Countries/Jurisdictions of Primary Concern - Costa Rica
Transnational criminal organizations increasingly favor Costa Rica as a base to commit financial crimes, including money laundering, as a result of its geographic location and other factors, including limited enforcement capability. This trend raises serious concerns about the Costa Rican government’s ability to prevent these organizations from further infiltrating the economy. As Costa Rica has shifted from a transit point to an operations base for regional narcotics trafficking organizations, the laundering of proceeds from illicit activities has increased. Proceeds from international narcotics trafficking represent the largest source of assets laundered in Costa Rica, although human trafficking, financial fraud, corruption, and contraband smuggling also generate illicit revenue. In 2015, the head of Costa Rica’s intelligence agency, known as the DIS for its Spanish acronym, said that approximately $4.2 billion annually is laundered in Costa Rica.
Much of the money laundering in Costa Rica is channeled through the country’s nascent construction industry. Other sectors have been identified as vulnerable to exploitation by criminal organizations seeking to launder illicit proceeds, including both state and private financial institutions. Money/value transfer services, including money remitters, the casino industry, and the real estate sector, are also particularly susceptible. Various Costa Rica-based online gaming operations launder millions of dollars in illicit proceeds through the country and offshore centers annually. Authorities also have detected, however with less frequency, trade-based money laundering schemes. There have been no prosecutions related to terrorist financing, and measures to detect, investigate, and prosecute such financing are limited. Moreover, narcotics and arms trafficking linked to the Revolutionary Armed Forces of Colombia (FARC) and bulk cash smuggling by nationals from countries at higher risk for terrorist financing have been detected in recent years.
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: 214: January – November, 2015
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: Not available
Convictions: 21 in 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. Its most recent mutual evaluation can be found at: http://www.gafilat.org/UserFiles//Biblioteca/Evaluaciones/IEM%204ta%20Ronda//MER_Costa_Rica_Final_Eng%20(1).pdf
Enforcement and implementation issues and comments:
Costa Rica has made progress in enhancing its AML/CFT legal and regulatory frameworks. In addition, the Attorney General’s Office established a Money Laundering and Asset Forfeiture Bureau and collaborates well with U.S. law enforcement agencies investigating financial crimes related to narcotics and other crimes. However, Costa Rica remains deficient in a number of areas, including with respect to the financing of terrorism and implementing appropriate risk-based policies to mitigate the money laundering risks identified in its 2014 risk assessment.
The Attorney General’s Office still has not successfully prosecuted any complex money laundering schemes, although 21 persons were convicted on related money laundering charges in 2014. Moreover, regulators have only sanctioned a few entities for non-compliance of AML/CFT obligations. The scarcity of convictions and sanctions raises concerns regarding Costa Rica’s capacity to effectively detect, prevent, investigate, and prosecute money laundering crimes; and combat the sophisticated criminal enterprises operating in the country.
A number of successful investigations concluded in the United States in 2015 have ties to Costa Rica, including the conviction in North Carolina of an individual for conspiracy to commit money laundering and six counts of international money laundering concealment. The subject was involved in a telemarketing scheme in which his co-conspirators contacted U.S. residents from call centers in Costa Rica, falsely claiming they had won substantial cash prizes in “sweepstakes.” To claim the cash prizes, the victims were instructed to send a purported “refundable insurance fee.” The subject was identified as a person who facilitated the laundering of hundreds of thousands of dollars received from the victims and sent to co-conspirators in Costa Rica.
Costa Rica does not have an adequate legal framework for non-conviction-based asset forfeiture. Recent legislative proposals would remedy this deficiency and enhance Costa Rica’s ability to dismantle criminal organizations.
In 2015, Costa Rican officials presented a National Strategy to Counter Money Laundering and Terrorism Financing. The strategy is designed to address noted deficiencies and challenges, including the lack of regulatory oversight of designated non-financial businesses and professions (DNFBPs); the lack of transparency regarding beneficial ownership of legal entities; an inadequate sanction regime for noncompliance; and insufficient resources, including personnel, allocated to primary AML/CFT stakeholders. The Government of Costa Rica should implement the strategy. However, significant obstacles, including a divided legislature and a national budget crisis, could impede the devotion of the resources necessary to progress on the plan.