The US Treasury Department has recommended cutting Nauru from the US financial system because it has not acted to curb money laundering.
The recommendation comes despite Nauru's finance minister last week saying the US had promised to back his government in its attempts to be removed from an international money laundering blacklist.
The blacklist of nations designated as unco-operative tax havens, is maintained by the Paris-based Financial Action Task Force.
The US Treasury's proposal would bar US financial institutions from holding accounts for financial institutions in Nauru or foreign banks that provide services to those institutions.
Nauru has recently been a focus of international concern because of allegations its banking system is being used by terrorists to finance their operations.
