This article published in La Prensa analyzes the possible impacts of new norms issued on money laundering and terrorism financing, overseen by the Financial Analysis Unit, issued April 23, 2019 within the context of a social and economic crisis that the Government has interpreted as a coup attempt on the part of the opposition and the Catholic church hierarchy.
See Spanish original:
Specialists point out that there is no trust in the Financial Analysis Unit for monitoring transactions
In the norms the Financial Analysis Unit stipulates that the people who will be reported to this Unit must not know that their information is being transferred there.
The decision this Thursday of the Financial Analysis Unit (FAU) to increase the monitoring of transactions of Nicaraguans over several financial and commercial activities created suspicions among specialists, who pointed out that even though this measure might adhere to international norms, there are fears that these mechanisms might be used to persecute opponents of the Daniel Ortega regime.
This past April 23rd the FAU – making use of the anti-money laundering law (Law 977) – set minimum amounts that will be subject to greater oversight. This supervision will be over several financial and commercial transactions.
As the new norm reads, the obligated subjects, that is to say, those are obligated to comply with the anti-laundering law, will have to report to the FAU suspected operations in transactions related to the entrance of family remittances, purchase of new and used vehicles, operations in currency exchange bureaus, micro-finance institutions, financial cooperatives, pawn shops, purchase and sale of real estate, cattle transactions, sale or export of gold, operations in trusts, as well as national and international transactions, among others.
In each one of these operations minimal amounts were set that will be left subject to greater monitoring and that, in the case that illicit operations are suspected, must be immediately reported to the FAU through an already established electronic system.The same norms of the FAU define suspected operations as “any isolated, repeated, simultaneous or serial act, operation or transaction, regardless of the amount transacted or attempted by any natural or legal person…(that) ends up being unusual, or lacking apparent legal or economic justification.”
Gabriel Álvarez, a constitutional lawyer, who is doing a legal analysis of the new norms to verify that they are not violating any constitutional rights, points out that even though this measure could be in adherence with international norms on the fight against illicit activities, it creates suspicion among Nicaraguans because of the distrust that exists that these legal instruments might be used for purposes of persecution and espionage on the part of the Government against its opponents.
There are political risks
Álvarez explains that standards and parameters already exist for defining when a suspicious operation should be identified, that even operate in democratic countries. But in Nicaragua “the risk is political, that the regulating instruments be used, that are important in any country in the world, because money laundering and other illicit activities of organized crime are pursued, as a mechanism to obtain information on the part of the Government or Government agencies, or of the party in power, about those who they believe are its opponents. This would be terrible”, warns Álvarez.
Along this same lines declared the opposition ex-deputy Eliseo Núñez, who pointed out that the problem is not the norm, the evil is rooted in the distrust that the FAU generates, which is seen as the espionage arm of the dictatorship. “The FAU has not been on the margins, it has become a political organ that has people who were in the Army there, so that generates suspicion, there is no trust, that is the problem”, he indicated. In addition to the lack of trust in the FAU, Núñez points out that the environment of fear about greater control over financial and commercial transactions of Nicaraguans created fear because of the political crisis that continues without solution, “and this norm on face value is seen as a type of control that the regime wants to establish.”
Regime has provided reasons for the fears
In the case of the decision of the FAU to increase controls over income from remittances higher or equal to US$500, Núñez recalled that “in its time the Government said that organizations were receiving money from outside the country to finance weapons and what it called death roadblocks, there is a precedent, and now the control over remittances is coming, so this will generate more distrust.”
In the norms, the FAU alleges that no obligated subject can allege reserve or secrecy of any type at the moment of reporting information on the operations that must be reported to the Unit. The information will be transferred to the FAU through an electronic platform, known as SIREL. If the obligated subjects believe that said transactions of people are suspect, they should report them immediately, or in a term no longer than twenty days. In the case that the transactions are in cash, this information should get to the FAU in a term no longer than ten days.
In the norms it is established that the people who will be reported to this Unit should not know that their information is being transferred. Concerning this, Álvarez said that international norms related to this issue effectively allow that the information would get to the Units of Analysis without the person who is subject of suspicion knowing, so as not to alert him, but insists that in Nicaragua the risk that exists is that global standards are not met for defining a suspicious operation.
Vargas: dictatorship seeks control over money
The sociologist and economist Óscar René Vargas states that there are big interests behind this norm, and one of them is looking at how to control the flow of money that would come in to finance political organizations and parties, in the case of an electoral contest.
“The regime knows that, if an electoral process opens up, political organizations and parties would have the need for money for their electoral work; this disposition allows them to know and control the possible money flows. For example, to do political work vehicles are needed, sound equipment, TV cameras, electoral networks, etc; all this requires money”, he explained. About this, Vargas remembers that the Ortega regime knows that several organizations receive donations from outside the country, and through this mechanism will seek to persecute them within the pretext of fighting corruption.
According to Vargas the dictatorship made “norms that creat a lot of suspicion and distrust among the population in general”, and that this can affect the channels for the operation of financial transactions, and thereby affect the economy.
The economist Alejandro Aráuz pointed out that “it constitutes in effect a discretional tool that the Government could be using not just to exercise influence, extortion and aggravation on those “obligated subjects”, allied or not with the government, in an anormal political situation that our country is currently undergoing.”
Based on the philosophy that currently reigns in Nicaragua concerning terrorism laws and the police state, Aráuz pointed out that this norm “provides an occasion for the Government to strengthen surveillance and terror mechanisms over legal organizations and the citizenry in general. Likewise businesses, associations, professional, political associations, etc. are exposed to this type of impairment.”
What type of information must the obligated subjects send? In the report on suspicious operations a comprehensive client profile must be attached; the account status of the product or service where the suspicious operation was detected; copy of the identification presented by those reported; a report of the analysis that originated the suspicious operation, among others.
The amounts subject to control
According to the norms, the subject obligated to this Unit of Analysis must report operations with the following amounts: in national and international transactions, the amount subject to oversight is equal to or greater than US$5,000; if the entry of remittances is equal or greater than US$500; if a person carries out a transaction with a cooperative that surpasses $3,000 per month.
In the case that a person carries out a transaction with an exchange bureau greater than US$5,000; operations with micro-finance institutions for US$10,000; if a person has earnings from gambling larger than US$1,000.
Also operations from the sale and purchase of real estate larger than US$100,000 must be reported to the FAU; in the case that the purchase is related to cash purchases of new and used vehicles, when the amounts are equal to or higher than US$10,000 and 5,000, respectively.
Likewise, when there are livestock transactions equal to or higher than US$1,000 they must be reported; in the case of national sales or export of gold, if the balance is equal to or greater than US$5,000 in the case of local sales, and if it is exported, if the amount is higher than US$10,000. If the operations are through trusts larger than US$10,000, they must also be reported to the FAU.