Nicaragua -- Travel Rule Implementation Regulatory Overview

As of the latest available information (early 2024), Nicaragua has not explicitly adopted or implemented specific legislation or regulations directly addressing the FATF Travel Rule for Virtual Asset Service Providers (VASPs).

While Nicaragua is a member of GAFILAT (Grupo de Acción Financiera de Latinoamérica), the FATF-style regional body for Latin America, and is therefore committed to implementing FATF Recommendations, its regulatory framework for virtual assets (VAs) and VASPs is still nascent or largely absent.

Here's a breakdown of the status:

1. Adopted?

   • No specific legislation: Nicaragua has not publicly enacted specific laws or regulations that define VASPs, require their registration, or mandate the implementation of the FATF Travel Rule (Recommendation 16).
   • General AML/CFT Framework: Nicaragua does have a general Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) framework in place, primarily through Ley 977, "Ley Contra el Lavado de Activos, el Financiamiento al Terrorismo y el Financiamiento de la Proliferación de Armas de Destrucción Masiva" (Law Against Money Laundering, Terrorism Financing, and the Financing of the Proliferation of Weapons of Mass Destruction). However, this law, passed in 2018, predates the specific FATF VASP Guidance (2019) and does not explicitly include virtual assets or VASPs within its scope of regulated entities.
   • Central Bank Stance: The Central Bank of Nicaragua (BCN) has issued statements warning about the risks associated with cryptocurrencies, emphasizing that they are not legal tender, are not issued or guaranteed by the BCN, and fall outside the financial system regulated by the country. This stance generally pushes virtual asset activities outside the traditional regulatory perimeter rather than bringing them into it for AML/CFT purposes.
     • Reference: Banco Central de Nicaragua - Comunicado sobre Activos Virtuales y Criptomonedas (September 7, 2021): https://www.bcn.gob.ni/divulgacion-prensa/comunicado/2021/09/07/comunicado-sobre-activos-virtuales-y-criptomonedas

2. Effective Date:

   • Since the Travel Rule has not been adopted, there is no effective date for its implementation in Nicaragua.

3. Threshold Amounts:

   • As the Travel Rule is not implemented, there are no specific threshold amounts ($1,000 USD/EUR equivalent) for VASP-to-VASP or VASP-to-unhosted wallet transfers mandated in Nicaragua.

4. Which VASPs are Covered:

   • Without specific legislation, there is no official definition or coverage of VASPs under a Travel Rule mandate. When and if Nicaragua implements the rule, it is expected to follow the FATF definition of VASPs, which includes exchanges, transfer providers, custodians, and issuers of new virtual assets.

5. Technical Implementation Requirements:

   • There are no specified technical implementation requirements for the Travel Rule in Nicaragua, as the rule is not in effect. Future implementation would likely require VASPs to use secure, interoperable data transfer solutions (e.g., TRISA, TRAVELER, SYGNA, OpenVASP) to transmit required originator and beneficiary information.

6. Penalties for Non-Compliance:

   • There are no specific penalties for non-compliance with the FATF Travel Rule in Nicaragua, as it has not been adopted.
   • However, if entities dealing with virtual assets were to be considered financial institutions or subject to general AML/CFT obligations under Ley 977, failure to comply with general AML/CFT requirements (e.g., customer due diligence, suspicious transaction reporting) could lead to administrative sanctions, fines, or even criminal charges for money laundering offenses, as defined in the law.
     • Reference: Ley 977 (Asamblea Nacional de Nicaragua): https://www.asamblea.gob.ni/leyes/ley-977-ley-contra-lavado-activos-financiamiento-terrorismo-financiamiento-proliferacion-armas-destruccion-masiva

Overall Status:

Nicaragua appears to be significantly behind in implementing the FATF Travel Rule and comprehensive regulation for virtual assets and VASPs. While it is obligated through its GAFILAT membership to align with FATF standards, specific legislative action regarding virtual assets, and particularly the Travel Rule, has not yet materialized. The Unidad de Análisis Financiero (UAF) is Nicaragua's Financial Intelligence Unit (FIU), responsible for AML/CFT, but as of now, there's no public guidance from them specifically addressing VASPs or the Travel Rule.

Reference for Nicaragua's AML/CFT framework (GAFILAT Mutual Evaluation Report from 2017 - note this predates FATF VASP guidance): https://www.gafilat.org/index.php/es/biblioteca-virtual/evaluaciones-mutuas/evaluaciones-mutuas-4ta-ronda/informes-aprobados-4ta-ronda/nicaragua/2723-informe-de-evaluacion-mutua-de-nicaragua/file