Nauru Strengthens Anti-Money Laundering Regulations

The Republic of Nauru has recently issued a new guideline on anti-money laundering (AML) and targeted financial sanctions, aimed at enhancing its regulatory framework to prevent financial crimes.

Simplified Due Diligence for Low-Risk Customers

Under the new guidelines, reporting entities in Nauru must apply simplified due diligence procedures for customers who pose a low risk of money laundering or terrorist financing. This includes:

• Established identities and beneficial owners
• Adequate internal controls

Simplified due diligence may include lower levels of scrutiny for customer identification, source and legitimacy of funds, legitimacy of recipients, transaction monitoring, and customer profiling.

Exclusions from Simplified Due Diligence

The guidelines exclude higher-risk scenarios, such as:

• Customers from countries with high financial crime risks
• Those involved in high-risk business activities
• Politically exposed persons
• Individuals with complex ownership structures

These entities are subject to more stringent regulations.

Supervisory Authority

The Financial Intelligence Unit (FIU) will monitor reporting entities’ compliance with the new guidelines, which aim to meet international standards set by the Financial Action Task Force.

Effective Date and Review

The guideline is effective from August 10, 2023, and will be reviewed in 2026. Reporting entities are expected to implement the simplified due diligence procedures as of September 11, 2023.

Nauru’s Efforts to Combat Financial Crime

Nauru’s move to strengthen its AML regulations is part of efforts to combat financial crime and protect its financial system. The country has taken steps to enhance transparency and accountability in its financial services sector, aligning with international best practices.

Reporting entities must adapt to the new guidelines to ensure compliance and maintain a strong reputation in the region.