Financial Crime World

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Offshore Company Registry Under Scrutiny

The Nauru offshore company registry, which oversees 59 operating corporations, including several pending removals, has raised concerns about residual risks in the sector. Although no new trust company licenses have been issued in the past decade, 15 unit trusts were formed under existing licenses.

Financial Institutions Deny Involvement

Financial institutions operating in the country have denied engaging in currency transactions linked to international narcotics trafficking that involve significant amounts of US currency or affect the US economy.

AML/CT Regime

Nauru’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regime is largely commensurate with the risks facing the country. However, there are concerns about the need for additional controls in the offshore sector, particularly with regards to the Nauru Agency Corporation and Nauru Trustee Corporation.

Financial Institutions

The government has been urged to attract a banking institution to provide a wider range of financial services to locals and subject it to AML/CFT controls. Alternative remittance providers should also be supervised by the government.

Legislative Amendments

Nauru’s AML legislation is set to be amended to include more predicate offenses and reduce restrictive conditions related to tax matters. The country has also begun work on a new Crimes Act, expected to be completed in 2013, which will cover money laundering and corruption offenses.

International Agreements

Nauru has prioritized the ratification of UN Conventions, including the Convention against Corruption and the 1988 UN Drug Convention. The country is also urged to become a party to the UN Convention against Transnational Organized Crime.

EU White List

Nauru is not currently on the EU’s White list of Equivalent Jurisdictions, which raises concerns about its compliance with international AML/CFT standards.

Weaknesses in Government Legislation

According to the US State Department, Nauru does not conform with regards to several government legislation areas, including:

  • Criminalizing beyond drugs
  • Arrangements for asset sharing
  • Cooperating with international law enforcement
  • Being a state party to the UN 1988 Convention

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