Nauru Country Summary

FATF Status

Nauru is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Nauru was undertaken in 2024. According to that Evaluation, Nauru was deemed Compliant for 19 and Largely Compliant for 18 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness ratings.

Nauru exhibits minimal involvement in various criminal activities, with no significant issues related to human trafficking, arms trafficking, or drug trafficking, largely due to its isolation and ecological conditions. However, there is a rise in counterfeit goods and illicit trade, particularly in tobacco, alongside concerns about illegal fishing and corruption in the phosphate mining sector. The government faces challenges related to corruption and transparency, and while the judicial system functions with international support, the economy remains vulnerable to criminality due to weak institutions and reliance on external factors.

Nauru's economy has historically been centered around phosphate mining, which peaked in the 1970s but has since declined due to resource exhaustion, leading to a heavy reliance on foreign aid. The country faces significant economic challenges, including high unemployment and a lack of diverse economic opportunities, as it struggles to maintain basic government functions and stability.

Nauru's investment climate is heavily influenced by its historical reliance on phosphate mining and foreign aid, resulting in limited economic diversification. Recent initiatives, such as partnerships in deep-sea mining and the 'golden passport' program, aim to attract investment and generate revenue, but the legacy of its past as a tax haven complicates efforts to create a stable investment environment. Despite improvements in tax transparency, significant challenges remain in diversifying the economy and fostering a more appealing investment landscape.