Regulatory Provisions for Factoring Entities

[Logo: Superintendency of Banks and Other Financial Institutions]

OFFICE OF THE SUPERINTENDENT OF BANKS AND OTHER FINANCIAL INSTITUTIONS. MANAGUA, JUNE TWENTY-SIX, TWO THOUSAND TWENTY-FIVE. EIGHT FORTY IN THE MORNING.

WHEREAS

I
That on June 4, 2025, the Monetary and Financial Board of Directors issued the “Regulation on Authorization and Regulation of Factoring Entities,” contained in Resolution CDMF-XIX-4-25, effective from June 18, 2025, with the purpose of regulating factoring operations carried out by legal entities other than banks and financial companies, in accordance with the provisions of Article 32 bis of Law No. 977, “Law Against Money Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction.”

II
That Article 13 of the aforementioned regulation empowers the Superintendent to establish the minimum guidelines to be met by factoring companies for the purpose of managing risks associated with their operations, the accounting treatment of factoring contracts, and the information they must submit according to the official calendar for information delivery required by the Superintendency, as well as aspects related to the provision of information to the Superintendency's credit bureau. That the same Article 13 also empowers the Superintendent to issue the necessary provisions for the implementation of the regulation subject to this resolution.

That in accordance with the foregoing considerations.

In exercise of its powers,

HAS ISSUED

The following,

RESOLUTION SIB-OIF-XXXIII-396-2025

REGULATORY PROVISIONS FOR FACTORING ENTITIES

TITLE I – CONCEPTS

FIRST: For the purposes of these regulatory provisions, the terms indicated in this section, whether in uppercase or lowercase, singular or plural, shall have the following meanings:

a) CDR: Credit Bureau of the Superintendency of Banks and Other Financial Institutions.

b) Economic Interest Group: Related parties, significant links, and indirect manifestations of natural or legal persons indicated in the scope of the Regulation on Authorization and Regulation of Factoring Entities, referred to in Article 55 of Law 561, General Law of Banks, Non-Banking Financial Institutions and Financial Groups, and the regulations governing concentration limits.

c) Law No. 842: “Law for the Protection of Consumer and User Rights,” published in La Gaceta, Official Gazette No. 129, of July 11, 2013, contained in Law No. 1097, “Law of the Nicaraguan Legal Digest on Business, Industry and Commerce Matters,” published in La Gaceta, Official Gazette No. 137, of July 26, 2022.

d) AML/TF Regulation: “Regulation for the Management of Prevention of Risks of Money, Goods or Asset Laundering; and Terrorism Financing,” contained in Resolution No. CD-SIBOIF-524-1-MAR5-2008, of March 5, 2008, and published in La Gaceta, Official Gazette Nos. 63, 64, 65, 66, and 67, of April 4, 7, 8, 9, and 10, 2008, respectively, and its reforms.

e) TF/PF Risk Management Regulation: “Regulation for the Management and Prevention of Risks of Terrorism Financing and Financing of the Proliferation of Weapons of Mass Destruction,” contained in Resolution No. CD-SIBOIF-980-1-ENE18-2017, published in La Gaceta, Official Gazette No. 27, of February 8, 2017.

f) AML/TF/PF: Prevention of the risks of money and/or asset laundering and/or terrorism financing and/or financing of the proliferation of weapons of mass destruction.

TITLE II – REQUIREMENTS FOR CONSTITUTION AND COMMENCEMENT OF OPERATIONS

SECOND: Requirements for Constitution. - Those interested in carrying out factoring operations must be constituted as single-purpose public limited companies and submit an application to the Superintendent accompanied by the following documents:

a) The draft articles of incorporation and its bylaws.

b) A minute indicating a deposit in the Superintendency's current account, for 1% of the minimum share capital amount, for processing the application. Once operations have commenced, said deposit will be returned to the promoters. If the application is denied, 10% of the deposit amount will be transferred to the General Treasury of the Republic, and the balance will be returned to the promoters. In case of withdrawal, 50% of the deposit will be transferred to the General Treasury of the Republic. For the purposes of what is indicated in this literal, the Superintendent must be requested for the account and name of the banking entity where the deposit will be made.

c) The economic-financial feasibility study, which must include, among other aspects, market considerations and projected financial statements for the first three years.

d) Information about its shareholders.

1. For natural persons:

i. Documented curriculum vitae with the information required in Annex 1 of these regulatory provisions.

ii. Notarially certified photocopy of the citizen identification card on both sides for nationals, or of the identity card for residents, or of the passport in the case of foreigners, in accordance with the relevant law.

iii. Statements of assets and liabilities and income and expense statements, with the information required in Annex 3 of these regulatory provisions, signed by the interested party and certified by a Certified Public Accountant (CPA) or equivalent professional in the country where it is issued. Figures must be expressed at book value in accordance with accounting standards.

iv. Notarially certified photocopy of the Single Taxpayer Registry (RUC) certificate, in accordance with the relevant law. In the case of foreigners not domiciled in the country, they must present the equivalent used in the country where they pay taxes with the respective authentication or apostille.

v. Judicial and/or police record certificate not older than two months from the date of the application, issued by the corresponding national authorities in the case of persons domiciled in Nicaragua, and by the competent foreign body, with the corresponding authentication or apostille, when dealing with persons not domiciled in Nicaragua or natural persons residing in Nicaragua who have been residents abroad in the last 15 years.

vi. A minimum of two (2) banking or commercial references not older than two months from the date of the application (national or foreign). If they have worked in public institutions, a solvency certificate from the Comptroller General of the Republic or the corresponding control body in the case of foreigners is required. These references must not be issued by the companies that will be shareholders of the factoring company nor by companies of the economic interest group to which they belong.

vii. Declaration before a public notary of not being involved in any of the situations contemplated in Article 29, numerals 1, 5, 6, 7, 8, and 9 of Law No. 561, as indicated in Annex 2 of these regulatory provisions.

viii. Report of their obligations in the financial system issued by a national or foreign credit bureau or credit reporting agency, when dealing with persons not domiciled in Nicaragua or natural persons residing in Nicaragua who have been residents abroad in the last 15 years.

ix. Detailed breakdown of related natural and legal persons, as well as those that form their unit of interest, based on the criteria established in Article 55 of Law No. 561 and the regulations governing concentration limits, for which they must complete Annexes 4A and 4B of these regulatory provisions.

2. For legal persons:

i. Notarially certified photocopy of the public deed of incorporation of the company, bylaws, and its modifications, if any, duly registered in the corresponding Public Registry. In the case of foreign legal entities, equivalent documents, with the corresponding authentications or apostilles.

ii. Original notarial certification of the minutes stating the authorization granted by the corresponding corporate body to participate as an organizer and/or shareholder of the new company and the amount of the investment allocated for that purpose.

iii. Names of the members of the board of directors, as well as the curriculum vitae of each of its members, which shall be presented in accordance with Annex 1 of these regulatory provisions.

iv. A minimum of two (2) banking or commercial references not older than two months from the date of the application (national or foreign). These references must not be issued by the companies that will be shareholders of the factoring company nor by companies of the economic interest group to which they belong.

v. Copy of the independent auditors' report on the audited financial statements, corresponding to the two fiscal years prior to the date of the application, as applicable.

vi. Judicial and/or police record certificate not older than two months from the date of the application, for the legal representative and members of the company's board of directors, issued by the corresponding national authorities in the case of persons domiciled in Nicaragua, and by the competent foreign body, with the corresponding authentication or apostille, when dealing with persons not domiciled in Nicaragua or persons residing in Nicaragua who have been residents abroad in the last 15 years.

vii. Report of their obligations in the financial system issued by a national or foreign credit bureau or credit reporting agency (in the latter case, when dealing with legal entities not domiciled in Nicaragua).

viii. List and percentage of participation of natural person shareholders, ultimate beneficial owners of the shares, in a succession of legal entities, of the promoting legal entity shareholder of the factoring company in formation.

The ultimate beneficial owner natural persons must comply with the information requirements established in numeral 1 of this literal d. Likewise, a scheme reflecting the shareholding structure must be presented, showing whether the participation in this succession of companies is individual or jointly with its related parties, indicating the full names of the natural or legal persons contained in this organizational chart. The information presented must allow for the identification, in terms of Law No. 977, of the ultimate beneficial owner of the factoring company to be constituted.

e) For all shareholders, documentary evidence of the lawful origin of the assets to be invested in the new company. At a minimum, such documentation must include:

1. Information on the bank accounts from which the money originates.

2. Information on the origin of the money deposited in said accounts.

3. Notarial declaration on the origin of the assets (information on the activities from which the assets originate, such as: businesses, inheritances, donations, among others) and evidence that the money originates from them.

f) The names of the members who will form the board of directors, the general manager and/or principal executive, and internal auditor, who must comply with the requirements established in the regulations governing the requirements to be a director, general manager and/or principal executive, and internal auditor of financial institutions. Additionally, the name of the AML/TF Risk Prevention Administrator, who must comply with the professional qualifications and requirements established in the AML/TF Regulation.

g) Any other document or information determined by the Superintendent.

All information and/or documentation required by this article, which is in a language other than Spanish, must be presented with its corresponding translation, which must comply with what is stipulated in national laws on the matter or with the laws of the country where the translation is carried out.

Documents from abroad required of natural or legal persons in this article must comply with the requirements established by the relevant laws to have legal effect in the country.

Those interested in being part of the company must authorize the Superintendent in writing so that the latter can request information from the corresponding natural and legal persons, in order to verify their integrity and competence.

The application and documents submitted to the Superintendency must be delivered in original and two notarially certified photocopies.

THIRD: Exceptions. - The Superintendent may authorize exceptions to one, several, or all of the information requirements established in literal d) of section SECOND of these regulatory provisions, in the following cases:

a) When the legal entity partner is a financial institution supervised by the Superintendency.

b) When the legal entity partner is a foreign financial institution subject to supervision according to international practices.

c) When the legal entity partner lists its shares on a stock exchange or regulated market.

The Superintendent is empowered to exempt from the presentation of requirements when they are officials with a recognized track record in the national or international financial system; or from any other literal when the information, having been required by other regulations, is updated in the Superintendency.

When pertinent, supporting documents for the case must be presented.

FOURTH: Requirements for Commencement of Operations. - To commence operations, factoring companies must comply with the following requirements:

a) Notarially certified photocopy of the public deed of incorporation and its bylaws with the corresponding registration entries in the relevant Public Registry.

b) Evidence that it has the minimum paid-in share capital, net of losses.

c) Opening Balance Sheet in accordance with the accounting framework issued by this Superintendency and certified by a Certified Public Accountant.

d) Original certification of the minutes of the appointments of the directors for the first term, the general manager and/or principal executive, internal auditor, and the AML/TF risk prevention administrator.

e) Have technological infrastructure and human resources, consistent with the nature, complexity, volume of transactions, and its own risk profile, in correspondence with its operations, clients, products and services, distribution channels, markets, and technologies.

f) Have the following policies, manuals, regulations, and/or systems approved by the board of directors:

1. Credit management and asset evaluation and classification manual for the operations it carries out.

2. AML/TF/PF Program, which at a minimum considers the guidelines and directives established in this regulation.

3. Manual for the management of technological risks and automated information systems that meet the conditions of security, availability, functionality, efficiency, reliability, confidentiality, auditability, and integrity.

4. Internal control manual consistent with the operations described in this regulation.

5. Customer Service Regulation that regulates, among other aspects, issues of information provision and transparency in the contracting and provision of factoring services, user protection, procedure and deadlines for handling inquiries and complaints, among others, in compliance with Law No. 842 and the regulations governing transparency in financial operations.

g) Have a code of ethics approved by the board of directors that addresses aspects related to the policies adopted to control and manage potential conflicts of interest that arise in its daily activity; business opportunities, information confidentiality; fair treatment of its clients, suppliers, and employees; the use and protection of its assets; compliance with applicable laws, regulations, and norms; applicable sanctions for non-compliance, among others.

h) Have the contract models that they will sign with their clients, which must be approved by the Superintendency in accordance with Article 35 of Law No. 842.

i) Any other requirement determined by the Superintendent in relation to the activities the company will develop and/or the management of its inherent risks.

FIFTH: Factoring Companies in Operation. - Factoring companies currently operating will have a period of up to ninety (90) days from the effective date of Resolution CDMF-XIX-4-25, dated June 4, 2025, regarding the “Regulation on Authorization and Regulation of Factoring Entities,” to submit their registration application to the Superintendency.

They must submit an action plan to adapt to the requirements established in these regulatory provisions, with compliance dates and responsible parties, which will be approved by the Superintendent. This plan must include the requirements for constitution with the exception of literal “c,” for which they must present a three-year budget projection with a description of the business strategy and operating model; likewise, compliance with the requirements established for commencing operations and other contemplated aspects.

TITLE III – OTHER REGULATORY PROVISIONS

SIXTH: Responsibilities of the Board of Directors in Risk Management. - The board of directors of the factoring company shall be responsible for approving the objectives, guidelines, and written policies that allow for adequate management of the risks associated with its operations. Likewise, it shall be its responsibility to ensure compliance with said objectives, guidelines, and policies, which must be implemented by the company's general management.

In particular, the board of directors shall be responsible for ensuring compliance with at least the following aspects:

a) That its policies for risk management and internal control are consistent with the company's strategic orientation and proportionate to the magnitude of the identified risks.

b) That its policies on conflicts of interest are clear and include actions among the different participants in its operations; as well as the actions of the company's officials and employees, its suppliers, and other external participants.

c) That its policies, strategies, and internal controls implemented in its operations are periodically examined.

d) That the human resources assigned to factoring operations have knowledge and work experience consistent with the exercise of their functions and responsibilities, which are also congruent with the complexity of the different risks associated with said operations.

e) That there is a systematic process to stay informed about the company's performance and the risks it faces in its operations.

f) That the company acts preventively, prudently, and diligently in its operations.

g) That the necessary monitoring mechanisms and internal controls are established to manage the prevention of ML/TF/PF risks in its factoring operations, including alert signals for their monitoring and early detection of suspicious operations, analysis, escalation, documentation, and reporting to the competent authority as appropriate, which, at a minimum, must contain the following aspects:

1. The adoption, implementation, and development of a Prevention Program or Comprehensive System for the Prevention and Management of Money, Goods or Asset Laundering Risk; Terrorism Financing and Financing of the Proliferation of Weapons of Mass Destruction (SIPAR ML/TF/PF).

2. The SIPAR ML/TF/PF must include the policies, procedures, and internal controls expressed in its respective Manual for the Prevention of Risks of Asset Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction (AML/TF/PF Manual), periodically updated AML/TF/PF Risk Matrices, monitoring system, and operating plans, all of which must comply with and adjust to the AML/TF Regulation, TF/PF Risk Management Regulation where applicable, to the resolutions, instructions, and directives of the Superintendency, to the national legal framework, including international conventions on the matter to which Nicaragua is a party, to codes of conduct, guides, corporate mandates, audit recommendations, periodic evaluations and self-evaluations, among others, that are related to the prevention of ML/TF/PF risks.

3. The intensity of the policies, procedures, internal controls, tasks, and measures that each factoring company applies must be subject to its ML/TF/PF risk level, classified as high, medium, or low, across all areas of its businesses and activities, that of its clients, and the size of the entity.

4. The SIPAR ML/TF/PF must allow the factoring company to prevent, detect, and report possible suspicious ML/TF/PF activities in any of its three internationally known stages: placement, layering, and integration; based on the four basic administrative tasks of an effective SIPAR ML/TF/PF:

i.- Prevention: of the risk that resources derived from ML/TF/PF-related activities are introduced or placed into the Financial System, through policies, procedures, and internal controls for adequate customer knowledge, complemented by robust training and education of the company's personnel at all levels.

ii.- Detection: of activities intended to be carried out or that have been carried out, to layer, integrate, or give the appearance of legality to operations linked to ML/TF/PF; through the implementation of adequate, timely, and effective controls and monitoring tools.

iii.- Reporting: timely, efficient, and effective to the competent authority designated by law, of detected operations intended to be carried out or that have been carried out or are suspected of being related to ML/TF/PF.

iv.- Retention: for the legal term, of all files, transaction records, and documentation, both physical and electronic, derived from the preceding tasks.

5. The factoring company will keep all its directors, officers, and employees generally informed and trained on its respective SIPAR ML/TF/PF; and specifically and focused on those who belong to areas or are in charge of products that, according to their profile, need, linkage, and impact, are more exposed to these risks.

6. The SIPAR ML/TF/PF must be subject to review and update in accordance with legislative, regulatory, and normative changes in the matter, or due to new and better practices in ML/TF/PF risk management; as well as in response to new schemes, indicators, signals, and patterns of ML/TF detected by the company itself, or communicated by the Superintendency or