Management and maintenance of the anti-money laundering prevention system in Nicaragua

By the instructions of GAFILAT (Financial Action Task Force of Latin America), Money Laundering is “the process through which the origin of funds generated through the exercise of certain illegal or criminal activities (e.g., drug trafficking or narcotics, arms smuggling, corruption, embezzlement, white-collar crimes, extortion, kidnapping, piracy, etc.) is concealed. The objective of the operation, usually carried out at various levels, is to make funds or assets obtained through illicit activities appear as the result of legitimate activities and circulate smoothly in the financial system.”

In this sense, Nicaragua has increased its efforts in the fight against money laundering by organizing a national anti-money laundering, counter-terrorism financing, and financing for the proliferation of weapons of mass destruction (AML/CTF/CFP) system that incorporates the task of prevention for certain obligated entities operating in sectors potentially exposed to money laundering risks, generating risk management and mitigation actions in each potentially linked sector. For anti-money laundering purposes, our country is primarily regulated by Law 976, the Law of the Financial Analysis Unit, and Law 977, the Law Against Money Laundering, Terrorism Financing, and Financing for the Proliferation of Weapons of Mass Destruction, and its regulations.

The entities involved, according to Art. 9 of Law 977, are obliged to establish AML/CTF/CFP prevention programs that allow them to effectively manage and mitigate risks identified through national, sectoral, or individual AML/CTF/CFP risk assessments.

This obligation, although binding and mandatory for obligated entities as part of good corporate practices, has been adopted by companies whose sectors are not necessarily potentially linked to AML/CTF/CFP risks. Therefore, it is recommended that within your business strategic plan for this new year 2024, policies and procedures related to AML/CTF/CFP be incorporated to strengthen risk identification and procedures to mitigate existing risks.

A prevention program must be suitable for the nature, scope, and/or size of the company’s activity. The minimum requirements that a compliance program in AML/CTF/CFP matters must contain are:

    1. Standard, simplified and intensified measures and procedures that allow the effective management and mitigation of AML/CTF/CFP risks identified through national assessments and sectoral or individual evaluations.
    2. The creation of functions or positions with managerial level and/or administrative structures that oversee compliance with AML/CFT/CFP measures and procedures and recommend to their superiors to intensify them when necessary.
    3. Responsibilities that top management or the compliance officer must follow and provisions regarding the implementation of measures, controls, and procedures, including the duty to approve, review, and update them, if necessary.
    4. Rigorous selection procedures to ensure high standards in hiring employees.
    5. A continuous training program for employees, including top management, in AML/CFT/CFP matters.
    6. An independent audit or evaluation function to examine the effectiveness of the program and its implementation, either by internal audit or by independent external experts, including external auditors.

The design of an AML/CTF/CFP compliance plan is essential for good business management and will allow for proper risk management and mitigation.

At Consortium Legal, we can support you in creating your AML/CTF/CFP prevention policies and procedures for 2024. Contact us at dmatus@consortiumlegal.com.