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 Treasury Department Announces Proposed Anti-Money Laundering Countermeasure Against Nauru


4/15/2003

FROM THE OFFICE OF PUBLIC AFFAIRS

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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 and 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 institutions, securities broker-dealers, mutual funds, and futures 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.  

 

 

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