According to the study The Double Standard of Dictator Daniel Ortega’s Anti-Money Laundering Policy, carried out by Central American think tank Expediente Abierto, the Daniel Ortega-Rosario Murillo regime uses anti-money laundering and counter-terrorist financing (AML/CTF) standards to strengthen political repression of its opponents.
Meanwhile, the regime makes it out to international organizations that it is willing to follow the recommendations and standards of the Financial Action Task Force (FATF) concerning AML/CTF. However, the double standard is evident in this purported compliance, the report, released in the first semester of 2023, revealed.
“They [the regime] use the anti-money-laundering system to bring down crimes that don’t really exist,” Eliseo Núñez, a former Nicaraguan lawmaker exiled in Costa Rica, told Diálogo on August 10. “In Nicaragua the rule of law has collapsed; there is no division of power or autonomous legal capacity of the security forces, because everything goes back to Ortega.”
The Financial Analysis Unit (UAF), the main entity of the AML/CTF measures in Managua, sees its functional autonomy compromised because it is presided over by two active officers of the Nicaraguan Army and the National Police, who maintain their unconditional loyalty to Ortega, the report indicates.
As such, “the entities responsible for preventing and prosecuting money laundering are under the control and use of the dictator, as a tool to persecute political opponents and benefit his allies and interests,” Expediente Abierto added. “This lack of autonomy undermines the integrity of the system, creating impunity in cases of corruption and money laundering.”
One of the cases that evidences the use of AML/CTF as a tool for political repression was the money laundering accusation against Cristina Chamorro, former director of nongovernmental organization (NGO) Violeta Chamorro Foundation, for using funds from the United States Agency for International Development (USAID), Núñez said.
In March 2022, Chamorro, who ran as a presidential candidate in the 2021 elections, received an eight-year prison sentence for “money laundering and ideological falsehood,” Spanish newspaper El País reported. In 2023, along with other political prisoners, Chamorro was expelled from the country.
In response to an inquiry from the Nicaraguan news site 100% Noticias, the U.S. State Department stated that USAID conducted several audits and found no evidence of money laundering or diversion of funds for other purposes.
Another case related to the use of AML/CTF, according to Núñez, is that of the Catholic Church. On May 27, the police reported on the existence of a money laundering network operating in several dioceses in different departments of the country. However, “the funds investigated are licit donations from legal entities destined for the construction of a hospital.”
Another situation that illustrates this trend is the 2018 Law against Money Laundering, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction, Expediente Abierto says. The Ortega-Murillo regime uses this law as a tool for political control for the Ministry of the Interior.
It also points out that since this law was passed, more than 3,000 NGOs were closed in the country, some under federal accusations of money laundering. “The dictatorship gives you civil death,” Núñez said. “In the Ortega regime you can’t assume that what he is saying is true.”
In 2022 Nicaragua obtained a score of 6.7 in the money laundering and terrorist financing risk index, experiencing a slight decrease compared to 2021 (6.75). The country ranked second with the highest risk in Latin that same year, data gathering platform Statista indicated.
In 2012, Ortega established the UAF to remove the country from international organizations’ “black list,” Núñez said. “What Ortega does with money laundering and drug trafficking is simply manage them,” he said. “He did it in the 80s and there is no difference now.”
For Núñez, “it would be more relevant to evaluate the possibility of withdrawing it [Nicaragua] from the FATF, since it uses the system for political purposes and not for the purposes for which it was created,” he said.
The actions of the Ortega-Murillo regime pose an international problem, since the credibility of its accusations against someone as a money launderer is questioned, when you know that the accusations are politically motivated, Núñez added. “Managua is in and out of the FATF.”
The Ortega-Murillo regime authoritarianism, corruption, and lack of accountability, results in negative ratings in international evaluations for Nicaragua. Today, the country is among the first with high risk of money laundering and terrorist financing, being one of the 20 worst evaluated since 2020, Expediente Público indicated.
An example of this situation is the seizure of more than $120 million by the Nicaraguan police between 2007 and 2021. However, it is not known how the state spent this money and it does not account for other foreign currency confiscated in anti-narcotics operations.
According to the analysis, similar cases that demonstrate how Nicaraguan authorities continue to integrate funds from illicit activities into the legal economy have been recorded in recent years. This practice of arbitrary confiscation and discretionary distribution evades established legal processes.
It is essential that Nicaragua stops having the possibility of including individuals in the system, as its irresponsible use “weakens the ability to differentiate between criminals and people who are simply being accused for political-partisan reasons,” Núñez concluded.