Compliance Issues Emerge in Nicaragua’s Fintech Sector Following New Regulation
======================================================
Managua, Nicaragua - A New Era of Regulation
A recent regulation aimed at governing financial technology providers in Nicaragua has sparked concerns about compliance issues in the sector. The “Regulation for Financial Technology Providers of Payment Services and Virtual Asset Services Providers” came into effect on April 27, replacing a previous regulation published in September 2020.
Background
The Central Bank of Nicaragua (BCN) introduced the new regulation to provide a more comprehensive framework for financial technology providers offering payment services and virtual assets. This move has already led to approximately 12 institutions registering with the BCN as Financial Technology Providers of Payment Services, including major banks and fintech companies.
Key Requirements
- Virtual Asset Services Providers (PSAVs) must register and apply for a license before offering services such as:
- Exchange between virtual assets and fiat currencies
- Transfer of virtual assets
- Custody and administration of virtual assets
- Licenses granted by the BCN are valid for an undetermined term but cannot be assigned, transferred, or disposed of to third parties.
- Financial institutions supervised by the Superintendency of Banks and Other Financial Institutions (SIBOIF) and National Microfinance Commission (CONAMI) that provide payment services do not need to apply for a license, but must register with the BCN.
Consequences
The new regulation establishes licensing and registration requirements for PSPs and PSAVs, as well as obligations they must comply with and penalties for non-compliance. Institutions seeking to offer services as PSPs and/or PSAVs must also register with the Financial Analysis Unit (UAF) and submit their certificate of registration before obtaining a license from the BCN.
Industry Expert Reaction
Industry experts have welcomed the new regulation, citing its potential to create a more favorable ecosystem for fintech payment services and virtual assets. However, the compliance challenges posed by the new regulation may lead to delays and increased costs for financial technology providers operating in Nicaragua.
Overall, while the new regulation aims to provide a more comprehensive framework for the fintech sector, it also raises concerns about compliance issues that could impact the industry’s growth and development in Nicaragua.