In Nicaragua, the legal framework applicable to the Prevention of Money Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction (AML/CFT/CPF) is broad and sector specific. As such, obligations vary depending on the type of economic activity or the sector in which the Obligated Entity operates.
Therefore, it is essential for entities—whether financial or non-financial—to stay up to date with legal reforms and amendments that introduce new obligations or redefine the scope of existing ones.
In this context, this article aims to highlight the update to the list of Obligated Entities under the reform introduced by Law No. 1215, Law of Reforms and Amendments to Law No. 977, Law Against Money Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction, published in La Gaceta, Official Gazette No. 166 of September 6, 2024.
I- Obligated Entities
As a result of this reform, Article 9 of Law No. 977 was updated to establish a new list of natural and legal persons considered Obligated Entities before the Financial Analysis Unit (UAF). These entities must report directly, without the ability to invoke any type of secrecy or confidentiality, and are grouped as follows:
A- Financial Institutions supervised by the Superintendency of Banks and Other Financial Institutions:
- Banks
- Financial companies.
- Insurance, reinsurance, surety companies, and insurance intermediaries.
- General deposit warehouse companies.
- Securities brokerage firms.
- Securities depositories.
- Brokerage houses.
- Clearing and settlement companies.
- Fund management companies.
- Investment companies.
- Representative offices of foreign banks and financial institutions.
- Special regime companies referred to in Law No. 561, General Law of Banks, Non-Bank Financial Institutions, and Financial Groups.
- Factoring operations.
- Financial leasing.
- Providers of fiduciary services.
B- Entities supervised by the National Microfinance Commission:
- Microfinance Institutions.
- Pawn and/or loan service providers.
C- Natural or legal persons supervised by the Financial Analysis Unit in the field of AML/CFT/CPF prevention, who engage in the following activities:
1- Those without ownership, management, corporate image, or control ties to banks or regulated non-bank financial institutions, such as:
- Issuance and administration of payment instruments.
- Remittance and similar service providers.
- Currency exchange and/or purchase-sale service providers}.
- Virtual asset service providers.
- Casinos and gaming halls.
- Cooperatives engaged in financial intermediation.
- Real estate brokers.
- Dealers in precious metals and/or precious stones.
- Dealers and distributors of new and/or used vehicles.
2- Authorized and registered attorneys and notaries public, through the Judicial Branch.
3- Certified Public Accountants, registered through the Nicaraguan College of Public Accountants.
4- Any other natural or legal person designated as an Obligated Entity under this Law or under any specific law that creates such designation.
Additionally, art. 10 establishes that, based on the results of national risk assessments, sectoral assessments, or international standards, the National Council against AML/CFT/CPF will submit to the President of the Republic recommendations to exclude entities from or include them in the list provided in the previous article. It will also designate the competent supervisor in AML/CFT/CPF matters, who, through legislative initiative, shall propose the necessary legal reforms to the National Assembly.
II- Main Obligations of Obligated Entities
Under Law No. 977 and its reform through Law No. 1215, Obligated Entities must comply with the regulatory framework based on a risk-based approach. Key obligations include:
- Maintaining a physical presence in Nicaragua
- Conducting specific risk assessments related to:
- Customers.
- Products and services.
- Countries or geographical areas.
- Distribution channels.
- Types of transactions or operations.
- Implementing AML/CFT/CPF prevention programs, including enhanced, standard, or simplified policies according to the identified risk level.
- Appointing a compliance officer responsible for supervising the implementation of internal programs.
- Undergoing independent audits and evaluations to assess effectiveness and proper implementation of measures.
- Registering in the Obligated Entities Registry managed by the UAF.
III- Supervision by the Financial Analysis Unit (UAF)
The Financial Analysis Unit (UAF) is a decentralized body with functional, technical, administrative, and operational autonomy, legal personality, and its own assets. It specializes in analyzing legal, financial, and accounting information within the AML/CFT system to combat money laundering, illicit asset flows, and terrorism financing. The UAF is governed by Law No. 976 and its amendments.
The UAF has the authority to:
- Supervise compliance with AML/CFT/CPF obligations by entities directly under its oversight.
- Receive and/or request information related to Suspicious Activity Reports (SARs) from all Obligated Entities, as well as other public or private entities.
- Request information from public or private entities, including the National Police, that may possess relevant data for the identification of Obligated Entities.
- Administer the Obligated Entities Registry, in which registration is mandatory.
In addition, professional associations and public institutions must coordinate with the UAF to facilitate the identification, registration, and monitoring of Obligated Entities.
IV- Conclusion
The update to the list of Obligated Entities under Law No. 1215 represents a substantial shift in the scope of the AML/CFT/CPF regulatory regime in Nicaragua. It expands the framework to include new sectors, strengthens formal compliance obligations, and enhances the supervisory role of the UAF. Newly designated Obligated Entities must take into account the registration process with the UAF and the set of obligations they must comply with under AML/CFT/CPF regulations, adapting their internal procedures accordingly.
Failure to comply with these provisions may result in administrative, civil, or criminal sanctions. It is imperative that all natural and legal persons falling under the new Obligated Entities framework review and adapt their internal policies, assess their risks, and strengthen their institutional response capacity.