The regulatory framework for the national financial system has been updated with the enactment of Law No. 1232, the “Monetary and Financial System Administration Law,” published in La Gaceta on December 30, 2024.
This new regulation unifies the Organic Law of the Central Bank of Nicaragua (Law 732) and the Law of the Superintendency of Banks and Other Financial Institutions (SIBOIF). It also sets new guidelines for managing the financial system, regulating local currency operations, and applying sanctions for violations.
The law creates the Monetary and Financial System Administration, composed of:
- Monetary and Financial Advisory Board: The highest governing body, responsible for approving policies and regulations.
- Central Bank of Nicaragua: Responsible for monetary stability, payment regulation, and currency issuance.
- SIBOIF: Monitors regulatory compliance and supervises financial entities.
These entities will enjoy autonomy and must coordinate efforts to strengthen the financial system’s stability and efficiency.
Expression and settlement of obligations in cordobas
The new regulation establishes that:
- All transactions within the national territory must be expressed and settled in cordobas.
- Transactions with foreign countries and those expressly authorized by the Central Bank are exempt.
- Any clause that mandates payments in foreign currency without conversion to cordobas is null and void.
- Clauses for maintaining value in foreign currency are allowed, adjusted to the exchange rate at the time of payment.
Capital contributions and share transfers
To ensure transparency in the financial system:
- All capital contributions or share transfers in supervised entities require SIBOIF authorization.
- The lawful origin of funds and the suitability of new shareholders are verified.
- The Superintendency may reject operations that threaten the system’s stability.
Fines and violations
The sanctions outlined in the law are classified by the severity of the violation:
- Minor: Warnings or fines equivalent to a percentage of the entity’s assets.
- Moderate: Significant fines and immediate corrective measures.
- Serious: Suspension of operations, license revocation, and doubled fines for repeat offenses.
Fines are calculated based on the national average minimum wage, ensuring proportionality in penalties.
terencio.garcia@garciabodan.com
Regional Managing Partner
García & Bodán
Nicaragua