Financial Crime World

Due Diligence Procedures in Nauru: A Simplified Guide to Anti-Money Laundering and Targeted Financial Sanctions

The Republic of Nauru has issued a guideline for simplified due diligence procedures in accordance with the Anti-Money Laundering and Targeted Financial Sanctions Act 2023. This guide aims to provide assistance to reporting entities, financial institutions, and supervisory authorities in complying with anti-money laundering regulations.

Key Definitions

  • Customer: A natural or legal person who engages in a transaction or maintains an account with a reporting entity.
  • Supervisory Authority: An authority responsible for supervising and regulating reporting entities and other financial institutions.
  • Simplified Due Diligence: A lower level of scrutiny applied to customer identification, source and legitimacy of funds, and transaction monitoring.

Circumstances for Simplified Due Diligence

The guide outlines the following circumstances under which simplified due diligence may be applied:

  • Low risk of money laundering or financing of terrorism
  • Information on customer identity and beneficial ownership is available
  • Adequate checks and internal controls are in place

Customers Subject to Simplified Due Diligence

Reporting entities licensed or regulated by supervisory authorities State Owned Enterprises Instrumentalities of the Republic

Simplified due diligence may include a lower level of scrutiny for:

  • Customer identification
  • Source and legitimacy of funds
  • Transaction monitoring

However, simplified due diligence must not be undertaken where there is:

  • Suspicion of money laundering or terrorist financing
  • Higher-risk scenarios prevail

Examples of Simplified Due Diligence

Financial activities carried out by natural or legal persons on an occasional basis

Higher-Risk Scenarios

Customers resident in countries with high risk of financial crime Involved in business activities with high risk of financial crime With unusual or excessively complex ownership structures

Guideline Information

  • Issued: August 10, 2023
  • Amended: September 11, 2023
  • Review period: Every three years, next review date set for August 9, 2026
  • Approved by: Financial Intelligence Unit of Nauru