Compliance Issues Plague Fintech Sector in Nicaragua: Experts Warn of Consequences
The Central Bank of Nicaragua’s Regulation No. CD-BCN-XXV-1-22, published on April 7, 2022, aimed to regulate financial technology companies providing payment services and virtual asset services. However, compliance experts warn that the regulation is only part of the puzzle, as fintech companies must also adhere to a wide range of corporate, commercial, tax, consumer protection, data protection, and other obligations.
Complexity of Compliance
The regulation sets out requirements for obtaining licenses, authorization, and operation, but companies must navigate these complexities while also ensuring they are in compliance with general laws. “Fintech companies operating in Nicaragua need to have a deep understanding of the regulatory framework, as well as their contractual relationships and obligations as legal entities,” said Maria Rodriguez, a compliance expert.
Creating a Compliance Matrix
To mitigate risks, experts advise creating a compliance matrix that maps out the requirements fintech companies must adhere to. This will enable them to identify potential issues before they become major problems. “It’s crucial to review and update this matrix regularly to ensure compliance with changing regulations,” added Rodriguez.
Benefits of a Compliance Matrix
- Identifies potential issues before they become major problems
- Ensures ongoing compliance with changing regulations
- Mitigates legal and reputational risks for fintech companies
Consequences of Non-Compliance
The consequences of non-compliance can be severe, including detrimental sanctions for companies. As the Nicaraguan fintech sector continues to grow, experts stress that companies must prioritize compliance to avoid legal and reputational risks.
Importance of Compliance
- Avoids legal and reputational risks
- Ensures ongoing operation in the market
- Maintains customer trust and confidence