Financial Crime World

Financial Action Task Force (FATF) Mutual Evaluation of Nauru’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Regime

Key Points

Automatic Sharing of Cash Export Declarations

  • There is no automatic sharing of cash export declarations with the Financial Intelligence Unit (FIU), although they can access them on request.

Financial Institutions in Nauru

  • No bank or other financial institution offers financial services in or from Nauru, except for one remitter, Western Union.

AML/CFT Obligations and Guidelines

  • The Anti-Money Laundering Act 2008 sets out AML/CFT preventive obligations.
  • Guidelines need to be updated to reflect the most current requirements.

Customer Due Diligence (CDD) Requirements

  • CDD requirements are incomplete, with weaknesses in beneficial ownership and enhanced CDD for high-risk customers.

Financial Institution Secrecy

  • Not an impediment to the effective implementation of AML/CFT regulations.

Record-Keeping

  • Generally satisfactory, allowing for the reconstruction of individual transactions.

Suspicious Transaction Reporting (STRs)

  • No STRs have been filed to date due to a narrow range of predicate offenses and restrictive conditions in relation to tax matters.

Recommendations

  1. Update guidelines to reflect current AML/CFT obligations under the Anti-Money Laundering Act 2008.
  2. Implement risk-based approaches for preventative measures, including CDD requirements.
  3. Improve STR reporting procedures, including a wider scope of predicate offenses and conditions in relation to tax matters.

Issues

Limited Resources

  • The FIU lacks staff resources and experience, limiting their ability to conduct thorough supervision.

No Prudential Regulator or Supervisor

  • Nauru does not have a prudentially regulated institution operating within its jurisdiction.

Insufficient Guidance

  • No guidance has been provided for the only financial institution (Western Union) on how to apply AML/CFT provisions.

Conclusion

The report highlights that while Nauru has made some progress in implementing AML/CFT regulations, significant weaknesses remain, particularly with regards to CDD requirements, STR reporting procedures, and supervision. Addressing these issues will be essential for Nauru to effectively combat money laundering and terrorist financing.