The US Treasury and Financial Crimes Enforcement Network (FinCEN) on Tuesday unveiled plans to impose sanctions on the offshore jurisdiction of Nauru over fears that its finance centre is vulnerable to money laundering and terrorist activity.
According to a statement released this week, the Treasury plans to impose the fifth and most severe countermeasure available under Section 311 of the USA Patriot Act, which requires US financial institutions to terminate correspondent accounts with banks and other financial institutions in Nauru. The department revealed that:
'The proposed prohibition includes correspondent accounts maintained for other foreign banks that are used to provide banking services indirectly to Nauru financial institutions...In short, this action cuts off Nauru's financial institutions from the US financial system.'
This announcement will doubtless have disappointed the jurisdiction's government, which in March pledged not to renew offshore banking licenses or issue any new 'investor passports', following the discovery that several members of a group believed by the US authorities to be a terrorist organisation were in possession of Nauru investor passports.
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