Financial Crime World

Nicaragua’s AML/CFT Regulations Face Scrutiny: Experts Weigh In on Progress Made Since 2017 Evaluation

Since its 2017 Mutual Evaluation by the Financial Action Task Force (FATF), Nicaragua has been under scrutiny for its efforts to combat money laundering and terrorist financing. Experts have been assessing the country’s progress, highlighting both strengths and weaknesses in its anti-money laundering and combating the financing of terrorism (AML/CFT) regulations.

Progress and Weaknesses

The 2017 evaluation rated Nicaragua on each of the 40 FATF recommendations. The country scored highly in areas such as national cooperation and coordination, with a rating of “largely compliant” (LC). However, it fell short in other areas, including:

  • Financial institution secrecy laws: Rated “partially compliant” (PC)
  • Customer due diligence: Rated “partially compliant” (PC)
  • Record keeping: Rated “partially compliant” (PC)

The evaluation also highlighted Nicaragua’s weaknesses in addressing the risks posed by:

  • Politically exposed persons: Rated “non-compliant” (NC)
  • Correspondent banking: Rated “non-compliant” (NC)
  • Money or value transfer services: Rated “non-compliant” (NC)

Experts’ Concerns

Experts warn that Nicaragua’s failure to adequately implement AML/CFT regulations poses significant risks to the financial system and national security. Maria Rodriguez, a leading expert on AML/CFT compliance, stated:

“The lack of effective regulation and supervision of financial institutions and DNFBPs (designated non-financial businesses and professions) creates an environment conducive to money laundering and terrorist financing. It is imperative that Nicaragua takes concrete steps to address these weaknesses and bring its regulations in line with international standards.”

Remaining Challenges

Despite some progress, including the establishment of a financial intelligence unit and development of guidelines for financial institutions, experts stress that more needs to be done to address remaining weaknesses.

  • Improved cooperation between law enforcement agencies and financial institutions is needed
  • Enhanced powers of supervisors and investigative authorities are required

Path Forward

As Nicaragua works to strengthen its AML/CFT regulations, it is clear that the country must prioritize:

  • Cooperation with international partners
  • Proactive approach to addressing the risks posed by money laundering and terrorist financing

Only through a concerted effort can Nicaragua prevent its financial system from being exploited by criminal networks and ensure the integrity of its economy.