After the Nicaraguan Assembly approved a bill that forces local banks to allow public officials sanctioned by OFAC to have an account, there are fears that the country will be isolated from the international financial system.
A statement issued by the National Assembly on February 3 explains that the deputies approved the Law Initiative of Reform and Addition to the Law for the Protection of the Rights of Consumers and Users, a legislative project which guarantees a better and greater protection of the rights of consumers and users in the access to goods and services as a human right recognized by the Nicaraguan State.
The European Commission announced that the two Central American countries are on the list of nations with deficiencies in their anti-money laundering and anti-terrorist financing strategies.
Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar/Burma, Nicaragua, Panama and Zimbabwe are the countries included in the list, the European Commission reported.
The bill being discussed in Costa Rica basically seeks to extinguish the assets of organized crime, but there are those who claim that as proposed, it puts at risk the presumption of innocence of individuals.
The extinction of domain is a concept that in practice refers to seizing or confiscating assets linked to criminal activities, and then transferring them in favor of the State.
From May 2019, foreign customers will have to declare to local system banks that their funds meet their country's tax requirements.
The Superintendence of Banks of Panama (SBP) approved Agreement 02-2019, which implements the recommendations of the Financial Action Task Force, which consists of expanding the required due diligence measures of banks with their customers.
The law approved in Nicaragua empowers authorities to investigate and even intervene in businesses suspected of being linked to money laundering or terrorist financing.
With the support of government legislators and in the context of a crisis that is deepening every day, the National Assembly yesterday approved a new law that will provide more investigative faculties to the Financial Analysis Unit (UAF by its initials in Spanish), which, among other things, may sanction those who alter the constitutional order.
The bill against money laundering which is making progress in the National Assembly, includes prohibiting corporations from issuing bearer shares.
The Justice and Legal Affairs Committee of the National Assembly approved the ruling of the new Law against Money Laundering, Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction.
Among the activities susceptible to laundering are sales of gold and vehicles, the purchase and sale of real estate and electronic money transfers.
From a report entitled "Mutual Evaluation of Nicaragua October 2017", by the Financial Action Group of Latin America (Gafilat):
Key findings
Nicaragua has legal and regulatory provisions, as well as an institutional framework allowing combating, at a certain level, Money Laundering (ML) and Terrorist Financing (TF). The current legal framework in force has some deficiencies that limit the general system effectiveness.
Following the transfer by Abdul Waked of Gese's majority shareholding to Fundación Publicando Historia, the Editorial Group's access restrictions to the United States financial system have been lifted.
From a statement by the US ambassador in Panama:
I and my Embassy colleagues in Panama congratulate all parties involved in the successful effort to reestablish unfettered access to markets and the financial system of the United States on behalf of the newspapers of the La Estrella de Panama and El Siglo Editorial Group (GESE).
Panama and Nicaragua are among the ten countries in Latin America with the highest risk of money laundering, according to the Basel Institute of Governance.
The anti-money laundering index (AML) prepared by the Basel Institute of Governance places Panama in fourth place in the list of countries with the highest risk of money laundering and financing of terrorist activities in Latin America and the Caribbean.
...and I will tell you who you are. In their quest to reduce exposure to risk, banking correspondents have started to restrict the services they provide to gambling companies, remittance companies, and brokerage firms that are not related to banking groups in the region.
In order to reduce risk exposure, some international banks with correspondents in Panama and other countries in the region are failing to open accounts for or provide services for companies whose income comes from activities such as remittances and gambling.The banks' argument is that they are more likely to be used for money laundering. Even non-banking brokerage firms claim to have difficulty offering their customers products and services,"... since banks wont open accounts in which customers can deposit their funds and receive a return on their investment."
"When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed."
Costa Rica 's estimated illicit financial flow averages 45% of its total foreign trade, and the incoming amount is 2.5%; For El Salvador these figures are 9% and 7.5%, for Guatemala 9% and 1.5%, for Honduras 31% and 28%, for Nicaragua 13% and 9%, and for Panama 16% and 307%.
A report by Global Financial Integrity (GFI) entitled "Illicit Financial Flows to and from Developing Countries: 2005-2014" concludes that the illicit flow of money to and from developing countries remains at high levels.The purpose of the report is to quantify those illicit financial flows that represent a serious disadvantage to economic development.
The housing market, casinos, concert halls, and the livestock sector are all used to launder money in Central American countries.
Excerpted from the report "International Narcotics Control Strategy Report, Volume II, Money Laundering and Financial Crimes" by the US State Department:
Costa Rica Transnational criminal organizations continue to favor Costa Rica as a base to commit financial crimes due to its location and limited enforcement capability. Costa Rica’s government has attempted to strengthen the legal framework for supervision and enforcement; however, challenges remain in mitigating money laundering risks. Costa Rica is a transit point that is also increasingly used as an operations base for narcotics trafficking; and significant laundering of proceeds from illicit activities continues. Costa Rica should continue to close financial crimes legislative gaps and allocate resources for investigation and prosecution.
After the bank was taken over because of its inclusion in the Clinton List drawn up by the U.S. Treasury Department, the Superintendency of Banks has ordered its reorganization and sale to another bank.
From a statement issued by the Superintendency of Banks in Panama:
Through Resolution SBP-0116-2016 of July 1, 2016, the Superintendency of Banks has ordered the reorganization of Balboa Bank & Trust Corp., effective from the date July 4, 2016 at 2:30 pm, taking into consideration the recommendations of the Interim Administrator.The reorganization of the bank aims to fulfill three basic objectives:• To protect the best interests of depositors;• To minimize any loss of value of the bank to the detriment of depositors and•Reduce any adverse impact on the banking system. The decision to reorganize the bank will allow choices to be made that aim to give greater security to depositors and creditors of Balboa Bank & Trust Corp. for an early normalization of the situation in the bank and access to all of its funds.
The Office of Foreign Assets Control has granted a license, until December 14, 2016, to access the US financial system, and allow the sale of the companies to be managed.
The license granted by the Office of Foreign Assets Control and the US Treasury Department (OFAC) is valid until December 14 this year and authorizes the companies Importadora Maduro, Maduro Internacional and Lindo & Maduro to make arrangements for them to be bought.