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Nauru’s Banking Requirements and AML/CFT Obligations

The Republic of Nauru has set out strict requirements for financial institutions operating in the country, including banks, to ensure their activities are transparent and compliant with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Banking Requirements

To operate a bank in Nauru, an institution must be registered with the Registrar of Banks. The Banking Act 1975 provides for the licensing and regulation of banks operating in Nauru. The Act sets out specific requirements for banking licenses, including:

  • Minimum capital requirements
  • Solvency tests

AML/CFT Obligations

All financial institutions operating in Nauru are required to comply with AML/CFT regulations. This includes:

  • Reporting suspicious transactions
  • Maintaining records of customer identification
  • Implementing effective know-your-customer (KYC) procedures
  • Risk-based approach to customer screening

Agencies Involved

The following agencies are involved in implementing Nauru’s AML/CFT policy:

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

Status of Application of Basel Committee on Banking Supervision Principles

Nauru’s position on the application of the Basel Principles to banks operating in Nauru is set out in Section 7(1)(a)(iii) of the Banking Act 1975. The Principles have been specifically provided for in statute for the purposes of transparency and accountability.

International Association of Insurance Supervisors (IAIS)

Nauru is not a member of the IAIS, but is committed to creating an enabling environment for the future operation of insurance service providers in Nauru.

International Organisation of Securities Commission (IOSC)

Nauru is also not a member of the IOSC, but is committed to upholding the principles of the IOSC should securities companies or agents set up business in Nauru.

Conclusion

The role of financial institutions in any society is important. It contributes to the development of an economy and brings many benefits not just to individuals but a country as a whole. With a new and updated anti-money laundering legislation, it is essential that financial institutions comply with AML/CFT requirements to detect and prevent money laundering and terrorist financing activities.

Contact Details

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