These unregulated businesses are a significant risk for money laundering and a potential mechanism for terrorist financing.  Costa Rica has demonstrated a genuine commitment to strengthening its anti- money laundering/counter-terrorist financing (AML/CFT) regime.  As a result of a law passed in 2009, in 2010 Costa Rica continued implementing new regulations directed at combating money laundering, terrorist financing, and organized crime.  Costa Rica also created a new National Anti-Drug Commissioner position that is responsible for monitoring and evaluating the GOCR‘s policies and plans to combat money laundering.

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 THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.:  NO

CRIMINALIZATION OF MONEY LAUNDERING:

• All serious crimes approach or list approach to predicate crimes:  All serious crimes
  
• Legal persons covered:  criminally:  NO   civilly:  YES

CRIMINALIZATION OF TERRORIST FINANCING:

• Ability to freeze terrorist assets without delay:  NO
  
• UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:
Covered entities:  Banks and savings and loan cooperatives; pension funds; money exchangers or remitters; investment fund and safekeeping companies; credit institutions; issuers, sellers or redeemers of travelers checks and postal money orders; and securities dealers.

• Enhanced due diligence procedures for PEPs:  Foreign:  YES   Domestic:  YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities:  Banks and savings and loan cooperatives; pension funds; money exchangers or remitters; fiduciary trust, investment fund and safekeeping companies, and asset managers; credit institutions; issuers, sellers or redeemers of travelers checks and postal money orders;  securities dealers; and real estate agents.

• Number of STRs received and time frame:  304 from January to December 2010
  
• Number of CTRs received and time frame:  Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

• Prosecutions:  Not available
  
• Convictions:  Ten - January through October 2010
  
• Assets forfeited:   criminally:  $9,693,214.00   in FY2010     civilly: Not applicable

Money Laundering and Financial Crimes

RECORDS EXCHANGE MECHANISM:

• With U.S.:  YES
  
• With other governments/jurisdictions:  YES

In December 2010, the Financial Action Task Force of South America (GAFISUD) admitted Costa Rica as a member, formally marking its departure from the Caribbean Financial Action Task Force (CFATF).

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Its most recent mutual evaluation can be found here:   http://www.cfatf- gafic.org/mutual-evaluation-reports.html

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ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Money laundering cannot be charged as an additional offense to the predicate crime (e.g., a drug dealer who is convicted on drug charges cannot also be prosecuted for laundering the drug proceeds).  In addition, criminal liability does not extend to legal persons.  
 
There are over 250 Internet sports book companies registered to operate in Costa Rica.  The industry transacts approximately $12 billion annually and employs 10,000 people.  This industry in practice is almost unregulated.  The FIU reports that Costa Rican attorneys oftentimes conduct cash purchases of real estate on behalf of persons located in the U.S.  The FIU has had significant difficulties verifying the identity and source of funds for those purchases.
 
The FIU does not directly receive cash transaction reports (CTRs).  Each supervisory entity that receives CTRs holds them unless it determines that further analysis is required or the FIU requests the reports.  Costa Rica fully cooperates with appropriate United States government law enforcement agencies investigating financial crimes related to narcotics and other crimes.  Additionally, Costa Rica has a tax information exchange agreement with the U.S.
 
Law 8719 authorizes the FIU to administratively freeze assets or accounts that are subject to an ongoing money laundering or narcotics investigation by the host government authority without a prior Court order (a judicial order must be obtained within 5 days after the seizure).  This provision was used in several money laundering cases involving bulk cash smuggling during 2010.  
 
Although the GOCR enacted a provision to allow for civil forfeitures in 2009, no case has been pursued by prosecutors.  The prosecutors state they have been reluctant to try cases under this law, because they fear these cases will not hold up in court.  Based on the non-use of this provision, it is unclear whether the GOCR will assist other countries in obtaining non-conviction-based forfeiture.

Several pieces of real property were identified and frozen by the U.S. Office of Foreign Asset Control (OFAC) owned by a Colombian National that resides in Costa Rica and uses his farms to launder funds  for the FARC.  This subject and his property were named as a second tier in the King-Pin Act with money laundering ties to the FARC.  Shortly after the OFAC report was publicized in Costa Rica the subject fled Costa Rica and returned to Colombia.
 
With so much to be done, Costa Rica is cooperating with the USA and other International organizations to fight organized crime and drug cartels; the commitment to minimize the drug trafficking and money laundering is a priority for the Costarican and USA government national security.