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Homeland Security

Washington File

17 April 2003

Treasury Recommends Anti-Money Laundering Action Against Nauru

(Measure would require banks end Nauru correspondent accounts) (460)
The Department of the Treasury and the Financial Crimes Enforcement
Network have proposed an anti-money laundering countermeasure against
the Pacific island nation of Nauru.
The measure would require U.S. financial institutions to terminate
correspondent accounts involving Nauru financial institutions.
"This action cuts off Nauru's financial institutions from the U.S.
financial system," an April 15 news release from the Treasury
Department says.
Nauru was first listed as a "primary money laundering concern" in
December of 2002, along with the Ukraine.
Following is the text of the news release:
(begin text)
From the Office of Public Affairs
April 15, 2003
Treasury Department Announces Proposed Anti-Money Laundering
Countermeasure Against Nauru
The Department of the Treasury and the Financial Crimes Enforcement
Network (FinCEN) today announced a notice of proposed rulemaking that
would require U.S. financial institutions to terminate correspondent
accounts involving Nauru financial institutions. Today's action is
part of the Treasury Department's ongoing efforts to attack money
laundering and to diminish the risks of terrorist financing worldwide.
Section 311 of the USA PATRIOT Act gives the Secretary of the Treasury
the authority to designate a foreign jurisdiction, a foreign financial
institution, a type of account or a type of transaction to be a
primary money laundering concern. Once designated, the Secretary can
require U.S. financial institutions to take appropriate
countermeasures against the concern. In December of 2002, Treasury
made the first designations under Section 311, designating both Nauru
and Ukraine as primary money laundering concerns.
The proposed rule would impose the fifth and most severe
countermeasure available to the Secretary under section 311 against
Nauru, requiring U.S. financial institutions to terminate
correspondent accounts with Nauru financial institutions. The proposed
prohibition includes correspondent accounts maintained for Nauru
financial institutions, as well as correspondent accounts maintained
for other foreign banks that are used to provide banking services
indirectly to Nauru financial institutions. With respect to services
provided to Nauru financial institutions indirectly, the proposed rule
does not impose additional due diligence requirements on U.S.
financial institutions. Instead, the proposed rule relies on existing
due diligence obligations that requires termination of such
correspondent accounts only if the U.S. institution has actual
knowledge that the accounts are being used to provide services to
Nauru financial institutions indirectly. U.S. financial institutions
affected by this proposed rule include depository commission
merchants.
In short, this action cuts off Nauru's financial institutions from the
U.S. financial system. This notice of proposed rulemaking is scheduled
to be published in the Federal Register later this week. Written
comments on the notice of proposed rulemaking may be submitted within
30 days of its publication.
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)



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