Nauru

Sanctions

No

FATF AML Deficient List

No

Higher Risk

Compliance with FATF 40 + 9 Recommendations
Not on EU White list equivalent jurisdictions
Corruption Index (Transparency International & W.G.I.)
Offshore Finance Centre
Compliance of OECD Global Forum’s information exchange standard

Medium Risk

Weakness in Government Legislation to combat Money Laundering
World Governance Indicators (Average Score)
Failed States Index (Political Issues)(Average Score)

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ANTI-MONEY LAUNDERING

 

FATF Status

Nauru is not on the FATF List of Countries that have been identified as having strategic AML deficiencies.

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Nauru was undertaken by the Financial Action Task Force (FATF) in 2012. According to that Evaluation, Nauru was deemed Compliant for 4 and Largely Compliant for 11 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 3 of the 6 Core Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

Nauru was deemed a “Monitored” Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

 

Nauru is a small central Pacific island nation with a population of approximately 9,400. A member of the British Commonwealth, Nauru is an independent republic but uses Australian currency.  The only banking institutions operating on Nauru are the Bendigo Bank, which opened an agency in June 2015 offering traditional, internet, and telephone banking deposit and withdrawal services, and Western Union, which provides wire transfer services. The economy remains largely cash-based and reliant on formal and informal remittances. Nauru has high unemployment and is a low-crime jurisdiction. The very narrow economic base, the lack of financial institutions, and very strict land tenure and associated restrictions on foreign investment discourage the introduction of criminal proceeds into the formal Nauru economy.

 

Nauru has a relatively small offshore company registry with 59 operating corporations. In the past ten years no new trust company licenses have been issued, although 15 unit trusts have been formed under the 11 existing licenses. The offshore companies and trusts represent a concern, although the very low rate of company and trust formation in the sector may indicate the risks are relatively low.

 

SANCTIONS

There are no international sanctions currently in force against this country.

 

BRIBERY & CORRUPTION

 

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           N/A

World Governance Indicator – Control of Corruption              41

ECONOMY

Revenues of this tiny island - a coral atoll with a land area of 21 square kilometres - traditionally have come from exports of phosphates. Few other resources exist, with most necessities being imported, mainly from Australia, its former occupier and later major source of support. Primary reserves of phosphates were exhausted and mining ceased in 2006, but mining of a deeper layer of "secondary phosphate" in the interior of the island began the following year. The secondary phosphate deposits may last another 30 years. Earnings from Nauru’s export of phosphate remains an important source of income. Few comprehensive statistics on the Nauru economy exist; estimates of Nauru's GDP vary widely.

 

The rehabilitation of mined land and the replacement of income from phosphates are serious long-term problems. In anticipation of the exhaustion of Nauru's phosphate deposits, substantial amounts of phosphate income were invested in trust funds to help cushion the transition and provide for Nauru's economic future.

 

Although revenue sources for government are limited, the opening of the Australian Regional Processing Centre for asylum seekers since 2012 has sparked growth in the economy. Revenue derived from fishing licenses under the "vessel day scheme" has also boosted government income. Housing, hospitals, and other capital plant are deteriorating. The cost to Australia of keeping the government and economy afloat continues to climb.

 

Agriculture - products:

Coconuts

 

Industries:

phosphate mining, offshore banking, coconut products

 

Exports - commodities:

Phosphates

 

Imports - commodities:

food, fuel, manufactures, building materials, machinery

 

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US State Department
Transparency International
World Bank
CIA World Factbook

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