Financial Crime World

Nicaragua’s Progress and Challenges in Combating Financial Crimes and Fraud: A Mutual Evaluation Report

The Republic of Nicaragua, a Central American nation, is making significant strides in the fight against money laundering (ML) and terrorist financing (TF). A testament to this is the latest Mutual Evaluation Report (MER) published in October 2017. This article highlights the key findings of the report and the actions needed to enhance Nicaragua’s financial crime prevention policies.

Key Findings and Achievements

  • Completed National Risk Assessment (NRA) on ML/TF
  • Developed National Strategy and an Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) National Action Plan (NAP)
  • Increase in confiscations of personal and real property, assets, and resources related to drug trafficking and organized crime

Disparities and Challenges

  • Variations in understanding and awareness of identified risks among authorities and reporting subjects
  • Legal framework defects, including the absence of compulsion for Suspicious Transactions Reports (STRs), limited access to beneficial ownership information, and insufficient criminalization of TF offenses
  • Ineffectiveness in countering other ML-related crimes and TF due to lack of legislation, insufficient data collection, and limited understanding of risks

Addressing Money Laundering Threats

Nicaragua has made strides in addressing ML threats, but challenges remain in dealing with other ML-related crimes and TF. The effectiveness is minimal due to:

  • Limited legislation
  • Insufficient data collection
  • Limited understanding of risks

Financial Institutions and DNFBPs

  • Preventive measures against ML/TF are implemented within their respective sectors
  • Varying degrees of understanding and awareness among reporting subjects

Absence of Targeted Financial Sanctions and International Cooperation

  • Absence of targeted financial sanctions against proliferation of weapons of mass destruction (WMD)
  • Need for more proactive international cooperation on complex investigations with a transnational character

Immediate Actions Required

Immediate actions needed to enhance Nicaragua’s financial crime prevention policies include:

  • Inclusion of key sectors and industries into the AML/CFT regime
  • Criminalization of TF
  • Introduction of an express and direct obligation to submit STRs
  • Creation of a legal and institutional framework for the regulation, monitoring, oversight, and sanction of DNFBPs and non-profit organizations (NPOs)

Balancing the Regulatory Landscape

As Nicaragua continues to strengthen its financial crime prevention policies, the country faces the challenge of balancing the regulatory landscape to ensure transparency, efficiency, and practicality in implementation. The MER provides valuable insights to inform the adjustments and improvements needed to build a robust AML/CFT system.

The report’s recommendations will help Nicaragua as it continues to prioritize and address existing and emerging threats.