Norm for the Management and Prevention of Terrorism Financing and Proliferation of Weapons of Mass Destruction Financing Risks (GPR-FT/FP)

---

Resolution No. CD-SIBOIF-980-1-ENE18-2017
Dated January 18, 2017

NORM FOR THE MANAGEMENT AND PREVENTION OF TERRORISM FINANCING RISKS; AND, OF THE FINANCING OF THE PROLIFERATION OF WEAPONS OF MASS DESTRUCTION (NORM GPR-FT/FP)

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

CONSIDERING

I

That in accordance with Article 99 of the "Political Constitution of the Republic of Nicaragua," banks and other financial institutions, both private and state-owned, are under the supervision, regulation, and oversight of the Superintendence of Banks and Other Financial Institutions.

II

That Nicaragua is a member of the United Nations Organization; therefore, IN CONCORDANCE WITH Article 25 of Chapter V, and WITH CHAPTER VII OF THE CHARTER OF THE UNITED NATIONS, IT IS OBLIGED TO ADOPT AND COMPLY WITH THE RESOLUTIONS OF ITS SECURITY COUNCIL;

THEREFORE, it must adopt internal mechanisms that allow for the immediate and effective implementation of the Resolutions of the United Nations Security Council on terrorism and its financing; likewise, Nicaragua is a party to thirteen international legal instruments against terrorism and, in particular, the "International Convention for the Suppression of the Financing of Terrorism" of the United Nations (New York, 1999), which was approved by the National Assembly of the Republic of Nicaragua through Decree No. 3287, published in the Official Gazette La Gaceta No. 92 on May 20, 2002, and ratified by Executive Decree No. 79-2002, published in the Official Gazette La Gaceta No. 72 on September 11, 2002, and considering, in line with said Convention, that the financing of terrorism is a matter of deep concern for the entire international community, observing that the number and gravity of acts of international terrorism depend on the financing that terrorists may obtain, it states that all States must adopt a wide range of measures to prevent and counter the financing of terrorists, terrorist organizations, and, in particular, the adoption of regulatory measures, which, in accordance with its Art. 18, include customer identification and due diligence, monitoring, and reporting of suspicious transactions, which must be applied by financial institutions and other professions involved in transactions, to prevent and counter the movement of funds suspected to be for terrorist purposes, but without in any way impeding the freedom of movement of legitimate capital.

III

That in accordance with Recommendation No. 6 of the Financial Action Task Force (FATF), countries must implement financial sanctions regimes to comply with the Resolutions of the United Nations Security Council relating to the prevention and repression of terrorism and the financing of terrorism, which require countries to implement measures and designate authorities to freeze funds or other assets without delay and ensure that no funds or other assets are made available, directly or indirectly, to or for the benefit of, any person or entity either (i) designated by, or under the authority of, the United Nations Security Council within Chapter VII of the Charter of the United Nations, including in concordance with Resolution 1267 (1999) and its successor Resolutions; or (ii) designated by the country under Resolution 1373 (2001).

IV

That in correspondence with Resolution 2253 (2015) of December 18, 2015 of the UN Security Council, the need to adopt measures to prevent and repress the financing of terrorism, terrorist organizations, and individual terrorists is recognized, even when no link to a specific terrorist attack is established, which includes the use of income derived from organized crime, such as the illicit production and trafficking of drugs and their chemical precursors, as well as the obligation to adopt the measures described with respect to all persons, groups, companies, and entities included in the list prepared under Resolutions 1267 (1999), 1333 (2000), 1989 (2011), 2083 (2012), and 2161 (2014), and successors, and regardless of the nationality or country of residence of those persons, groups, companies, or entities.

V

That, Nicaragua condemns terrorism and its proliferation and financing in all its forms and manifestations; therefore, through its specialized institutions, it maintains its firm support for the compliance and adoption of measures established by the United Nations and the FATF to prevent and combat the financing of terrorism and the financing of the proliferation of weapons of mass destruction, even though, in the country's assessment, the risk of terrorism financing is classified as Moderate-Unlikely risk, because no criminal activities typically practiced directly by terrorist organizations have occurred, nor is there evidence that they are developing; therefore, the Board of Directors of this Superintendence considers it of special interest to continue promoting the stability, transparency, and reliability of the National Financial System, strengthening and

expanding existing regulatory measures for the more effective management and prevention of terrorism financing and proliferation risks.

VI

That in accordance with Recommendation No. 7 of the FATF, countries must implement financial sanctions aimed at complying with the resolutions of the United Nations Security Council relating to the prevention, repression, and interruption of the proliferation of weapons of mass destruction and their financing.

VII

That, in accordance with Article 3 (items 2, 4, 7, 10, 12, and 13); and 10 (items 1, 2, 3, 4, 5, and 9), of Law No. 316, "Law of the Superintendence of Banks and Other Financial Institutions," and its Reforms, it is the responsibility of this Superintendence to supervise, inspect, monitor, and oversee the operation of all entities within its scope, corresponding to the Board of Directors of the Superintendence of Banks and Other Financial Institutions to issue general norms; and to issue to institutions subject to its supervision, inspection, monitoring, and oversight, the necessary instructions to remedy deficiencies or irregularities found and to adopt measures within its competence to impose administrative sanctions and correct infractions committed.

VIII

That, in accordance with Article 10 (letters "a" and "c"), of Law No. 793, "Law Creating the Financial Analysis Unit," published in La Gaceta, Official Gazette No. 117 on June 22, 2012, hereinafter, Law No. 793, it is the faculty of this Superintendence, in relation to obligated subjects under its supervision and within the scope of preventing money laundering, goods and assets from illicit activities, and terrorism financing, indicated in its Article 9 (letter "a"), to issue, develop, and apply norms, circulars, measures, and instructions and to apply corrective measures, administrative, and pecuniary sanctions as corresponding to its legal faculties.

IX

That, in accordance with Article 17 (items "1" and "3"), of Decree No. 17-2014, "Decree for the Application of Measures on the Immobilization of Funds or Assets Related to Terrorism and its Financing in accordance with Resolutions 1267 (1999) and 1989 (2011) and successors, Resolution 1988 (2011) and successors, and Resolution 1373 (2001) of the Security Council of the United Nations Organization," published in La Gaceta No. 61, on March 31, 2014, hereinafter Decree No. 17-2014, the detection of funds or assets, their preventive immobilization, and immediate reporting to the Financial Analysis Unit by supervised entities, applies without prejudice to their own Internal Anti-Money Laundering and Terrorism Financing Prevention Programs and Policies that

must be maintained in compliance with Article 15 of the aforementioned Law No. 793; the information delivered to the Financial Analysis Unit regarding the measure adopted in attention to the cited Decree, is without prejudice to the Suspicious Transaction Report (STR), as appropriate, in accordance with Articles 3 (item "4"), 4 (item "1"), and 15 of Law No. 793, Article 11 of Decree No. 07-2013, "Regulation of the Financial Analysis Unit," and the respective Applicable Regulations, issued or to be issued in this matter by the Superintendence and/or the Financial Analysis Unit.

X

That, in accordance with Article 19 (items "1", "2", and "3"), of Decree No. 17-2014, the Financial Analysis Unit and other regulatory entities, within the framework of their respective competencies, must carry out the monitoring and supervision of the obligated subjects under their charge, established in Article 9 (letter "a"), of Law No. 793, regarding the proper compliance with this Decree, and, upon detection of non-compliance with it, the sanctions defined according to the Legal Order will be applied, for which purpose, the Financial Analysis Unit will inform the state institutions referred to in the cited Decree about those non-compliances.

XI

That, in accordance with Article 15, of Law No. 793, obligated subjects, as appropriate, must develop and implement Anti-Money Laundering, Goods and Assets from Illicit Activities, and Terrorism Financing Prevention Programs, in correspondence with their particular risk profile, size, complexity, and volume of their products, services, or transactions, geographic areas in which they operate, their specificity within the industry or activities proper to their trade or profession, programs that must adjust at minimum to the norms and guidelines established by their respective regulatory or supervisory entity.

XII

That, in the same order, and in accordance with Article 4, of the "Norm for the Management and Prevention of Money Laundering, Goods or Assets; and Terrorism Financing Risks," and its reforms, issued by the Board of Directors of the Superintendence of Banks, every Supervised Entity, in attention to the industry in which it operates, to its own specificity within it, to the nature and complexity of its business, products, and financial services, to the volume of operations, to its geographic presence, to the technology used for the provision of its services, in weighing its risks and in compliance with the specific legal provisions of the matter and general provisions contemplated by said Norm, must formulate, adopt, implement, and develop effectively and efficiently, a Prevention Program or Integrated System for the Prevention and Management of Money Laundering, Goods or Assets; and Terrorism Financing Risk, which may also be referred to briefly as SIPAR LD/FT.

XIII

That Supervised Financial Institutions must adopt and implement the preventive measures that are necessary, unique, and specific in the context of contributing to prevention and detection to stop the flow of funds or other assets to terrorist groups or terrorist organizations or individual terrorists; the use of funds or other assets by terrorist groups or terrorist organizations, or individual terrorists from, or by individual persons who make or attempt to make use of or through Supervised Financial Institutions (hereinafter IFiS); and to effectively prevent them from being used in terrorism financing; and/or in the financing of the proliferation of weapons of mass destruction.

XIV

That Article 38, item 4, of Law No. 561, General Law of Banks, Non-Bank Financial Institutions, and Financial Groups, published in La Gaceta, Official Gazette No. 232, on November 30, 2005, regarding the obligations of the board of directors, states that the latter has among its responsibilities "to ensure that policies, systems, and processes necessary for the correct administration, evaluation, and control of risks inherent to the business are implemented and instructed to be maintained in adequate functioning and execution."

In exercise of its faculties,

HAS ISSUED

The following:

Resolution CD-SIBOIF-980-1-ENE18-2017

NORM FOR THE MANAGEMENT AND PREVENTION OF TERRORISM FINANCING RISKS; AND, OF THE FINANCING OF THE PROLIFERATION OF WEAPONS OF MASS DESTRUCTION (NORM GPR-FT/FP)

TITLE I

GENERAL PROVISIONS

SINGLE CHAPTER

CONCEPTS, OBJECT, AND SCOPE

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

a) Databases: Files, physical or electronic, or a combination of both media, that every supervised financial institution must create, have, maintain, and conserve for at least five years, and, at the disposal of the competent national authority, regarding its Clients and Users or their managers; regarding its Shareholders, Directors, Representatives, Agents, Attorneys-in-fact, Suppliers, Funders, Correspondent Banks, Non-Bank Correspondents even if for commercial purposes they are designated with another name, employees; as well as, all transactions and operations carried out, rejected, or attempted by or with them or in their name.

b) United Nations Security Council (UNSC): Committee of the United Nations Organization, which issues Resolutions which have a binding character, among others, in matters of fighting terrorism, and terrorism financing; as well as, against the proliferation of weapons of mass destruction (WMD) and the financing of their proliferation.

c) Decree 17-2014: "Decree for the Application of Measures on the Immobilization of Funds or Assets Related to Terrorism and its Financing in accordance with Resolutions 1267 (1999) and 1989 (2011) and successors, Resolution 1988 (2011) and successors, and Resolution 1373 (2001) of the Security Council of the United Nations Organization," published in La Gaceta No. 61, on March 31, 2014.

d) Risk-Based Approach (RBA): Process by which supervised financial institutions, in compliance with legal provisions and regulations governing the matter on AML/CFT/FP, and supported by the Standards, Recommendations, and Guidelines of the Financial Action Task Force (FATF), and in attention to the results of their own Risk Assessment of ML, TF, and FP, adapt the policies, procedures, controls, and measures of their prevention program, assign their resources where they identify greater risks, must perform more rigorous and exhaustive due diligence processes where those greater risks exist, without prejudice that under no circumstances are they exempt from mitigating and assigning the due resources to those risks that according to their assessment are considered low, being able in this case to apply simplified due diligence to them.

e) Risk Assessment of money laundering, terrorism financing, and financing of the proliferation of weapons of mass destruction, of the supervised financial institution (Risk Assessment of ML, TF, and FP; or RA/ML-TF-FP): It is the process by which Supervised Financial Institutions, supported by the pertinent guidelines issued by the FATF and their own policies, methodologies, matrices, and procedures, given the particularities and singular characteristics of each of these risks, identify, evaluate, and mitigate them in a differentiated manner individually and in attention to their particular characteristics of each of the money laundering, goods or assets risks; of terrorism financing; and, of financing the proliferation of weapons of mass destruction to which they are exposed; they understand and manage them by adopting measures proportional to the greater or lesser risks identified according to the results obtained in the assessment for each of them.

f) False Positive: Possible matches with persons and entities listed, either in the Resolutions of the United Nations Security Council, and/or in other risk lists used by the Supervised Financial Institution, due to the common nature of the name or due to ambiguous identifying data, which upon examination prove that they do not match, and are discarded.

g) Financing of Proliferation (FP): Any act that provides funds or uses financial services, in whole or in part, for the manufacture, acquisition, possession, development, export, transit, transport, transfer, deposit, or use of nuclear, chemical, or biological weapons, their launch means, and other related materials (including technologies and dual-use goods for illegitimate purposes) in contravention of national laws or international obligations, when the latter is applicable.

h) Terrorism Financing (TF): Crime typified in Article 395 of the Penal Code, Law No. 641, published in La Gaceta Nos. 83, 84, 85, 86, and 87 on May 5, 6, 7, 8, and 9, 2008.

i) Funds or Assets: According to what is established in Article 3, item 3, of Decree 17-2014, they refer to those goods of any type, tangible and intangible, movable and immovable, regardless of how they were obtained, and the documents and legal instruments, whatever their form, including electronic or digital form, that accredit ownership or other rights over said goods, including, without the enumeration being exhaustive, deposit accounts, bank credits, traveler's checks, bank checks, drafts, shares, bonds, debentures, bills of exchange, letters of credit, and interest, dividends, other income, or values that accrue or are generated by those funds or assets.

j) Supervised Financial Institutions (IFiS): Institution or Supervised Financial Institutions by the Superintendence of Banks and Other Financial Institutions; including but not limited to, financial groups and their members, branches of banks and foreign financial societies established in the country, representation offices of foreign banks, non-bank financial societies, insurance companies, general warehouses of deposits supervised as non-bank financial institutions in their condition of credit auxiliaries assigned by the special law that regulates them, and securities market entities; non-bank financial institutions that, according to Art. 1. Item 2, of the aforementioned Law No. 561, provide brokerage services or financial services with public resources, qualified as such by the Superintendence or that by special laws it corresponds to this one to regulate their operation; and any other that in the future the laws assign to it, and/or that enter the category of supervised in matters of AML/CFT/FP in accordance with what is provided in Art. 9, letter "a", of the aforementioned Law 793, "Law Creating the Financial Analysis Unit."

k) Money Laundering, Goods or Assets (ML): Crime typified in Article 282 of the Penal Code, Law No. 641, published in La Gaceta Nos. 83, 84, 85, 86, and 87 on May 5, 6, 7, 8, and 9, 2008.

l) AML/CFT Norm: Norm for the Management and Prevention of Money Laundering, Goods or Assets; and Terrorism Financing Risks, approved by the Board of Directors of the SIBOIF through Resolution CD-SIBOIF-524-1-MAR5-2008 of March 5, 2008, and published in La Gaceta numbers 63, 64, 65, 66, and 67 on days 4, 7, 8, 9, and 10 of April 2008; and its reforms through Resolution CD-SIBOIF-576-1-MAR11-2009 of March 11, 2009, published in La Gaceta number 62 on March 31, 2009; Resolution CD-SIBOIF-612-3-ENE27-2010 of January 27, 2010, published in La Gaceta, number 73 on April 21, 2010; and Resolution CD-SIBOIF-721-1-MAR26-2012 of March 26, 2012, published in La Gaceta, number 80 on May 2, 2012.

m) United Nations Organization (UN): Supranational body, which through its Security Committee, issues Resolutions, which have a binding character in matters of fighting terrorism, and terrorism financing; as well as, against the proliferation of weapons of mass destruction (WMD) and the financing of their proliferation.

n) ML, TF, and FP Risk Profile: Nature and level of exposure of IFiS to money laundering and/or terrorism financing and/or financing of the proliferation of weapons of mass destruction risks, risk profile and level that is determined from the identification and analysis of threats, vulnerabilities, and consequences obtained through its own Risk Assessment of ML, TF, and FP and/or those known from evaluations carried out by national authorities.

o) Designated Persons or Entities (DPE): Natural or legal persons and/or entities designated by virtue of the Resolutions of the United Nations Security Council on Terrorism and/or Terrorism Financing; or, the Proliferation of weapons of mass destruction and/or Financing of their proliferation.

p) Activity-Based Financial Prohibitions (ABFP): These are the prohibitions established by the United Nations Security Council, to prevent the provision of financial services, financial resources, or financial assistance in relation to the supply, sale, transfer, manufacture, maintenance, or use of articles, materials, equipment, goods, and technology prohibited by relevant resolutions, such as those contained in resolutions 1737 (2006) and 1929 (2010); or in resolutions 1874 (2009), 2087 (2013), and 2094 (2013); successors or future ones that this body issues in this matter.

q) UNSC Resolution: Resolution or Resolutions of the United Nations Security Council

r) Money Laundering, Goods or Assets; and/or Terrorism Financing; and/or Financing of the Proliferation of Weapons of Mass Destruction Risks (ML/TF/FP Risks): These are inherent and emerging risks, which by their very nature of business supervised financial institutions permanently have and face of being used for Money Laundering, Goods or Assets; and/or for Terrorism Financing; and/or for Financing the Proliferation of Weapons of Mass Destruction.

s) STR: Suspicious Transaction Report.

t) Specific Financial Sanctions (SFS): These are part of the sanctions regime relating to the prevention, suppression, and interruption