In order to comply with international standards on the Prevention of Money Laundering and Financing of Terrorism (AML), Law No. 1,035 has been published in La Gaceta, Diario Oficial No. 158 of August 25, 2020 (“Reform and additions to Law No. 698 General Law of Public Registries and Commercial Code of the Republic of Nicaragua”).
This new norm creates the “Registry of Ultimate Beneficial Ownership of Commercial Companies”, in order to comply with Recommendation 24 of the FATF (International Financial Action Group), which consists of ensuring that there is adequate, accurate and timely information on the ultimate beneficial owner and the control of legal persons; understanding by “Ultimate Beneficial Owner” as those natural person(s) who exercise final effective control over a legal person or other legal structure, in accordance with the FATF.
With the aforementioned reform, now every Nicaraguan commercial company will have the duty to keep its shareholding structure updated before the Mercantile Registry, as well as the report of its corresponding ultimate beneficial owner. Compliance with this new obligation is a prerequisite for registering any act related to the operation of the company concerned, such as the daily acts of registration of general powers of administration or new boards of directors.
As a reference, since the incorporation of Lawyers as designated subjects in matter of AML, article 18 of Accord 451 of the National Council of Administration and Judicial Career created us the obligation to identify the ultimate beneficial owner of the clients that are legal persons, taking as a reference that natural persons who exercise control of the company through ownership of 25% or more of its shareholding may be ultimate beneficiaries. Likewise, if the owner of such percentage is another legal person, we must identify who controls it through a similar percentage and so on, until the natural person who controls the client through the chain of ownership is duly identified.
In that order, one of the functions of this new registry is to ensure the integrity, confidentiality, traceability and security of the data guarded in accordance with international standards, as well as guaranteeing access only to interested commercial companies, to the competent authorities and relevant institutions. However, the Nicaraguan Private Sector has expressed its concern regarding the due protection that is given to the information provided together with the discretion that the new Law has given to the Supreme Court of Justice in regulatory matters, such as in sanctioning matters. .
The creation of this registry adds Nicaragua to the countries that in Central America have a registry of ultimate beneficial owners, such as the cases of Costa Rica and Panama. We will keep you informed regarding the start date of this new registration.
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Avil Ramírez Mayorga
CENTRAL LAW in Nicaragua