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Nicaragua: working to get off the grey list

Rodrigo Taboada
By decision of the Financial Action Task Force (FATF), an intergovernmental institution, and the Financial Action Task Force on Money Laundering in South America (GAFISUD), in June 2001 Nicaragua became part of the so-called Grey List on those institutions' prevention system for combating money laundering and terrorist financing. This was due to 'strategic deficiencies'.

One of the five reasons Nicaragua presented strategic deficiencies was the absence of a financial intelligence unit. The country has now taken steps to stay off the Grey List, through the passage of a law that creates the Financial Intelligence Unit. This was published in the Official Journal (La Gaceta) on June 22 2012 and became effective in September 2012.

The Financial Analysis Unit is an entity that receives information through suspicious activity reports (SARs) on money laundering, property and assets derived from illegal activities and terrorist financing. It is able to analyse, process and determine its content and source, and generate a final technical report. The Unit is a decentralised entity, headed by a director, chosen by the President of the Republic, to whom the director must respond.

An SAR is a report generated by the obligated parties, related to any act, operation, or isolated, repeated, simultaneous or serial transaction, regardless of the amount thereof, made by any person or entity that under existing regulations results in unusual or no apparent economic or legal justification.

According to the law, SARs must be submitted (without any argument of confidentiality) by:

  • those supervised by the Superintendence of Banks and Other Financial Institutions (Superintendencia de Bancos y Otras Instituciones Financieras).
  • financial cooperatives that manage financial resources with their partners;
  • microfinance institutions supervised by the National Microfinance Committee (Comisión Nacional de Microfinanzas);
  • foreign exchange companies;
  • pawn and loan shops;
  • companies and agencies that perform transactions of sending remittances and parcels; and
  • casinos, gambling places and similar establishments.

The new law and its further regulations have been implemented in Nicaragua since the first semester of 2013, and it is expected that the new Financial Analysis Unit will effectively monitor and sanction anti-money laundering activities and financing of terrorism in the country.

Rodrigo Taboada

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