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Unusual Wire Transfer Activity Raises Concerns

A recent review of wire transfer and payment activity has raised concerns about unusual transactions that do not disclose any apparent purpose. The investigation found that some transfers were made to entities with corporate structures, which may be used to disguise the real actors involved.

Length of Relationship Important

The length of a customer’s relationship with a reporting entity is also being scrutinized. While a long-standing relationship does not necessarily mean it is safe, due diligence must still be conducted regularly to ensure compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Volume of Transactions Under Review

The volume of transactions is another key factor in assessing risk. Frequency and amount of transactions are being examined to identify potential suspicious activity.

Proliferation Risk Management

Nauru has implemented a risk-based approach to managing proliferation risk, which incorporates control measures to mitigate the risk within its AML/CFT framework. Key staff members and business associates have received training to identify suspicious activities, and a system for reporting such activities is in place.

Reporting Requirements

If a reporting entity or supervisory authority comes into possession of assets belonging to a listed person or entity, it must immediately report this to the Financial Intelligence Unit (FIU) and the Supervisory Authority. A routine reporting requirement will also be implemented in the future, with reports due every six months.

Designated Persons and Entities

The Anti-Money Laundering (High-Risk Countries) Guideline 2023 lists North Korea, Iran, and Myanmar as high-risk countries. The United Nations Security Council designated consolidated list contains designated persons and entities.

List Updates

There is no fixed schedule for updating the lists, but the FIU remains vigilant through its constant contact with relevant authorities and UN bodies. Any changes to the lists will be brought to attention by the FIU.

Asset Freezing

An asset freezing requirement under Nauruan law prohibits the transfer, conversion, movement, disposition, assignment, or pledging of assets owned or controlled by designated persons. This includes countries and terrorist groups listed in the High-Risk Countries Guideline and the FIU Notice United Nations Security Council Consolidated List.

Unfreezing Assets

Frozen assets can only be unfrozen when a UNSC resolution is changed. Reporting entities must freeze assets immediately upon receipt of a notice or request from the FIU or other supervisory authorities.

Conclusion

The investigation has raised concerns about unusual wire transfer activity and highlights the importance of regular due diligence, risk assessment, and reporting requirements to combat money laundering and terrorist financing.