Compliance in Fintech Companies

Fintech companies are those dedicated to offering financial services through technological means.

In some countries, there is special regulation for these types of companies, while in others, they are governed by common law legislation. This distinction is important for Fintech companies regarding compliance issues because depending on the applicable legislation, their compliance framework can be established.

In Nicaragua, Resolution No. CD-BCN-XXV-1-22 “Regulation of Providers of Financial Technology for Payment Services and Providers of Virtual Asset Services” published by the Central Bank of Nicaragua on April 7, 2022, aims to establish general provisions to regulate the process of application, authorization, operation, and regulation of companies dedicated to providing financial technology services for payment services and companies providing virtual asset services.

The Nicaraguan regulation sets out the requirements for obtaining a license, its authorization, obligations according to the services offered, and applicable infractions to providers of financial technology for payment services and providers of virtual asset services. However, these types of companies must not only comply with the provisions established in the Regulation of the Central Bank of Nicaragua but, being commercial entities, they must also comply with corporate, commercial, tax, consumer protection, data protection, and any other obligations that apply to them as legal entities in Nicaragua.

Therefore, to conduct due diligence on Fintech companies, the general and special legislation applicable to them in the jurisdiction in which they operate, as well as their contractual relationships, relationship with their regulatory body (if any), and general obligations must be analyzed.

It is advisable to create a compliance matrix to map the requirements that the company must comply with and, in this way, reduce the risks of legal non-compliance that could result in detrimental sanctions for the company.

The compliance matrix must be reviewed and updated periodically by a committee responsible for monitoring the regulations applicable to the company to ensure compliance.

If you require more information about the regulation applicable to Fintech companies in Central America, do not hesitate to contact us at contact@consortiumlegal.com.