Nuclease required for the repair of DNA interstrand cross-links (ICL) recruited at sites of DNA damage by monoubiquitinated FANCD2. Specifically involved in repair of ICL-induced DNA breaks by being required for efficient homologous recombination, probably in the resolution of homologous recombination intermediates. Acts as a 5'-3' exonuclease that anchors at a cut end of DNA and cleaves DNA successively at every third nucleotide, allowing to excise an ICL from one strand through flanking incisions. Probably keeps excising with 3'-flap annealing until it reaches and unhooks the ICL. Acts at sites that have a 5'-terminal phosphate anchor at a nick or a 1- or 2-nucleotide flap and is augmented by a 3' flap. Also has endonuclease activity toward 5'-flaps. Hydrolytically removes 5'-nucleotides successively from the 3'-hydroxy termini of 3'-hydroxy-terminated oligonucleotides. Binds 2 magnesium or manganese ions per subunit. Interacts with fancd2 (when monoubiquitinated). Localizes at sites of DNA damage following recruitment by monoubiquitinated fancd2. The UBZ4-type zinc finger specifically binds monoubiquitinated fancd2. Increased DNA damage response, apoptosis and development of abnormalities such as kidney cysts. Belongs to the FAN1 family.