The law regulating the activities of VASPs
The law No. 1072
Resolution of the Central Bank of Nicaragua No. CD-BCN-XXV-1-22
VASP regulator
The Central Bank of Nicaragua (BCN)
The Financial Analysis Unit (UAF)
Activities included in VASP services
According to paragraph 17 of Article 4 of Law No. 977, which was amended by Law No. 1072:
Virtual asset service providers, who are defined as persons who perform one or more of the following activities or operations, for or on behalf of another natural or legal person:
1. exchange between virtual assets and fiat currencies;
2. exchange between one or more forms of virtual assets;
3. transfer of virtual assets;
4. custody and/or management of virtual assets or instruments that allow control over virtual assets; and
5. participation in and provision of financial services related to an issuer’s offering and/or sale of a virtual asset
VASP registration procedure for a local company
According to Article 6 of Resolution No. CD-BCN-XXV-1-22:
In order to VA services, interested parties must submit an application for an operating license to the BCN. To this end, they must submit an application letter addressed to the Financial Operations Division of the BCN, accompanied by at least the following documents:
1) application form duly completed with the information required in Annex 1;
2) notarized copy of the Memorandum of Association and/or document of Incorporation, Articles of Association and amendments, if applicable, duly registered with the corresponding Public Registry;
3) for joint-stock companies, a certificate from the relevant management body indicating the list of shareholders registered in the shareholders’ register holding a share equal to or exceeding 5% of the capital and information on their beneficial owners. For legal entities that are not joint-stock companies, a certificate from the relevant corporate body with information on shareholders holding a stake of 5% or more of the capital and information on their beneficial owners must be submitted. In the case of commercial companies, they must attach a certificate of beneficial ownership declaration issued by the relevant State Trade Register
4) a notarized copy of the Registration Letter of the current Board of Directors or an equivalent body registered in the relevant Register
5) notarized copy of the identification of the legal representative and the Power of attorney granted to him/her, which must be duly registered in the corresponding Public Registry
6) certificates of no criminal record or criminal prosecution of the legal representative/members of the Board of Directors/other governing body of the legal entity within the established period before submitting the application
7) notarized copy of the Certificate of Registration before the UAF
8) business plan
9) notarized copy of the drafts of contracts to be signed, or business agreements, and of the licenses of foreign virtual asset service companies, with which it will carry out operations, when applicable
In the case of newly incorporated applicant entities, they must comply with the requirements set forth in this article and submit justification for those which, in their opinion, are not applicable. The BCN shall decide independently whether or not to accept or not the justification and/or the merits of the request
Upon receipt of an application, the BCN’s units shall verify, within 90 days, that the requirements are met and that all necessary documentation is submitted. The relevant recommendation is then forwarded to BCN’s senior management and the BCN Board of Directors. After obtaining a license and/or registration, the provider will be included in the register maintained by the BCN
Once the license is granted by the BCN, it must be published within 90 calendar days by the authorized provider in La Gaceta, Official Gazette of the Republic of Nicaragua, in order for it to take effect. Once published, the authorized supplier shall notify the NCB by means of a communication, attaching a copy of La Gaceta where the authorization license has been published
Authorization of VASP from another state to provide services in the jurisdiction
In accordance with Article 4 of the Resolution, those interested in providing virtual asset services must incorporate as a legal entity whose purpose is to provide such services or other related financial services. Neither the law nor the resolution mentions the possibility of authorizing foreign companies.
Requirements to the VASP after registration (corporate maintenance, reporting, substance)
According to Article 19 of the Resolution, VASP have to:
1. inform the BCN within 15 working days when:
-they authorize or modify operating rules, internal regulations or procedures, related to authorized services, ML/FT/FP prevention policies and the conditions of the services provided, including their fees and service commissions;
-there are effectively registered changes of: legal representative and/or general manager, domicile, shareholder composition, amendments to minutes or articles of incorporation and their bylaws, members of the board of directors or equivalent body, or other information that the entity considers relevant whether corporate or operational or of any other nature
2. provide access to its facilities and documentation to the BCN personnel designated for this purpose and make available to them the real-time consultation and reporting tools
3. provide the BCN, as often as it deems appropriate, with statistical and operational data on the transactions carried out, and any other data it deems pertinent, in the formats, terms, and by the means it may require
4. prepare its financial statements for the period from January 1 of a year to December 31 of the same year, date on which the closing of the fiscal year shall take place
5. inform the BCN, within a term not to exceed two business days, after the occurrence of any operational or technical inconvenience or incident that affects its normal operation in any of the authorized payment services
6. submit the information requested by the BCN regarding ML/TF/PF prevention and other matters related to its activities
7. for services involving electronic fund transfers-keep records on originators and beneficiaries of electronic transfers
8. define the technical, infrastructure, human resources, security or other requirements to be met by the authorized agencies
9. enter into service contracts with authorized agencies
10. have minimum policies, plans and/or manuals in place as defined by law
Liability provided for the activities of a VASP without local registration
According to Article 25 of the Resolution, if a person provides virtual asset services without an appropriate license or without proper registration, it is subject to a fine of double the amount established for serious violations (for serious violations, the upper limit of the fine is 6% of the company’s assets according to its latest audited financial report) and may not continue to provide these services until it obtains an appropriate license to operate or registration.
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Manimama Law Firm provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.
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