Financial Crime World

Nicaragua’s Anti-Money Laundering and Combating the Financing of Terrorism Efforts Fall Short

Managua, Nicaragua - A recent review has revealed significant shortcomings in Nicaragua’s anti-money laundering (AML) and combating the financing of terrorism (CFT) efforts.

Inadequate Supervision

The report highlights the need for more efficient supervision by the Superintendency of Banks and Financial Institutions (SIBOIF). Inspectors from SIBOIF conduct annual inspections, but the institution is not informed of weaknesses identified during the inspection until the completion of the comprehensive report, which takes too long. Furthermore, there is no mechanism to follow up on inspection findings and corrective action except during the next annual visit.

Lack of Regulation

The report also recommends that AML/CFT regulations be issued and implemented for all other regulated entities, including non-financial businesses and professions (DNFBPs). Currently, only casinos are subject to some basic obligations under Law 285, while other DNFBPs such as real estate brokers, notaries, and trust services providers remain largely unregulated.

Vulnerability of Sectors

The lack of regulation and supervision of these sectors makes them vulnerable to abuse and increases the risk of money laundering and terrorist financing. The report notes that Nicaragua does not have a suitable study of these sectors or a regulatory framework in place for each sector, leaving them open to exploitation.

Beneficial Ownership Information

The report also highlights the need for better access to information about the beneficiary owners of legal persons and non-profit organizations. The Public Business Register lacks adequate information on beneficial ownership, making it difficult to detect and prevent illegal activities.

Conclusion

Nicaragua’s AML/CFT efforts are in need of improvement to ensure that the country is able to effectively prevent and detect money laundering and terrorist financing. Strengthening supervision, regulation, and access to information will be crucial in this effort.

Recommendations

  • Improve SIBOIF Supervision: Provide more timely feedback on weaknesses identified during inspections.
  • Issue AML/CFT Regulations: For all regulated entities, including DNFBPs.
  • Establish Regulatory Frameworks: For each sector of DNFBPs, including real estate brokers, notaries, and trust services providers.
  • Conduct Sectoral Studies: To better understand the risks and vulnerabilities of each sector.
  • Improve Beneficial Ownership Information: Ensure that the Public Business Register has adequate information on beneficial ownership.

By implementing these recommendations, Nicaragua can strengthen its AML/CFT efforts and reduce the risk of money laundering and terrorist financing in the country.