Nicaragua’s Dictatorship Moves to Control Private Banks
A soon to be approved law eliminates banking secrecy
The Superintendency of Banks and other Financial Institutions will now be under the control of Ortega’s “superminister” Ovidio Reyes.
By Ivan Olivares (Confidencial)
HAVANA TIMES – On Christmas Eve, Nicaraguan dictator Daniel Ortega sent his National Assembly a proposed Law on the Administration of the Monetary and Financial System that will overhaul how the Central Bank of Nicaragua (BCN) and the Superintendency of Banks and Other Financial Institutions (Siboif) operate. When this law comes into effect, both entities will be overseen by a common board of directors chaired by the BCN president, “superminister” Ovidio Reyes.
Since early last year, Reyes has exercised de facto control over the Ministry of Finance and Public Credit, particularly after the ousting of its former minister, Ivan Acosta. The appointment of Bruno Gallardo as head of the Finance Ministry appeared to be a mere legal formality, as it was Reyes—not Gallardo—who presented the 2025 National Budget.
An analyst familiar with the country’s political and economic situation told Confidencial anonymously that this law increases Reyes’s already extensive “supercontrol.” The analyst argued, “He is practically the second most powerful person in the country, given the authority and control he holds over fiscal and monetary policy.”
From exile, a private businessman experienced in financial regulation commented that another purpose of this law is to intimidate the population by showcasing the regime’s repressive power. The text also threatens top executives of financial institutions who could now be removed at the discretion of the new all-powerful entity.
A financial law expert pointed out an additional aim of the proposed law: to control the flow of capital both in and out of the country. Faced with some businesspeople moving their assets abroad, the regime seeks to “prevent capital flight, keep assets within the country, and identify those who are transferring funds out of Nicaragua,” the expert explained.
Legal and De Facto Repression
The proposed law submitted to the legislature politicizes financial regulations to consolidate the dictatorship’s power, using these laws to gather information on individuals it perceives as enemies, the private businessman remarked.
According to him, “The initiative aims—like other laws they have imposed—to instill fear in the population and demonstrate their power through repression. This is evident in Article 137, ‘Support from Law Enforcement,’ which allows the Superintendency to utilize the police in cases where individuals or entities resist providing requested information.”
Article 137 states:
“The Superintendency may request assistance from law enforcement if it encounters obstacles or resistance in fulfilling its supervisory, inspection, and monitoring functions. Law enforcement must provide all necessary support to the Superintendency, without prejudice to the legal responsibilities of violators.”
A financial law expert argued, “The Superintendency doesn’t need this new authority. It can already declare an intervention to take control of institutions without involving law enforcement. This provision is unnecessary and excessive.”
End of Banking Secrecy
The businessman also noted that Article 24, “Obligation to Provide Information,” grants unlimited and arbitrary power to authorities, effectively abolishing private financial information. Individuals and entities are now required to provide information not only to the Central Bank or Superintendency but also to any entities or persons they designate.
He criticized the broad demands for any type of information within discretionary timelines and formats, arguing, “This goes beyond regulatory norms. It includes economic, financial, and statistical data without clear limits, undermining the right to private information and threatening banking secrecy for individuals and companies.”
Regarding Article 138, “Nullification of Appointments,” he observed that it grants discretionary power to remove directors, general managers, executives, and internal auditors of supervised financial institutions for reasons determined solely by the Superintendency.
The expert emphasized, “The current law already allows for the dismissal of those who fail to meet legal requirements or commit irregularities. But this proposal introduces vague criteria like ‘reasons determined by the Superintendency,’ which could apply to entire boards, managers, executives, and employees.”
Private Banks Left Defenseless
The financial law expert stressed that “the regime seeks total control over every sector and economic space in the country,” particularly entities handling cross-border capital flows, such as exporters, importers, and bankers. This drive for control has intensified since 2018, following a massive flight of capital from Nicaragua.
“In today’s world, the main source of financing for businesses, farmers, and any economic sector is the savings deposited in the financial system. But when a large amount of capital exits an economy, the transferring country loses its capacity to fund productive activities,” the expert explained.
In Nicaragua’s case, productive actors fear losing their money and send it abroad. As a result, the regime created this infrastructure with extensive control powers to monitor who is moving capital out of the country, he added. The new law threatens public force to obtain information and conduct on-site inspections.
The expert concluded that this superstructure “places banks in a highly vulnerable position regarding correspondent banking relationships and international operations.” Moreover, it removes banks’ independence as commercial entities. “Banks can no longer make decisions that contradict the regime, as this could justify intervention. Now, liquidating a bank requires only an administrative resolution, with no legal recourse.”
FIrst published in Spanish by Confidencial and translated and posted in English by Havana Times.