Financial Crime World

Nicaragua’s Central Bank Issues Regulations for Financial Technology Providers of Payment Services and Virtual Assets

In a move aimed at strengthening the country’s financial landscape, Nicaragua’s Central Bank (BCN) has published new regulations governing financial technology providers of payment services and virtual assets. The regulations, officially known as Resolution CD-BCN-XXV-1-22, were published in the Official Gazette No. 76 on April 27, 2022.

Objectives of the Regulations

The objective of the regulations is to establish a framework for controlling the application, authorization, operation, and regulation of financial technology providers offering payment services and virtual assets. The BCN defines two main categories of entities under these regulations: Payment Service Providers (PSPs) and Virtual Assets Service Providers (PSAVs).

Categories of Entities

According to the regulations, PSPs refer to legal entities authorized and regulated by the BCN that provide a range of payment services, including:

  • Digital wallets
  • Mobile points of sale
  • Electronic money
  • Electronic trading and currency exchange services
  • Funds transfer services
  • Online payment gateways
  • Other innovative payment services designated by the BCN’s Board of Directors

Meanwhile, PSAVs refer to legal entities authorized and regulated by the BCN that engage in activities such as:

  • Exchanging virtual assets for fiat currencies
  • Transferring virtual assets
  • Custodying and/or administering virtual assets or instruments allowing control over virtual assets
  • Providing financial services related to the offer and sale of virtual assets

Requirements for Operation

To operate in Nicaragua, PSPs and PSAVs must:

  • Be incorporated as legal entities in the country
  • Have a physical office in the nation
  • Apply for registration and an operating license issued by the BCN
  • Provide various types of information to the BCN, including:
    • Technological data
    • Administrative data
    • Financial data
    • Statistical data
    • Legal regulatory data
    • Other required data

Failure to comply with these requirements may result in fines and other penalties.

Supervision and Monitoring

The regulations also inform supervisory entities such as:

  • Superintendence of Banks and Other Financial Institutions (SIBOIF)
  • National Microfinance Commission (CONAMI)
  • Financial Analysis Unit (UAF) of the registration and control of PSPs and PSAVs. This move aims to ensure that these entities are properly supervised and monitored to prevent money laundering, terrorist financing, and other financial crimes.

Impact on Nicaragua’s Financial Sector

The new regulations are seen as a crucial step in strengthening Nicaragua’s financial sector, promoting innovation, and protecting consumers.