Nicaragua | The Powers of the Financial Analysis Unit are Expanded

Published on Nov 29, 2024

Bertha Argüello and Octavio Alarcón, attorneys in Nicaragua experts in Dispute Resolution, Litigation and Arbitration, share the following article on the Financial Analysis Unit strengthening and increased supervision of the obligated entities. 

 

Nicaragua created the Financial Analysis Unit (UAF) in 2012 following the recommendations of the Financial Action Task Force (FATF), aimed at providing an action plan necessary for the fight against money laundering. The UAF is responsible for receiving, analyzing, and transmitting information on unusual or suspicious financial activities from obligated entities that may be linked to Money Laundering (ML), Terrorism Financing (TF), and Proliferation Financing of Weapons of Mass Destruction (PF/WMD). 

 

On September 4, 2024, through Law No. 1217, the Law of Reforms and Additions to Law 976, the Law of the Financial Analysis Unit, a series of reforms were approved to the powers and scope of supervision of the UAF, with the aim of strengthening control and supervision mechanisms to prevent related crimes related to ML/TF/PF/WMD. 

 

In this regard, Law No. 1217 incorporates the following key definitions to improve the clarity of the regulations: 

  1. Corrective Measures: Administrative measures aimed at correcting, remedying, mitigating, and/or repairing non-compliance with regulations without a punitive character. 

  1. Monitoring: A continuous and systematic process of risk assessment by the UAF to identify deficiencies or changes in the risk profiles of Obligated Entities. 

  1. Suspicious Transaction Report (STR): A document that Obligated Entities, self-regulatory bodies, and the Judiciary, when acting as supervisors, must submit to the UAF when they detect signs of illicit activities. 

 

We highlight that the Law adds as new activities subject to Suspicious Activity Reports (SARs) discrepancies in the identification of the ultimate beneficial owner and transfers involving fiat currency or virtual assets. Fiat money is the legal tender used in a country for transactions, while virtual assets are digital representations of value that can be transferred, traded, or used for payments. 

 

  1. Sanction: A legal consequence for the Obligated Entity, its directors, administrative managers, and compliance officers for failing to meet their preventive obligations. 

 

The recent reform strengthens supervision and control over high-risk financial transactions and promotes greater transparency in the information reported to the UAF. To this end, it also expands its capacity by granting it the following powers: 

 

• Regulate the obligations for the prevention of ML/TF/PF/WMD, considering international standards on the matter. 
• Issue regulations, resolutions, guidelines, manuals, circulars, forms, questionnaires, requirements, and instructions directed at Obligated Entities. 
• Supervise and monitor compliance with prevention obligations. 
• Impose corrective measures and administrative sanctions. 
• Process the administrative sanctioning procedure. 

 

The reform also introduces further development of the regulation of corrective measures and classifies the types of sanctions applicable by the UAF, with fines of up to fifteen thousand United States dollars (USD 15,000.00). 

 

The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.