Nauru’s Blacklisted Banks: ICC Warns of Resurgence
The International Chamber of Commerce’s Financial Investigation Bureau (FIB) has raised concerns over the return of several Nauru-registered banks that were once blacklisted due to money laundering issues.
Nauru: A Money Laundering Hotspot
Back in 2002, Nauru, a South Pacific island, was designated a money laundering hotspot by the US Department of the Treasury. This designation came after the amendments made to the Bank Secrecy Act targeting offshore banks with no physical or legal presence anywhere else in the world and inadequate banking supervision in countries where money laundering was not a criminal offense.
Following the introduction of the USA Patriot Act, the US authorities prohibited any financial dealings between American financial institutions and Nauru-licensed institutions.
Re-emergence of Blacklisted Institutions
More than 17 years later, the FIB has discovered that some of these once-blacklisted Nauru financial institutions are making a comeback, trying to disguise their origins and mislead investors by adopting new names or pretending to be different entities.
FIB Assistant Director Jon Merrett warned:
“We have noticed recent instances where US banks have unknowingly engaged with Nauru banks featured on the US Treasury List. These banks’ names can be the same or very similar to reputable banks, leading to confusion and an increased risk of inadvertently contravening regulatory requirements. Given the significant penalties associated with trading with discredited financial institutions, we strongly advise financial institutions to take precautions.”
Prevention and Mitigation
The FIB encourages financial institutions to stay informed and follow due diligence procedures to prevent any confusion and minimize compliance risks. If banks find themselves involved with a blacklisted Nauru financial institution, the FIB offers measures such as:
- Tracking assets
- Guidance on terminating correspondent relationships
To contact the FIB for further information and assistance, financial institutions should email fib@icc-ccs.org.
The FIB’s Nauru Bank Registry
The FIB maintains a complete registry of all Nauru banks and financial institutions named by the US Department of the Treasury. By staying informed and following due diligence procedures, financial institutions can effectively mitigate the risks associated with inadvertently engaging with these institutions.