Banking Compliance Updates 2023 in Nicaragua: New Regulations for Financial Technology Providers
The Central Bank of Nicaragua (BCN) has introduced new regulations for providers of payment services and virtual assets to create a more favorable ecosystem for financial technology and virtual asset services. The “Regulation for Financial Technology Providers of Payment Services and Virtual Asset Services Providers” came into effect on April 27th, replacing the previous regulation published in September 2020.
Registration Requirements
Financial technology providers must register and obtain a license before providing payment services such as:
- Digital wallets
- Mobile points of sale
- Electronic money
- Online payment gateways
Since the effective date of the first regulation, approximately 12 institutions have registered with the BCN as financial technology providers, including most banks authorized to operate in the country and fintech companies.
Virtual Asset Services Providers
In addition to the registration requirement for financial technology providers, virtual asset services providers (PSAVs) must also register and obtain a license before providing services such as:
- Exchange between virtual assets and fiat currencies
- Transfer of virtual assets
- Custody and/or administration of virtual assets
- Participation and provision of financial services related to the offer of an issuer and/or sale of a virtual asset
Licensing and Registration
The licenses granted by the BCN are valid for an unspecified term and cannot be assigned, transferred, or disposed of to third parties. Financial institutions supervised and regulated by the Superintendency of Banks and Other Financial Institutions (SIBOIF) and the National Microfinance Commission (CONAMI) that provide services as financial technology providers do not need to apply for a license before BCN but must still register with the BCN.
Compliance Obligations
The new regulation establishes the licensing and registration requirements for financial technology providers and virtual asset services providers, including:
- Obligations they must comply with
- Violations, fines, and reasons for suspension of licenses and registrations
Institutions seeking to offer these services must also register with the Financial Analysis Unit (UAF) and submit their certificate of registration as a requirement to obtain their operating license and registration before BCN.
Impact
The approval of this new regulation is expected to create a more complete and accurate regulatory framework for financial technology payment services and virtual assets in Nicaragua, paving the way for the growth of these industries in the country.