Lawyers, Public Notaries and their new designation as Mandatory Subjects under Law No. 977, Law against Money Laundering (LA / FT / FP).
As of 2019, Nicaraguan lawyers and notaries public become part of the National System: Against the Laundering of Assets, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction. (ALA /CFT /CFP).
On August 19, 2019, Law No. 1000 was published that reforms Law No. 977, Law against Money Laundering and designates lawyers and notaries public as Mandatory Subjects. With this reform, lawyers acquire the responsibility of implementing prevention, detection and reporting activities that may be linked to Money Laundering.
The regulation indicates that Mandatory Subjects must send reports of suspicious activities and other information to the Supreme Court of Justice (CSJ) who will process the information as a Supervisory entity and will transfer its findings to the Financial Analysis Unit (UAF) as the final regulator.
Not yet defined are the types of specific actions that newly designated Mandatory Subjects must execute, and the same law authorizes the CSJ to define the minimum operation values that trigger the obligation to identify and cross-check the identity of potential clients.
Also pending are regulations to be imposed by the CSJ or the UAF specific to compliance with this law as well as the formats for reports that must be submitted. However, it is a safe bet to assume that attorneys and notaries should at least apply the standard Client Due Diligence (DDC) measures.
In general terms, the Mandatory Subjects are committed to:
|Take measures to identify properly each potential client, verify the information that such client provides them and try, based on their best efforts, to identify if the client or its operations may have a link with LA/FT/FC activities; and
|In case of suspicion that a potential client has links to these activities, prepare and send the corresponding report to the Supervisory entity.
Depending on the Mandatory Subject and the Supervisory entity different types of reports will have to be submitted and other organizational obligations will have to be met.
It is important to note that the publication of this reform, the publication of laws No. 976 and No. 977 in July 2018 and the changes in all UAF regulations in the last 12 months to some extent respond to the need to comply with the 40 Recommendations of the International Financial Action Task Force (FATF).
The FATF is an international body made up of 38 countries and more than 200 jurisdictions that have committed themselves to follow collective guidelines in the fight against money laundering and terrorism financing and their recommendations are considered to set world standards in the fight against such illicit activities.
Of particular priority is compliance with the provisions of the “Second Intensified Follow-up Report of Nicaragua” published by the FATF in January 2019, which establishes the deficiencies and areas for improvement in the Nicaraguan asset laundering prevention system.
For countries such as Nicaragua, it is important to comply with the 40 Recommendations in order to stay off of international Grey or Blacklists that may affect a county’s investment risk rating and/or reduce its attractiveness to funding companies or investors.