|Legal System and Related Institutional Measures|
|Criminalization of Money Laundering|
The Criminal Code should be amended to include counterfeiting and piracy of products as predicate offences for money laundering.
It would be convenient to include ML in the list of offences which can be sanctioned under incitement and conspiracy.
Criminal or administrative sanctions should be made applicable to legal persons involved in money laundering (directly, not as ancillary to the penalty imposed on physical persons).
|Criminalization of Terrorist Financing|
Provision should be specifically included in article 16 of the Criminal Code to enable financing of terrorism to be prosecuted in Nicaraguan jurisdiction regardless of whether the act occurred inside or outside Nicaraguan territory.
There should be administrative or civil sanctions for legal persons involved in the offence of financing of terrorism.
|Confiscation, freezing, and seizing of proceeds of crime|
Establish effective mechanisms (freezing funds) to secure funds, property or rights to finance terrorism, not urgent measures envisaged in the Criminal Procedure Code.
Train law enforcement officials on the possibilities existing under the law for the adoption of asset freezing.
A minimum degree of uniformity of criteria for the adoption of precautionary measures in the offence of Money Laundering and Terrorist financing should be promoted among the members of the judiciary, judges, Prosecutor, Public Prosecutor and Police.
It should be disclosed and law enforcement officials trained in the scope and effect of Act 285 to remove uncertainty regarding the origin of precautionary measures provided for therein.
It is recommended to implement the provisions of Article 246 of the Criminal Procedure Code, which provides legislative jurisdiction of any Criminal District Judge to authorize investigative measures that restrict constitutional rights.
|Freezing of funds used for terrorist financing|
Include in the Code of Criminal Procedure the freezing of assets as a matter of urgency in FT cases.
Establish procedures for freezing and unfreezing funds in accordance with UN Resolutions 1267 and 1373.
|The Financial Intelligence Unit and its functions|
Create a Financial Intelligence Unit (FIU) in keeping with the principles of FATF Recommendation 26 and the 10 corresponding criteria regarding evaluation methodology.
Consider future membership of the FIU in Egmont Group.
Appoint all members of the CAF (except the auditor nominated by the Association of Accountants) and increase the frequency and number of meetings of that Commission.
Until the FIU is created, the CAF must have physical premises to operate securely, suitable staff appointed exclusively to it, operational independence and the other resources that will enable it to meet the technical requirements of the functions assigned to it by Act 285-1999.
Issue guidelines and instructions to the financial institutions and other regulated entities, as well as to the Superintendency of Banks and Other Financial Institutions and other supervisory and control bodies that may be created in future, on trends or patterns of money laundering and financing terrorism that have been detected, as well as on the quality of STRs and other aspects relevant to the process of submission of STRs.
Explore alternatives to avoid the security risks arising out of the existence of copies of the STRs in the hands of various entities (Fiscalia and Police), and to avoid these reports having to pass through many state bodies before arriving at their destination.
It is recommended as soon as the FIU is created and begins work, it should consider joining the Egmont Group.
|Law enforcement, prosecution and other competent authorities|
Consideration should be given to measures designed to defer prosecution, for example, while more evidence is collected or assets and people tracked, even without the investigation bring linked to a collaborative program with the law.
It is recommended that the practice of legal outreach, such as training, workshops and conferences on the scope of the criminal law, criminal procedure, and related special laws relating to money laundering and terrorist financing.
Must designate an authority or jurisdiction for feedback on criminal trends in TF and ML between the authorities and law enforcement.
Mechanisms should be established or powers granted to law enforcement authorities to urgently freeze funds connected with the offence of TF.
|Cross Border Declaration or disclosure|
Establish the obligation to declare cash and securities out of the country (not just upon entry).
Make arrangements and procedures that enable the customs authorities to impose administrative sanctions for failure to declare cash or by providing false or wrong cross-border declarations.
Scan the information obtained from the declarations, share and coordinate with national authorities for purposes of prevention of ML and TF.
Provide mechanisms for the DGA to exchange with foreign counterparts about suspicious movements of cash, securities or precious metals.
Strengthen the capacity of the customs authority for monitoring, tracking and detection at border posts on the basis of risk and using intelligence information to enable it to prioritize their efforts more efficiently.
Continue training efforts in the prevention of money laundering and terrorist financing to the staff in charge of Directorate General Customs Services.
|Preventive Measures: Financial Institutions|
|Risk of money laundering or terrorist financing|
|Customer due diligence, including enhanced or reduced measures|
Mechanisms and regulations should be established to ensure that institutions included in Act No.285 but not supervised by the SIBOIF comply with the obligations arising from that Act.
The SIBOIF Rules embody most of the aspects of the FATF recommendations, but it applies only to institutions supervised and monitored by the SIBOIF.
Regulations for the financial institutions should include measures to prevent and repress financing of terrorism.
Eliminate the uncertainty prevailing on the permanence of the SIBOIF Rules, by prompt resolution of the constitutional appeal at present before the Supreme Court.
Consider the possibility of assigning AML/CFT supervision of the financial institutions not falling under the SIBOIF to the respective regulatory bodies of each of them and assign to the CAF only those which lack a specific regulatory agency.
For institutions that are not under the supervision of the SIBOIF, risk management procedures should be required as well as enhanced CDD, including determination of the origin of the funds and approval of all commercial relationships by senior staff when a customer is classified as PEP.
Amend the Rules of the SIBOIF to require that financial institutions establish the source of wealth of foreign PEPs, and not only the source of funds.
The requirements of Recommendations 7 and 8 should be applied to all regulated institutions and not solely to one sector.
|Third parties and introduced business|
Regulations should be issued on the use of third parties for customer due diligence and on customers presented by another institution, requiring CDD to be applied in any contractual relationship, or else make the obligation non-delegable as in the case of financial institutions governed by the SIBOIF.
|Financial institution secrecy or confidentiality|
Bank secrecy is not an obstacle to the judicial authorities in collection of information on money laundering and FT. However the power of the Fiscal General (as President of the CAF) to obtain confidential information without any need for a Court Order in the case of money laundering STRs should be explicitly extended to financing of terrorism.
A method should be established for control of the orders for information sent by judges to the financial institutions on the request of the Public Ministry, and an office designated to be responsible for such control.
Consider legally authorizing the Attorney General (Fiscal General) to also access information from the institutions not supervised by SIBOIF without warrant.
|Record keeping and wire transfer rules|
R.10: For regulated institutions not supervised by the SIBOIF the record keeping requirement should be broadened to include information and documentation on transactions and activities of the customer, correspondence, analysis of possible suspect transactions, etc. (not only documentation on the customer’s true identity).
SR.VII: The requirement for including complete information on the originator of a transfer should be extended to money transfer operators, savings cooperatives (credit unions) and microfinance associations which are outside the regulatory framework of the SIBOIF.
SR.VII: The informal remittance businesses should be required to register with some authority and implement all AML/CFT prevention measures.
SR.VII: A state agency should be designated to be responsible for the AML/CFT regulation and supervision of money transfer businesses, savings cooperatives and microfinance associations.
|Monitoring of transactions and relationships|
R.11. Compliance with the monitoring requirements embodied in Act 285 should be demanded of all money remittance companies, financial cooperatives, Bureaux de Change and other financial activities not supervised by the SIBOIF.
R.11 The monitoring obligations of institutions not supervised by the SIBOIF should be set out in greater details and guidelines should be provided for the various regulated institutions on how to apply them, in accordance with the nature of their business.
R.11 The provision of Act 285 and its Regulatory Decree on conservation of documents and information should be broadened beyond the simple conservation of “information on the true identity of persons” to include supporting documents of the suspicious transaction analysis.
R.21. The same control over operations with high risk countries should be applied to financial institutions not under SIBOIF supervision.
|Suspicious transaction reports and other reporting|
R.13: The necessary institutional and regulatory measures should be taken to ensure that the financial institutions not supervised by the SIBOIF comply with their suspicious transaction reporting obligations.
R.13: The SIBOIF should speed up the conclusion of its inspection reports in order to be able to act more promptly and severely when failure to comply with unusual and suspect operation reports is discovered, particularly in the public banking sector.
R.13: Compliance with the reporting requirement by non-bank institutions supervised by the SIBOIF should be strengthened.
R.13: It is suggested that the STRs from institutions supervised by the SIBOIF be sent by secure electronic means to avoid waste of time and loss of information.
R.14: The prohibition to warn a customer and other people applicable to institutions not supervised by the SIBOIF when a suspicious transaction report on that customer is made, should be updated to include explicitly cases related with terrorist financing.
R.25: The CAF, while no FIU exists, must provide the reporting institutions with appropriate feedback to enable them to improve the quality of their reports and to be abreast of the most relevant trends and typologies.
SR.IV: It is suggested that the requirement for reporting transactions in which there is a suspicion of financing of terrorism be set out expressly in the law and not just implicit in the reporting of unusual transactions (however, this does not affect the categorization of SR.IV).
|Internal controls, compliance, audit and foreign branches|
Regulations should be issued requiring the other financial institutions to establish internal procedures, policies and controls to prevent ML/FT, and these should be made known to all their officials and employees; to include a post of Compliance Officer in their administrative structures; and to have external and internal audits to verify compliance with the anti-ML/FT regulations. In addition, that they should have procedures to ensure that their employees maintain a high level of integrity.
Regulations should be issued to ensure that all sectors that have branches and subsidiaries should observe ML/FT measures and that there should be effective supervision by both the host country and the home country.
SIBOIF should have procedures for consolidated supervision of financial groups, since the regulations in force give it the power to do so.
|Supervisory and oversight system-competent authorities and SROs Role, functions, duties and powers (including sanctions)|
A scale for proportionate and dissuasive sanctions for non-compliance with Act No.285 and its Regulations should be issued.
Fines for directors, managers, officials and compliance officers, as responsible for the application of ML/FT rules, should be considered.
Regulations should be issued to give the competent authority or the supervisory bodies’ power to revoke, restrict or suspend licenses of financial institutions which re-offend in non-compliance with their duties under the ML/FT regulations in force.
Financial institutions should be made subject to effective ML/FT supervision by the competent authority or the supervisory or regulatory body.
The CAF should be provided with the human, financial and technical resources to enable it to carry out supervision over the financial institutions, to verify compliance with ML/FT rules in force.
Regulations should be issued to prevent criminals or their associates obtaining or becoming beneficiaries of a significant or majority part of, or occupying administrative functions within, a financial institution.
There should be a body to regulate, license and supervise money transfer firms and Bureaux de Change.
Guidelines should be issued to help financial institutions to implement and comply with requirements of ML/FT rules. For example, typologies, warning signals, instructions, etc.
Steps should be taken to ensure that the reports on SIBOIF inspections are sent in a timely fashion to supervised institutions to enable them to correct the deficiencies detected.
The number of persons responsible for SIBOIF inspections, as well as for following up the deficiencies detected in these inspections, should be increased.
|Money value transfer services|
Make it mandatory for money transfer businesses to register with some government agency with the capacity to manage this information.
Issue a regulation empowering the CAF or an agency with the necessary expertise to issue regulations and guidelines for money transfer operators, and to impose the penalties for non-compliance embodied in Act 285-99.
While the above takes place, the CAF should start raising awareness and overseeing compliance of ML controls by money transfer businesses, making use of the limited powers that it has in this respect.
|Preventive Measures: Non-Financial Businesses and Professions|
|Customer due diligence and record-keeping|
Except casinos, which are already obligated, all other categories of DNFBPs should be included for under the law for prevention of ML / TF.
Issue the necessary regulations, sectioned, so that NPNFD comply with the FATF Recommendations.
Designate a competent authority and adequate resources for the regulation and supervision of these obligations.
Prepare statistics showing the proportion of the financial system represented by each of the NPNFD with a view to giving priority to those representing the greatest risk.
|Suspicious transaction reporting|
Regulate and monitor the implementation of the obligations AML / CTF of casinos.
Include as obligated all other categories of NPNFD under recommendations 12 and 16 of the FATF.
Designate an authority responsible for licensing or registration, regulation, supervision and punishment of the individual categories of NPNFD.
Take the necessary steps to include the minimum requirements for establishing NPNFD Recommendations 13-15 and 21 and apply them appropriately to these.
The CAF, in partnership with other relevant authorities, should make an effort to raise awareness among NPNFD to educate them about their obligations.
|Regulation, supervision, monitoring, and sanctions|
Nicaragua should take all necessary steps to ensure that DNFBPs are regulated within the ML/FT Prevention regime, by passing a law to include all the international obligations in this sector. The rules should guarantee inclusion of the minimum requirements for DNFBPs described in Recommendations 24 and 25, and apply them adequately and efficiently to the sector.
|Other designated non-financial businesses and professions|
Greater efforts should be made to reduce the use of cash in the economy and modernize financial transactions.
It is suggested that an authority be designated to regulate and control pawnshops and other regulated entities that may be designated as such in the future, with a view to ensuring that they comply effectively with AML/CFT obligations. An anti-money laundering regulation should be issued in accordance with the nature of their business (this does not affect the listing).
|Legal Persons and Arrangements & Nonprofit Organizations|
|Legal Persons-Access to beneficial ownership and control information|
The Property Registration Authority should be modernized and its procedures computerized, to streamline consultation by users and issue of certificates, and better security should be provided for the historical information that it holds in its records.
It is suggested that information held by the Register should be centralized at the national level and not independently for each Department of the country. This would simplify access to data on companies from any geographical location in the country and without delays for the authorities and the public.
Regarding bearer shares, the country should take steps to enable speedy location of reliable information on beneficial ownership. For example, each company issuing bearer shares should have a single representative of the holders of bearer shares, domiciled in Nicaragua and required to keep a register of transfers or such shares.
|Legal Arrangements-Access to beneficial ownership and control information|
If the law authorizing Trusts is passed, measures should be taken to ensure access by the authorities to adequate and timely information on the beneficial owners and all parties involved in this type of contract. Some of these measures are suggested in the OECD 2001 report entitled “Behind the Corporate Veil: Using Corporate Entities for Illicit Purposes”.
Nicaragua should carry out a study on the characteristics and dimensions of the non-profit sector, its level of exposure to risk of being used for financing of terrorism, and to what extent the regulations in force are adequate for reducing that risk.
Efforts should be made to inform and raise awareness in the NPO sector on risks and preventive measures in this area.
Make better use of (and possibly increase) the resources of the Department for Registration and Control of Associations of the Ministry of Public Administration to monitor compliance with the substantive obligations of the biggest and internationally most active NPOs, not simply for penalizing late renewal of registration or other formal violations.
Make it possible for the public and foreign authorities to have access to information on NPOs held in the Ministry of Public Administration (as is the case for commercial companies), particularly with regard to the objectives and activities of the organizations, and the identity of the persons who exercise control over them, including senior staff, members of the Board of Directors and confidential posts.
Establish a requirement for detailed record-keeping on international and domestic operations and money transfer.
Create channels for rapid coordination of activities and exchange of information among national authorities to enable them to take quick action in the case of suspected FT through an NPO.
Designate specific contact points and procedures for response to foreign requests for information on a particular NPO.
Consider the possibility of increasing the staff assigned to monitoring and supervision of non-profit organizations, because of the large number of such entities registered.
Train staff of the Department for Registration and Control of Associations in prevention and detection of the use of NPOs in money laundering and/or terrorist financing operations.
Adopt regulations or guidelines to prevent money laundering and financing of terrorism for NPOs.
|National and International Cooperation|
|National cooperation and coordination|
More frequent CAF meetings and meetings of the National Council Against Drugs (CNDLCD) to deal with matters concerning definition and follow up the action plan and policy of the country to combat these offences.
Periodic interaction and coordination between the CAF and authorities related to prevention and prosecution of these offences.
Define AML/CFT policy objectives and a national strategy with an identification of risks, priorities and performance indicators, and monitor the results.
|The Conventions and UN Special Resolutions|
Even acknowledging the efforts made by the Republic of Nicaragua, it should continue with the approval and implementation of domestic laws incorporating the provisions of the International Conventions mentioned herein and to which the country is a party.
Set out the domestic procedure for compliance with the UN Security Council Resolutions, as well as the responsibilities of each body or competent authority of the country in relation to such compliance.
Amend Act No.285 of 15th April 1999 (on Narcotics, Psychotropic Drugs and Other Controlled Substances, Laundering of Money and Proceeds of Unlawful Activities) to make it applicable to the prevention of money laundering in all its forms and to the financing of terrorism. Only the SIBOIF has a set of regulations that applies to regulated entities under its supervision, and these establish mechanisms for prevention, control, detection and suspicious transaction reports on money laundering and terrorist financing.
|Mutual Legal Assistance|
Power should be granted to freeze and confiscate property related to ML and FT without a corresponding prosecution, when another State requests it.
International assistance in matters concerning financing of terrorism should be explicitly provided for in the law for acts committed outside the territory of Nicaragua.
It is recommended that a special fund be created from confiscated property to assist the law enforcement authorities to fulfill their objectives in the area of ML and FT.
Mechanisms should be created to share with the law enforcement authorities of other countries confiscated property arising from coordinated activities.
It would be desirable for the country to include within its domestic
extradition legislation the possibility of applying a simplified extradition procedure for persons who consent to the suspension of the formal procedures.
|Other Forms of Cooperation|
An agency should be created, or some state agency empowered, to exchange financial intelligence information with the FIUs of other countries.
|Resources & Statistics|
Provide for the CAF staff and resources to manage the information it receives, while establishing a FIU.
Train judges, prosecutors and police about new laws and issued to combat ML and TF.
Standardize interpretation by judges, prosecutors and police on the precautionary measures that the law makes available.
Create a system that allows the authorities to use available data to review the effectiveness of its system AML / CFT comprehensive manner.
Produce information on the response times of requests for mutual legal assistance and monitor their effectiveness.
Facilitate the sorting and analyzing reports of suspicious transactions according to their characteristics, case reports, amounts of money, etc. to assess trends and typologies.
|Other relevant AML/CFT measures or issues|
|General framework - structural issues|