FATF status

Nicaragua is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 21 October 2022

The FATF notes Nicaragua’s progress in improving the elements of its AML/CFT regime covered by its action plan. Nicaragua has addressed technical deficiencies to meet the commitments of its action plan regarding strategic deficiencies in the areas that the FATF identified in February 2020. Nicaragua is therefore no longer subject to the FATF’s increased monitoring process.

However, the FATF is strongly concerned by the potential misapplication of the FATF Standards resulting in the suppression of Nicaragua’s non-profit sector. Nicaragua should continue to work with GAFILAT to improve further its AML/CFT regime, including by ensuring its oversight of NPOs is risk-based and in line with the FATF Standards. Nicaragua is strongly encouraged to continue cooperating with GAFILAT on this issue.

European Commission list of countries with strategic deficiencies in their AML/CFT regimes

Nicaragua is no longer on the EU Commission list of high risk countries.

Compliance with FATF Recommendations

The latest follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Nicaragua was undertaken in 2021. According to that Evaluation, Nicaragua was deemed Compliant for 7 and Largely Compliant for 30 of the FATF 40 Recommendations. It was deemed Highly effective for 0 and Substantially Effective for 1 of the Effectiveness & Technical Compliance ratings.

Nicaragua has a legal framework against corruption, but enforcement is lacking due to a permissive environment and the Ortega-Murillo regime's control over institutions, leading to widespread corruption that hinders foreign investment. The judicial system is particularly vulnerable to manipulation and bribery, with businesses citing government procurement and taxation as high-risk areas. Although Nicaragua has ratified several international anti-corruption conventions, the lack of effective enforcement of its comprehensive anti-corruption laws results in a challenging business climate.

Nicaragua's economy, valued at approximately $17 billion, is characterized by stable macroeconomic fundamentals, including a record-high $5 billion in foreign reserves and a well-capitalized banking sector. Despite facing significant political repression and a decline in formal employment, the economy is projected to grow by about 3.5 percent in 2024, driven in part by record remittances of $4.7 billion, which constitute around 30 percent of the GDP.

The investment climate in Nicaragua is highly unpredictable and fraught with risks due to the authoritarian practices of the Ortega-Murillo regime, which has suspended civil rights, expropriated private property, and imposed arbitrary regulations. The government has increasingly targeted the private sector, revoking the legal status of numerous business chambers and organizations, while foreign investors face significant delays and bureaucratic hurdles in establishing operations. Despite these challenges, Nicaragua possesses stable macroeconomic fundamentals and seeks foreign direct investment, particularly from ideologically aligned countries, but the overall environment remains hostile and non-transparent.