Banking
Nauru Faces Global Pressure
In the Offshore Banking Industry,It is Second Only to One
What is intriguing about the Organization for Economic Cooperation and Development / Financial Action Task Force “blacklist” is that 14 of the nations are now negotiating furiously to get themselves off the list. Except one: Nauru hasn’t yet communicated with the FATF, say FATF officials.
Nauru is now the world’s second largest tax haven operator next to the Cayman Islands with 400 offshore banks registered. The U.S. International Narcotics Control Strategy Report, published by the State Department, said “Nauru’s non-resident banks appear to be particularly susceptible to money laundering operations,” adding that up to US$80 billion has gone through Nauru banks “whose clientele base was built on the desire of businesses to avoid scrutiny by Russian officials.”
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The discovery of its key role with the Russian Mafia has turned the international media focus on Nauru — and the single mailbox owned by the government’s Nauru Agency Corporation (NAC), variously described as being in a tin shanty or a grass hut. Actually it is in a concrete building.
“Over the last three years, this tiny speck of a nation has played a role in bringing down the economy of mighty, nuclear-armed Russia,” the U.S. Bulletin of the Atomic Scientists commented last year.
Nauru has steadfastly refused to discuss any of its operations although President Bernard Dowiyogo said that Nauru was “committed to participate in the international drive to combat money laundering.” The fact is, however, that he has not acted on this and in late February his government was facing a rebellion in Parliament with former minister Anthony Audoa demanding answers to the Russian Mafia connections — charges which Dowiyogo’s government denied, saying it applies “stringent” licensing regulations and thorough background checks of off-shore banking clients.
