Financial Crime World

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Financial Crime Definition in Nicaragua Takes Shape with New Act 977

The National Assembly of Nicaragua has published a groundbreaking law aimed at preventing money laundering, combating terrorism financing, and stopping the proliferation of weapons of mass destruction.

Prevention Measures

Act 977 sets out specific measures to strengthen prevention, investigation, prosecution, and punishment of AML/CF/FP crimes. Key provisions include:

  • Setting up mechanisms to reduce the financial and operational capacity of criminal organizations
  • Implementing international financial measures adopted by organizations Nicaragua is a member of
  • Strengthening national legislation
  • Reducing the financial and operational capacity of criminal organizations

Regulated Parties

Regulated parties, including natural and legal persons conducting activities in the capacity of:

  • Financial institutions
  • Non-financial activities
  • Professions

are required to report directly to the Financial Analysis Unit (FAU) and cannot argue discretion or use diversionary tactics. Financial institutions supervised by the Banking & Other Financial Institutions Authority, institutions regulated by the National Microfinance Commission, and others must also comply with AML/CFT/FP prevention requirements.

Duties of Regulated Entities

Regulated entities have several duties, including:

  • Verifying client identities and beneficial owners within 10 days of establishing a service relationship
  • Maintaining transparency
  • Conducting individual risk assessments
  • Setting up programs to manage and mitigate risks found through national or industry risk assessments

These programs include:

  • Know Your Customer (KYC) due diligence
  • Staff selection procedures
  • Continuous training programs
  • Independent audit functions

Reporting Requirements

The law introduces physical cross-border transfer of money and other monetary instruments reporting requirements for natural and legal persons carrying more than USD 10,000.

Non-profit organizations must meet specific requirements, including:

  • Making financial transactions through regulated financial channels
  • Maintaining formal accounts for their assets

Amendments to the Penal Code

The Act introduces several amendments to the Penal Code regarding ML/FT/FP felonies and lays the groundwork for future regulation in this area.

Implementation Timeline

Regulated entities must take immediate action to comply with the new requirements and implement effective AML/CFT/FP prevention programs. The law also provides a 12-month period for private companies to convert bearer shares into nominative shares.

Conclusion

The new law aims to strengthen Nicaragua’s financial system and prevent criminal activities from affecting the country’s economy. With its publication, regulated entities must take immediate action to comply with the new requirements and implement effective AML/CFT/FP prevention programs.