Actualidad Nicaragua

Money laundering and the financing of terrorism

Decree 15-2018

Decree 15-2018 was published on 3 October, with the secondary legislation for the  977 Act combatting money laundering, financing of terrorism and financing the proliferation of weapons of mass destruction (ML/FT/PF), discussed in Progreso 16.

The regulation, setting out the regulatory provisions needed to enforce Act 977 and to create the institutional procedures required for the prevention, detection and reporting of ML/FT/PF, also covers:

New Regulated Parties

According to Article 4.18 of Act 977, any natural or legal person with the responsibility for implementing requirements concerning the prevention, detection and reporting of activities that are potentially linked to money laundering and the financing of terrorism and predicate offenses linked to money laundering will become a regulated party, in accordance with a Risk Based Approach (RBA).

The Decree empowers the President of the Republic to designate new categories of regulated parties based on recommendations made by the National AML/CFT/APF Commission. Furthermore, the regulation also extends to regulated parties' branch offices, subsidiaries and owned companies, the reporting obligation applicable to clients, accounts and transactions; in the areas of anti-money laundering and financing of terrorism actions, in those cases in which it is needed to develop risk management functions, regulatory compliance, auditing and anti-money laundering and financing of terrorism at financial group level.

Duties of regulated entities

As well as complying with the requirements outlined in Act 977, regulated parties must keep digitized copies of the identification documents* in conditions that ensure they are safe, readable, cannot be tampered with and are stored in a suitable location. To this end, regulated parties who keep records in this type of support must send copies of these to the Financial Analysis Unit (FAU) if they cease trading.

Documents describing regulated parties' compliance with their internal AML/CFT administration and risk mitigation measures and procedures must be stored for 5 years.

Non-profit organizations

The regulations have a chapter on non-profit organizations (NGOs), setting out measures that regulatory bodies should put in place to promote NGO transparency and integrity, together with the obligations they must meet:

  • To submit information to the regulatory body about the identity of all their donors and the annual financial statements with detailed breakdowns of the profit & loss statement, balance sheet, trial balance, breakdown of donations, plus the source of the funds and the use to which they are put.
  • To send their financial statements for the current fiscal period to the regulator.
  • To put into practice the recommendations in the manuals and internal control measures to mitigate AML and CFT risks.
  • Foreign NGOs that are legally authorized to operate in Nicaragua must guarantee that they will submit to the competent public regulatory body such legal and financial documents as they are asked for in the prevention of money laundering and countering terrorism financing.

United Nations' Security Council Resolutions

The Decree contains a section on implementing the United Nations' Security Council Resolutions to counter the proliferation of weapons of mass destruction and their financing. The FAU will share the contents of the lists drawn up by the Council with regulated parties so that they can act in consequence, freezing the funds and assets of those appearing on these lists.

* Documents provided for in Article 25.1 of Act 977: those relating to domestic or international transactions, online transfers, those obtained through client due diligence (CDD) and such others as are specified in administrative provisions issued by supervisory bodies