Norm Reforming Articles 3 and 12 of the General Norm on the Imposition of Fines

Page 1 of 6 RESOLUTION NO. CD-SIBOIF-1262-1-AGOS3-2021 Dated August 3, 2021 NORM REFORMING ARTICLES 3 AND 12 OF THE GENERAL NORM ON THE IMPOSITION OF FINES

The Board of Directors of the Superintendence of Banks and Other Financial Institutions,

CONSIDERING

I That by Resolution No. CD-SIBOIF-410-1-MAR14-2006, dated March 14, 2006, the "General Norm on the Imposition of Fines" was approved, published in La Gaceta, Official Journal No. 80 on April 25, 2006.

II That pursuant to Article 9 of Law No. 977, "Law Against Money Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction"; contained in Law No. 974, "Law of the Nicaraguan Legal Digest on Banking and Finance Matters", published in La Gaceta, Official Journal No. 164, on August 27, 2018, and its updates (Legal Digest), the obligated subjects include the representative offices of foreign banks and financial entities, as referred to in Article 14 of Law No. 561 "General Law of Banks, Non-Bank Financial Institutions, and Financial Groups", also contained in the Legal Digest.

III That Article 30 of the aforementioned Law No. 977, reformed by Law No. 1072, published in La Gaceta, Official Journal, No. 89 on May 17, 2021, empowers the Superintendence of Banks and Other Financial Institutions to "...establish administrative provisions that give operational effect to this Law and its Regulations; supervise with a risk-based approach that Obligated Subjects implement their AML/CFT/CPF prevention obligations, whose scope, depth, and periodicity will be defined taking into account the risk profile, size, complexity and volume of products, services and transactions, geographic areas in which they operate, their specificity within the industry and/or activities inherent to their business line; and impose corrective measures and/or administrative sanctions when appropriate...". The latter, in line with what is provided in Article 36 of the same law, which states: "Supervisors have the authority 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/CPF prevention obligations, without prejudice to what is provided in criminal legislation".

Page 2 of 6 IV That it is appropriate to modify Article 3 of the aforementioned "General Norm on the Imposition of Fines" in order to expand its scope, including the representative offices of foreign banks; as well as to reform Article 12 of the aforementioned norm, to suppress from it certain provisions that have been incorporated into other current regulatory frameworks.

V That in accordance with the considerations set forth above and based on the authority established in Articles 3, items 2), 12) and 13), and 10, items 1) and 2) of Law No. 316, "Law of the Superintendence of Banks and Other Financial Institutions", contained in the Legal Digest.

HAS ISSUED

The following,

CD-SIBOIF-1262-1-AGOS3-2021 NORM REFORMING ARTICLES 3 AND 12 OF THE GENERAL NORM ON THE IMPOSITION OF FINES

FIRST: Articles 3 and 12 of the "General Norm on the Imposition of Fines", contained in Resolution No. CD-SIBOIF-410-1-MAR14-2006, of March 14, 2006, published in La Gaceta, Official Journal No. 80, of April 25, 2006, and its reforms, are hereby reformed, which shall read as follows:

"Art. 3.- Scope.- The provisions of this Norm are applicable to banking entities, non-bank financial companies, shareholding companies of financial groups, as well as second-tier banking entities; entities that hereinafter will be referred to as financial institutions. Likewise, this Norm shall be applicable to the representative offices of foreign banks and financial entities, insofar as applicable."

"Art. 12.- Imposition of fine for violations of the General Law of Banks, regulations and resolutions of the Central Bank of Nicaragua, the Superintendence of Banks and the Deposit Guarantee Fund.- When institutions infringe any of the provisions contained in the General Law of Banks; in the laws, regulations and resolutions of the Central Bank of Nicaragua, the Deposit Guarantee Fund and the Board of Directors of the Superintendence; as well as orders, resolutions or instructions issued by the Superintendent; or irregularities are detected in the functioning of an institution, or documents or reports are received that do not correspond to their true situation and whose sanction is not provided for in this Law, the Superintendent may impose a fine in accordance with the following: a. Range:

Page 3 of 6 500 to 50,000 fine units. b. Severity of the infractions. For the purposes of this article, infractions are classified as minor, moderate, and serious.

1. Minor Infractions: Minor infractions are those that do not have an impact on the financial situation of the institutions, do not affect their liquidity and solvency nor the deposits and investments of the public, such as: i) Not informing the Superintendence of Banks or informing outside the established deadlines: A) The change of members of the board of directors, general managers, and internal auditor. In the case of a foreign bank branch, the manager thereof or whoever acts in their place. B) The plan for opening branches in the country. ii) Not giving notice, or giving notice outside the established deadline, of the appointment of the external auditor of the entity and/or the financial group, as applicable. iii) Lack of minimum information that, in accordance with the corresponding norms, must be demanded from financing applicants and debtors, when such information does not have an impact on the determination of the debtors' payment capacity. iv) Not sending, sending outside the established deadline, or sending incomplete or inaccurate reports, minutes, reports, forms or other information that institutions must remit to the Superintendence of Banks, occasionally or periodically, in accordance with law, norms or instructions of the Superintendent. v) Not delivering, publishing or disclosing, in accordance with what is established in the Law or applicable regulations, or delivering, publishing or disclosing outside the deadlines, the following: A) The list of delinquent debtors and those under judicial collection, as well as those clients who issue checks without funds. B) The deposit regulations of the institution at the moment the bank opens an account in favor of the client.

Page 4 of 6 vi) Any other infractions of equal or similar gravity committed against legal, regulatory and other provisions applicable to them, as well as instructions of the Superintendent. For this type of infractions, the Superintendent will apply a sanction of 500 to 3,000 fine units according to materiality.

2. Moderate Infractions: Moderate infractions are those that affect the financial situation of the entity, but do not significantly impact its liquidity and solvency nor the deposits and investments of the public, such as: i) Not presenting or presenting incorrectly to the Superintendence of Banks within the established deadline, the integration of shareholders, amount and participation of each of them in the paid-in capital of the institution in question in accordance with its records. ii) Not valuing mortgage and/or pledge guarantees of credits when such valuation is required in accordance with the norm. iii) Extending or restructuring credits without complying with the legal and regulatory requirements established. iv) Not presenting, presenting incorrectly, or presenting outside the established deadline, to the Superintendence, the report containing the valuation of assets, contingent operations and other risk exposures of the entity in question. v) Non-compliance with resolutions that order actions aimed at correcting any deficiency other than those related to patrimonial and liquidity situation. vi) Any other infractions of equal or similar gravity committed against legal, regulatory and other provisions applicable to them, as well as instructions of the Superintendent. For this type of infractions, the Superintendent will apply a sanction of 3,001 to 10,000 fine units.

3. Serious Infractions: Serious infractions are those that affect the financial situation of the entity and significantly impact its liquidity and solvency or the deposits and investments of the public; as well as those in which provisions prohibiting or limiting operations, transactions, records, or without observing the conditions established in laws or norms are violated, considering as such those indicated below, which are not expressly sanctioned by the previous articles: i) Carrying out acts or operations without the authorization of the Superintendence,

Page 5 of 6 when so established by law or norms, or without observing the conditions established therein. ii) Revaluing real estate without complying with the established procedure. iii) Valuing assets, contingencies and other risk exposures without adjusting to the legal and regulatory provisions established. iv) Carrying out or exercising activities foreign to their legally established corporate purpose. v) Canceling contributions to the Superintendence of Banks outside the established deadlines. vi) Carrying out acts or operations prohibited by law, norms, and other applicable laws. vii) Lacking the legally required accounting, keeping it without complying with accounting standards issued, recognized or authorized by the Superintendence or with irregularities that prevent knowing the patrimonial, reserve, economic and financial situation of the institution. viii) Carrying out operations to evade reserve requirements. ix) Refusing to present to the Superintendence of Banks accounting books, as well as any other information required in accordance with the law. x) Failing to comply with the obligation to submit annual financial statements to the examination of an external auditor in accordance with the law. xi) Not publishing audited financial statements in accordance with the law and regulations. xii) Presenting or publishing financial information that differs from the real situation of the entity. xiii) Transacting with related parties under preferential conditions or without complying with the legal and regulatory provisions established for active operations. xiv) Lack of minimum information that, in accordance with the law and corresponding norms, must be demanded from financing applicants and debtors, when such information has an impact on the determination of their payment capacity and/or credit recoverability. xv) Refusal or resistance to the actions of the Superintendence of Banks

Page 6 of 6 in its surveillance and inspection activities, upon written request. xvi) Not Registering or Incorrectly Registering (or at the appropriate time) provisions for assets and other risk exposures, as well as adjustments resolved by the Superintendence of Banks and by internal and external auditors. xvii) Not Registering or Incorrectly Registering (or at the appropriate time) reserves required by law or norm. xviii) Non-compliance with resolutions that prohibit operations or order actions aimed at correcting patrimonial or liquidity deficiencies and other provisions derived therefrom. xix) Registering shareholders without the authorization of the Superintendent. xx) Interrupting or not providing public service on working days, in contravention of what is established in the norm on the regulation of working days. xxi) Any other infractions of equal or similar gravity committed against legal, regulatory and other provisions applicable to them, as well as instructions of the Superintendent. For this type of infractions, the Superintendent will apply a sanction of 10,001 to 50,000 fine units. The infractions established in this item may be applied individually for each offense observed and/or for each branch where the offense occurs and/or for each day it persists."

SECOND: This Norm shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Journal.

(S) Illegible Magaly María Sáenz Ulloa (S) Illegible (Luis Ángel Montenegro E) (S) Illegible Fausto Reyes (S) Illegible (Silvio Moisés Casco Marenco) (S) Illegible (Ervin Antonio Vargas Pérez).

SAÚL CASTELLÓN TÓRREZ Ad Hoc Secretary of the Board of Directors SIBOIF