Countries/Jurisdictions of Primary Concern - Costa Rica
Transnational criminal organizations increasingly favor Costa Rica as a base to commit financial crimes, including money laundering. This trend raises serious concerns about the Costa Rican government’s ability to prevent these organizations from infiltrating the country.
Proceeds from international cocaine trafficking represent a significant source of assets laundered in Costa Rica. Sizeable Costa Rica-based online gaming operations also launder millions of dollars in illicit proceeds through the country and offshore centers annually. Criminals launder other proceeds through Costa Rica from activities that include financial fraud, human trafficking, corruption, and contraband smuggling.
Criminal organizations use financial institutions, licensed and unlicensed money transfer businesses, bulk cash smuggling, and the free trade zones to launder the proceeds of their illicit activities. Money services businesses are at significant risk for money laundering and a potential mechanism for terrorist financing. Trade-based money laundering, while used, is not detected with the same frequency as the above typologies. While there is no recent investigation related to terrorism financing, recent investigations in Costa Rica detected narcotics and arms trafficking linked to the Revolutionary Armed Forces of Colombia (FARC).
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: YES
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: NO civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks, savings and loan cooperatives, pension funds, insurance companies and intermediaries, money exchangers, and money remitters; securities broker/dealers, credit issuers, sellers or redeemers of traveler’s checks and postal money orders; trust administrators and financial intermediaries; asset managers, real estate developers and agents; manufacturers, sellers, and distributors of weapons; art, jewelry, and precious metals dealers; sellers of new and used vehicles; casinos, virtual casinos, and electronic or other gaming entities; lawyers and accountants
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not available
STR covered entities: Banks, savings and loan cooperatives, pension funds, insurance companies and intermediaries, money exchangers, and money remitters; securities broker/dealers, credit issuers, sellers or redeemers of traveler’s checks and postal money orders; trust administrators and financial intermediaries; asset managers, real estate developers and agents; manufacturers, sellers, and distributors of weapons; art, jewelry, and precious metals dealers; sellers of new and used vehicles; casinos, virtual casinos, and electronic or other gaming entities; lawyers and accountants
money laundering criminal Prosecutions/convictions:
Prosecutions: 4: July 2013 – December 2014
Convictions: 4: July 2013 – December 2014
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Costa Rica is a member of the Financial Action Task Force of Latin America (GAFILAT), a FATF-style regional body. Once published, its most recent mutual evaluation will be found at: http://www.gafilat.org/content/evaluaciones/#3
Enforcement and implementation issues and comments:
While Costa Rica made substantial progress in enhancing its AML legal and regulatory frameworks, a 2013 case demonstrated that financial sector regulators failed to prevent a major money laundering scheme from openly operating in Costa Rica despite various red flags. In addition to these regulatory deficiencies, various other obstacles hinder Costa Rica’s ability to effectively investigate and prosecute money laundering crimes. The underutilization of investigative tools—such as cooperating witnesses, confidential informants, electronic surveillance, and undercover operations—reduces the efficacy of investigators. The laws that govern corporations do not adequately provide for transparency, resulting in the extensive use of corporate structures to facilitate money laundering. In addition, criminal liability does not extend to corporate entities.
In 2013, the Public Ministry established a separate Money Laundering and Asset Forfeiture Bureau. Most money laundering investigations were previously handled by the Economic Crimes Bureau. Moreover, Costa Rica enacted a law to facilitate greater fiscal transparency through the international exchange of tax information.
Costa Rica has a minimal legal framework for non-conviction-based asset forfeiture, with no stand-alone legislation. The government has pursued only one successful case under this minimal legal framework, which has been in effect since July 2009. In November 2013, the President submitted to the National Assembly a proposal to improve non-conviction-based asset forfeiture. The draft bill 18964 seeks to create the first stand-alone law governing non-conviction-based asset forfeiture. The legislation would be a significant improvement to the current law and would enhance Costa Rica’s ability to dismantle criminal organizations. The National Assembly has yet to act on the proposal while other government agencies continue to undertake revisions to the proposal.
Costa Rica has a tax information exchange agreement with the United States. Additionally, Costa Rica cooperates well with appropriate U.S. law enforcement agencies investigating financial crimes related to narcotics and other crimes. In May 2013, Costa Rican authorities assisted U.S investigators in taking down an online money transfer business based in Costa Rica alleged to have laundered approximately $6 billion.