Nicaraguan Parliament Passes Tougher Banking Regulations Amid Money Laundering Concerns
In a move aimed at strengthening financial regulations and combating money laundering and terrorist financing, Nicaragua’s parliament has approved significant amendments to the country’s General Banking Law.
New Penalties for Non-Compliance
The changes introduce harsh penalties for individuals and institutions found guilty of non-compliance. Directors, managers, officers, employees, and internal auditors of financial institutions will face severe sanctions if they:
- Alter or distort financial data
- Conceal information
- Destroy documents to avoid regulatory oversight
Monetary fines have been increased to a maximum of $500,000, or 0.15% of an institution’s assets, whichever is greater.
Stricter Regulations for Banking Institutions and Capital Market Firms
The amendments also introduce stricter regulations for banking institutions and capital market firms to prevent:
- Money laundering
- Financing of terrorism
- Proliferation of weapons of mass destruction (ML/FT/FP)
Firms found non-compliant will face a range of penalties, including:
- Temporary suspension of operations
- Cancellation of authorization to operate
- Separation of officers
Granting Powers to the Superintendency of Banks
The Nicaraguan government has granted its Superintendency of Banks the power to approve regulations ensuring the lawful origin of financial institution capital and preventing money laundering within the national financial system.
Modification of Fine and Sanction Regime
The changes also modify the regime of fines and sanctions related to ML/FT/FP prevention, imposing monetary penalties on officials and employees of capital market institutions and firms.
Welcome Step Towards Strengthening Financial Sector
The new regulations come amid concerns over Nicaragua’s vulnerability to money laundering and terrorist financing. Analysts say the measures are a welcome step towards strengthening the country’s financial sector and improving its international reputation.
Establishment of a Financial Intelligence Unit (FIU)
In related news, the government has also announced plans to establish a Financial Intelligence Unit (FIU) to monitor and investigate suspicious transactions. The FIU will work closely with the Superintendency of Banks and other regulatory bodies to prevent and detect money laundering and terrorist financing activities.
These measures demonstrate Nicaragua’s commitment to addressing money laundering concerns and ensuring the stability and integrity of its financial system.