Nicaragua’s AML and CFT Regulations Under Scrutiny: Country Lacks Adequate Institutional Framework

Financial Crimes on the Rise in Nicaragua

MANAGUA, NICARAGUA - In 2008, Nicaragua introduced legislation to criminalize money laundering (ML) and the financing of terrorism (FT). While the country’s Antimony Laundering and Combating the Financing of Terrorism (AML/CFT) measures for the regulated financial sector are largely compliant with international standards, experts have raised concerns over key deficiencies.

Unregulated Financial Cooperative Sector

Despite making progress in regulating the financial sector, Nicaragua’s financial cooperative sector remains unregulated. This significant gap in its AML/CFT framework leaves the country vulnerable to financial crimes.

• Experts warn that the lack of regulation creates an environment conducive to money laundering and terrorist financing.
• The absence of regulations makes it challenging for authorities to detect and prevent financial crimes.

Lack of Institutional Framework

Nicaragua lacks an adequate institutional framework to effectively combat ML and FT. A recent assessment found:

• No evidence of FT risk
• No suspicious transaction reports or investigations have been conducted
• Experts warn that this lack of activity does not necessarily mean the country is free from FT threats

Failure to Establish a Financial Intelligence Unit (FIU)

Nicaragua’s failure to establish an FIU has also raised concerns about its ability to effectively combat ML and FT. The absence of an FIU hinders the country’s capacity to:

• Gather and analyze financial intelligence
• Detect and prevent financial crimes

Call to Action

The Nicaraguan government must take immediate action to address these deficiencies and establish a robust AML/CFT framework that includes effective supervision, regulation, and enforcement mechanisms. Failure to do so could have serious consequences for the country’s:

• Financial stability
• International reputation