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 the Ortega-Murillo regime's control over institutions and a general permissiveness that fosters corruption. Businesses face significant obstacles to investment, particularly in areas like government procurement and taxation, where bribery and manipulation are common. Despite having comprehensive anti-corruption laws, the ineffective judicial system and political pressure hinder their enforcement, resulting in a challenging environment for foreign investment.

Nicaragua's economy, despite facing significant political repression and a challenging investment climate, shows stable macroeconomic fundamentals with a projected growth rate of about 3.5 percent for 2024. The country has a record-high $5 billion in foreign reserves and a well-capitalized banking sector, although it continues to grapple with high poverty levels and a formal sector that has lost approximately 120,000 jobs since its peak in 2017.

The investment climate in Nicaragua is highly unpredictable and fraught with risks due to the authoritarian regime of President Daniel Ortega and Vice President Rosario Murillo, which has led to the suspension of civil rights and the arbitrary seizure of private property. The government has increasingly targeted the private sector, revoking the legal status of numerous business chambers and imposing repressive laws that deter foreign investment. While Nicaragua possesses stable macroeconomic fundamentals, the lack of transparency and the politicization of investment processes create significant challenges for potential investors.