Many countries have adopted the recommendations of the Financial Action Task Force (hereinafter FATF) regarding the incorporation of a Declaration of Beneficial Ownership to combat tax evasion and money laundering.
The Republic of Nicaragua has not been oblivious to this, whereby it issued Law 977 or “Law against Asset Laundering, the Financing of Terrorism and Proliferation of Mass Destruction Weapons Financing” in July 2018, which introduces by first the term Beneficial Owner.
However, the National Assembly published the amendment to the “General Law of the Public Registries and the Commercial Code of the Republic of Nicaragua” through Law No. 1035 in the Official Gazette on August 25, 2020, introducing the Registry of Beneficial Ownership of Commercial Companies.
In turn, the Special Commission of Registries of the Supreme Court of Justice issued a Circular in November of that year, in which the operation of said Registry is developed.
This article describes the main aspects of the beneficial owner legislation.
1. Who are considered beneficial owners?
According to Article 2.1 of the aforementioned Circular, a beneficial owner is a natural person on whose behalf a transaction is carried out.
Likewise, natural persons who have ultimate ownership of a customer are also considered as such, including those who exercise ownership or control through a chain of title or other means of direct control.
It should be noted that the term ownership indicated in the regulation also refers to ownership exercised de facto.
2. Obligated parties
The parties subject to the Statement of Beneficial Ownership are all the corporations registered in the Public Registries of the country.
3. Criteria to determine the Beneficial Owner in Commercial Companies
The following must be considered:
- The natural person must own 25% or more of the capital stock of the corporation.
- If it is not possible to determine based on the above, it will be identified through the natural person, who acts as a decision-making unit individually or through other natural persons or legal entities that have powers not derived from ownership to assign or remove management bodies or decision-making on agreements.
- If not identified based on the above criteria, the natural person holding the most important administrative position shall be considered as such.
4. Registration of Beneficial Ownership of Business Corporations
The Registry of Beneficial Ownership of Business Corporations has an administrative nature and performs the following functions:
- To register the information of the Beneficial Owner declared by the business corporation.
- To ensure the integrity of the data kept.
- To guarantee the access of interested companies and competent authorities.
5. Registration Procedure
The registration must be done via the web, assigning a natural person domiciled in the country as the information provider of the beneficial owner.
When the information of the Commercial Company is loaded, the statement of the Beneficial Owner must be completed with the required information.
The certification of the statement of the Registry shall be requested through the assigned natural person.
Corporations must register in the Beneficial Ownership Registry within 30 days from the date of registration in the Business Register. Thus, this registration will be made when the online form is published for existing companies.
It should be noted that the information must be updated every 12 months when there are modifications regarding the beneficial owner.
If no statement is filed or there is an error or omission, remedial measures may be imposed on the taxpayer, i.e., a Qualification Note will be issued indicating this and the deadline to correct it.
In case of recidivism, the Registrar will issue a sanction, which may reach 1500 Fine Units if the infraction is considered “very serious.”