Nauru Passes Anti-Money Laundering Legislation

by Mary Swire, Tax-News.com, Hong Kong

30 August 2001

Despite having called on Pacific states to oppose the demands of the OECD earlier this month, it was revealed earlier this week that the island of Nauru has passed a new law to combat money laundering in order to appease the multilateral organisation.

The Organisation for Economic Cooperation and Development had previously threatened that Nauru and other South Pacific states including the Cook Islands, the Marshall Islands, and Niue, had until November 2001 to comply with international standards, or would face unspecified sanctions.

Rene Harris, the President of Nauru announced earlier this week that the 18 member parliament had approved a law banning money laundering practices, and had set up a regulatory body to supervise the offshore banking sector. 'For too long, undesirable elements have exploited the banking system in Nauru,' he explained. 'Now those days are gone.'

However, this was a far cry from his comments at the recently held annual Pacific Island Forum, when he seemed intent on spearheading the Pacific revolution, condemning the OECD for compromising the sovereignty of island states, and urging fellow member countries to stand together to defend their rights. 'Offshore banking provides a viable, legitimate, and competitive economic opportunity, but the rich states of this world have labelled it harmful competition,' he lamented at the time.

Although Nauru is just eight miles square with a population of around 12,000, it is home to around 400 offshore banks, according to US Treasury figures.

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