, Nauru has implemented various measures, including:

• National Strategy for Anti-Money Laundering and Combatting the Financing of Terrorism
• Anti-Money Laundering and Targeted Financial Sanctions (Fit and Proper Person) Criteria
• Anti-Money Laundering and Targeted Financial Sanctions (Simplified Due Diligence) Guide 2023

By implementing these measures, Nauru is working to ensure that its financial institutions are compliant with international standards and that the country remains a stable and secure place for business and investment.