Norm on the Imposition of Fines on Insurance, Reinsurance, and Surety Companies

Page 1 of 16 CERTIFICATION OF RESOLUTION RUTH ELIZABETH ROJAS MERCADO, Secretary of the Monetary and Financial Board, CERTIFIES: that in Ordinary Session number twelve of the Monetary and Financial Board, held on Wednesday, March 25, 2026, Resolution No. CDMF-XII-3-26 was unanimously approved, which literally states:

Monetary and Financial Board Ordinary Session No. 12 Wednesday, March 25, 2026

RESOLUTION CDMF-XII-3-26 THE MONETARY AND FINANCIAL BOARD

CONSIDERING

I That in accordance with Article 105 of the Full Text of the "Political Constitution of the Republic of Nicaragua," banks and other financial institutions, private and state-owned, are supervised, regulated, and audited by the Superintendence of Banks and Other Financial Institutions, in accordance with the laws governing the matter.

II That Article 147 of Law No. 1232, "Law on the Administration of the Monetary and Financial System," published in Official Gazette No. 241, on December 30, 2024, established a new range of fines for "supervised institutions" for violations of the provisions of said Law, related laws, and regulations, committed even by "other financial institutions," which will be applied by the Superintendence. Likewise, Article 148 of the aforementioned Law No. 1232 establishes the fines to be imposed on persons other than those mentioned in the cited Article 147.

III That Article 146 of Law No. 1232, "Law on the Administration of the Monetary and Financial System," establishes that: "For the application of the fines contemplated in this Law and related laws with the functions of the Central Bank and the Superintendence, the net worth and the fine unit will be used as reference. The value of each fine unit will correspond to the national average minimum wage on the date of imposition of the fine, which is the simple average calculated based on the Minimum Wage Table by Activity Sector determined by the law governing the matter."

IV That Article 17, letter A, numeral 10, of Law No. 1232, "Law on the Administration of the Monetary and Financial System," states that it is an attribute of the Monetary and Financial Board: "To approve general norms on violations of this Law, sanctions, and fines, as well as the criteria for their application."

Page 2 of 16 V That in accordance with Articles 9, numeral 1), and 30 of Law No. 977, "Law Against Money Laundering, Terrorism Financing, and Financing of Proliferation of Weapons of Mass Destruction," whose consolidated text is contained in Law No. 1175, "Law of the Nicaraguan Legal Digest of the Banking and Finance Matter" (hereinafter, the Legal Digest), published in La Gaceta, Official Gazette No. 153, on August 20, 2024, and its subsequent reforms, it is the faculty of the Superintendence of Banks and Other Financial Institutions, hereinafter the Superintendence, regarding obligated subjects under its supervision and within the scope of preventing money laundering, terrorism financing, and financing of proliferation of weapons of mass destruction, to establish administrative measures that give operational effect to said law, supervise with a risk-based approach that obligated subjects implement their AML/CFT/FP prevention obligations, and impose corrective measures and administrative sanctions when appropriate.

VI That Article 36 of the same Law No. 977 empowers supervisors to "order the implementation of corrective measures and impose sanctions on Obligated Subjects and/or their directors, administrative managers, and compliance officers, as appropriate, for non-compliance with the applicable AML/CFT/FP prevention obligations, without prejudice to what is provided in criminal legislation."

In exercise of its powers,

RESOLVES TO APPROVE

The following:

NORM ON THE IMPOSITION OF FINES ON INSURANCE, REINSURANCE, AND SURETY COMPANIES

CHAPTER I GENERAL PROVISIONS

Article 1. Concepts. - For the purposes of applying the provisions contained in this norm, the terms indicated in this article, both in uppercase and lowercase, singular or plural, shall have the following meanings:

a) Mass insurance marketers: Legal persons referred to in Article 125 of Law No. 733. b) Board of Directors: Monetary and Financial Board of Directors. c) Deficiencies / Significant Events: These are deficiencies or events that may have a material impact on the liquidity, solvency, image, or other aspects of the insurance company. The materiality of an event will depend on whether it has the potential to cause a significant impact, whether quantitative or qualitative, on a significant business line of the insurance company or on its operations in general. d) Insurance intermediaries and auxiliaries: Persons referred to in Article 115 of Law No. 733.

Page 3 of 16 e) Law No. 842: Law No. 842, Law on the Protection of the Rights of Consumer and User Persons, whose consolidated text was published in La Gaceta, Official Gazette No. 137, on July 26, 2022. f) Law No. 733: Law No. 733, General Law on Insurance, Reinsurance, and Surety, published in La Gaceta, Official Gazette Nos. 162, 163, and 164, on August 25, 26, and 27, 2010. g) Law No. 1232: Law on the Administration of the Monetary and Financial System, published in Official Gazette No. 241, on December 30, 2024. h) Fine: Administrative sanction of a pecuniary nature applied based on the net worth or salary of the offender, or in fine units. i) Net Worth: Amount established in the financial statements of the supervised entity, as defined in its applicable accounting framework. j) Insurance Companies: Entities authorized by the Superintendence of Banks and Other Financial Institutions, operating in insurance, reinsurance, surety, and re-surety, national or foreign, privately, state-owned, or mixed, except for the exceptions expressly contemplated in Law No. 733. k) Superintendent: Superintendent of Banks and Other Financial Institutions. l) Superintendence: Superintendence of Banks and Other Financial Institutions. m) Fine Units: Sanction of a pecuniary nature applied in accordance with Article 146 of Law No. 1232. The value of each fine unit will correspond to the national average minimum wage on the date of imposition of the fine, which is the simple average calculated based on the Minimum Wage Table by Activity Sector determined by the law governing the matter.

Article 2. Object and Scope. - This norm aims to establish the amounts of fines applicable to insurance companies within the ranges provided in Title V of Law No. 1232, determined according to the severity of the offense and in accordance with the parameters and criteria to be set forth in these provisions.

Article 3. Parameters. - The Superintendent shall grade and apply sanctions considering the following circumstances:

a) Mitigating factors:

1. If before the sanctioning procedure begins or before the Superintendent issues a resolution regarding it, the offender has remedied the offending conduct on their own initiative or has submitted an action plan consisting of the aspects that need to be remedied, indicating a proposed maximum date for its completion and the persons responsible for executing it.

Page 4 of 16 2) The offender's historical behavior. b) Aggravating factors:

1. When the offense causes damage to the public interest and/or the protected legal good, including the impact on public confidence in the area in which the offender conducts its activities.
2. When the offender has committed the offense with the intent to execute or conceal another offense.
3. When the offender has obtained personal benefits or benefits for third parties through the commission of the offense.
4. When the offender prevents or obstructs the Superintendence from exercising its powers by avoiding that the offense comes to light, either by hiding information or delaying its delivery, making control actions difficult, or in any other way.
5. When by the nature of the position and functions of the offender, they have specific responsibility regarding the fact constituting the offense.
6. When the offender involves or uses one or more institutions operating in supervised systems to commit the offense. Likewise, when involving or using one or more institutions operating in the financial systems of other countries.
7. When the offender reoffends in the commission of any offense according to the terms provided in Article 171 of Law No. 733. The payment of the fine does not exempt the offender from correcting the offense or fault that generated it.

Article 4. Calculation of fines based on net worth. In cases where the fine corresponds to a percentage of the net worth, it shall be calculated on the net worth registered in the financial statements corresponding to the month of December of the year prior to the application of the fine, reported by the offending entity to the Superintendence and published by it on its website. In the case of insurance companies that have been in operation for less than twelve (12) months, the fine shall be calculated on the net worth registered in the financial statements corresponding to the most recent month, reported by the insurance company to the Superintendence.

CHAPTER II OFFENSES AND FINES IN GENERAL

Article 5. Imposition of fine for lacking authorization. - It shall be a grave offense for any natural or legal person who, without being authorized, carries out operations for which Law No. 733 requires prior authorization. The Superintendent shall impose a fine equivalent to fifty and one hundredth (50.01) to one hundred (100) fine units.

Page 5 of 16 Article 6. Imposition of fine for violations of laws, resolutions, and instructions of the Superintendence. - When the Superintendent observes any violation of the laws that the Superintendence is responsible for applying, including this norm and Board of Directors resolutions, as well as orders, resolutions, and instructions issued by the Superintendent, or irregularities are detected in the functioning of an insurance company, or documents or reports are received from them that do not correspond to their true situation, the Superintendent may impose an administrative sanction adjusted to the importance of the offense, as follows:

a) Light offenses: Light offenses are those that do not have an impact on the financial situation of the insurance company, do not affect its liquidity or solvency, such as:

1. Not informing the Superintendent or informing outside the established deadlines: i. The change of board members, general manager and/or chief executive, internal auditor, and regulatory controller. In the case of a branch of a foreign insurance company, its administrator or whoever acts on their behalf. ii. The external audit firms hired.
2. Not having a database of all insurance intermediaries and auxiliaries with which it operates, or having it incomplete or outdated.
3. Not maintaining updated files of reinsurance contracts signed with reinsurance companies with which it operates for the risks ceded, reported as such to the Superintendence.
4. Not keeping the records established in the regulations governing the matter on the authorization and functioning of insurance auxiliaries, or keeping them incomplete or outdated.
5. Not keeping the files referred to in the regulations governing the matter on the marketing of mass insurance, or keeping them incomplete or outdated.
6. Not sending, sending outside the established deadline, or sending incomplete or inaccurate reports, minutes, reports, or other information that insurance companies must remit to the Superintendent, occasionally or periodically, in accordance with Law No. 733, norms issued by the Board of Directors, or instructions of the Superintendent.
7. Any other offenses of equal or similar gravity committed against the legal, regulatory, and other provisions applicable to them, as well as instructions of the Superintendent. In these cases, a fine from zero and one thousandth percent (0.001%) to zero and one hundred twenty-five thousandths percent (0.125%) of the net worth shall be applied.

Page 6 of 16 b) Moderate offenses: Moderate offenses are those that affect the financial situation of the insurance company, but do not significantly impact its liquidity or solvency, or that constitute practices that weaken its corporate governance, impacting an increase in its operational, legal, reputational, and other risks, such as:

1. Not presenting or incorrectly presenting to the Superintendence within the established deadline, the integration of shareholders, amount, and participation of each in the paid-in capital of the company in question in accordance with its records, as well as the financial situation of these in accordance with Law No. 733 and applicable regulations.
2. Not informing the Superintendent or informing outside the established deadlines the opening of branches in the country.
3. Non-compliance with legal, regulatory, or Superintendent instructions that order actions aimed at correcting any deficiency other than those related to their patrimonial and liquidity situation.
4. Not delivering the insurance policy contracted by the insured, no later than five (5) business days counted from the payment of the premium and the delivery of the documentation related to the risk by the insured.
5. Any other offenses of equal or similar gravity committed against the legal, regulatory, and other provisions applicable to them, as well as instructions of the Superintendent. In these cases, a fine from zero and one thousand two hundred fifty-one ten-thousandths percent (0.1251%) to zero and twenty-five hundredths percent (0.25%) of the net worth shall be applied.

c) Grave offenses: Grave offenses are those that affect the financial situation of the insurance company and significantly impact its liquidity and solvency, or that constitute practices that weaken its corporate governance, impacting a significant increase in its operational, legal, reputational, and other risks, as well as the non-compliance with legal, regulatory, or Superintendent instructions on the carrying out of operations, transactions, or records, or those that limit or prohibit these operations, considering as such those indicated below, which are not expressly sanctioned by the previous articles:

1. Carrying out or exercising activities foreign to its legally established corporate purpose.
2. Carrying out prohibited acts or operations without the authorization of the Superintendence, when required by Law No. 733 or the corresponding regulations, or carrying them out without observing the conditions established in them.
3. Non-compliance with any of the corporate governance provisions established in Article 56 of Law No. 733.
4. Not providing, within the deadlines and/or conditions established in each case, the information and/or documentation required by the Superintendent in writing, email, or any other means that evidences the requirement.

Page 7 of 16 5) Not providing the Superintendence with the necessary facilities for the development of inspection visits or any other control procedure, or obstructing such actions. 6) Not respecting the freedom of contracting of the insurance consumer as provided in Article 89 of Law No. 733. 7) Non-compliance with procedures and deadlines for the indemnification of claims as established in Law No. 733, the corresponding regulations, and the terms and conditions provided in the insurance policy. 8) Exceeding the debt limits and premium retention limits established in the regulations of the matter. 9) Not constituting the technical reserves provided for in Article 35 of Law No. 733, constituting insufficient technical reserves according to applicable legal and regulatory provisions, or constituting technical reserves calculated in a manner different from that authorized by the Superintendence. 10) Carrying out investments that do not meet the characteristics, limits, and other requirements established in Law No. 733 and/or the regulations of the matter. 11) Transacting with related parties under preferential conditions or without complying with the legal and regulatory provisions established for active operations. 12) Promoting, distributing, selling, or marketing insurance policies through persons who are not registered and authorized in the Superintendence's records to act as insurance intermediaries or marketers. 13) Hiring persons who are not registered and authorized in the Superintendence's records to act as insurance auxiliaries. 14) Issuing insurance policies whose general conditions, particular conditions, and other documents comprising them have not been approved by the Superintendent. 15) Not remedying and/or implementing the recommendations formulated by the Superintendent in the inspection visit report and which, in the opinion of the Superintendence, should be in the process of implementation or completely overcome due to the elapsed time or the previously indicated deadline by said official. 16) Refusing to submit its books and business to the examination of the Superintendence or evading such submission. 17) Revaluing real estate without complying with the procedure established in the regulations of the matter. 18) Lacking the legally required accounting, keeping it without complying with the accounting standards issued, recognized, or authorized by the Superintendence, or with irregularities that prevent knowing the patrimonial, economic, and financial situation of the company.

Page 8 of 16 19) Non-compliance with the obligation to submit its annual financial statements to the examination of an external audit firm in accordance with Law No. 733 and the corresponding regulations. 20) Not publishing the audited financial statements in accordance with the law and corresponding regulations. 21) Presenting or publishing financial information that differs from the real situation of the insurance company. 22) Lack of minimum information that, in accordance with Law No. 733 and the corresponding regulations, must be demanded from financing applicants and debtors, when such information has an impact on the determination of their payment capacity and/or the recoverability of the credit. 23) Not registering or incorrectly registering (or at the appropriate time) provisions for assets and other risk exposures, as well as adjustments resolved by the Superintendent and by internal and external auditors. 24) Not registering or incorrectly registering (or at the appropriate time) the reserves required by Law No. 733 and corresponding regulations. 25) Non-compliance with legal, regulatory, or Superintendent instructions that prohibit operations or order actions aimed at correcting patrimonial or liquidity deficiencies and other provisions derived from them. 26) Registering shareholders without the authorization of the Superintendent. 27) Canceling contributions to the Superintendence outside the established deadlines. 28) Not informing the Superintendent of any significant event that could affect the insurance company. 29) Carrying out advertising outside the provisions on this matter regulated by Law No. 733, Law No. 842, and the regulations governing the matter on transparency in financial operations. 30) Non-compliance with complaint handling provisions established in Law No. 733, Law No. 842, and the regulations governing the matter on transparency in financial operations. 31) Not informing the Superintendent or informing outside the established deadlines the closing of branches in the country. 32) Any other offenses of equal or similar gravity committed against the legal, regulatory, and other provisions applicable to them, as well as instructions of the Superintendent. In these cases, a fine from zero and two hundred fifty-one thousandths percent (0.251%) to zero and five tenths percent (0.5%) of the net worth shall be applied.

Page 9 of 16 Article 7. Imposition of fines in case of conflict of interest. - It shall be a grave offense for a shareholder, board member, or any official of an insurance company who, having a personal interest or conflict of interest with the company in the processing or resolution of any matter or operation, or if their financial group, partners, or the firm or company to which they belong, or their spouse or relatives within the fourth degree of consanguinity or second degree of affinity, participate or influence before the officials and bodies of the insurance company in charge of the processing, analysis, recommendation, and resolution of the same, or are present during the discussion and resolution of the related topic. The Superintendent shall impose a fine equivalent to fifty and one hundredth (50.01) to one hundred (100) fine units.

Article 8. Imposition of fine for transacting with related or unrelated parties in violation of legal limits. - It shall be a grave offense for the insurance company that carries out operations with its related or unrelated parties and infringes the limitations contained in Articles 71 and 72 of Law No. 733. The Superintendent shall impose an administrative fine from zero and two hundred fifty-one thousandths percent (0.251%) to zero and five tenths percent (0.5%) of the net worth.

Article 9. Imposition of fine on directors, managers, officials, employees, internal auditors, money laundering and terrorism financing prevention administrator, and regulatory controller. - It shall be a grave offense for the director, manager, official, employee, internal auditor, money laundering and terrorism financing prevention administrator, or regulatory controller who alters or distorts data or background in balances, books, statements, accounts, correspondence, or any other document, or who hides or avoids that they are known or destroys these elements with the intent to hinder, divert, or evade the supervision that the Superintendence is required to exercise in accordance with the law. The Superintendent shall impose, without prejudice to the corresponding criminal sanctions, a fine equivalent to fifty and one hundredth (50.01) to one hundred (100) fine units. Likewise, the Superintendent may instruct the dismissal from their position.

Article 10. Imposition of fine for non-compliance with measures regarding normalization plans. - It shall be a grave offense for the directors and general managers who are found to be...