MANAGUA, (Reuters) – Nicaragua’s parliament yesterday passed a law forbidding banks from closing accounts of sanctioned individuals, a move that one prominent business group said poses a systemic threat to the country’s financial system.
The United States has over the past three years sanctioned 27 Nicaraguan politicians or business people with ties to President Daniel Ortega for human rights violations and corruption, including Ortega’s wife, Vice President Rosario Murillo.
Legislators in Nicaragua’s parliament, which is controlled by Ortega, amended the Consumer Defense law with a 74-14 vote in support of the changes that dictate banks are not allowed to shutter accounts of sanctioned Nicaraguans.
“We cannot have financial institutions that decide, outside of the Constitution and the laws, who lives and who dies when it comes to financial matters,” said Walmaro Gutierrez, president of the parliament’s Economic Commission and one of the Nicaraguan officials sanctioned by Washington.
Nicaraguan banks have long been worried that they may be cut off from the global financial system by doing business with any of the growing number of sanctioned individuals and businesses, something the U.S. government strictly prohibits.
To be able to access the global banking system, Nicaraguan banks rely on so-called “corresponding banks,” which are usually large global banking institutions that operate under U.S. regulations.
Nicaragua’s most influential business association, the Council for Private Enterprise (COSEP), said the amendment was the worst law change by Nicaragua’s parliament in the last 30 years.
“This will lead to the closure of corresponding offices, make it impossible to receive remittances, send or receiving international transfers, and the cancellation of contracts with credit card brands,” Cosep said in a statement.
Washington began imposing sanctions against Ortega family members and allies following a wave of anti-government protests in 2018 that Nicaraguan security officials put down harshly. More then 320 people have died in the violence.
