Money laundering happens in almost every country in the world, and a single scheme typically involves transferring money through several countries in order to obscure its origins.
In the past year, the Instituto Costarricense sobre Drogas (ICD) – Costa Rican Drug Institute – reports a total of 302 “suspicious transactions”, many of which are investigated by the auditors of the entity or by the agents of the Unidad de Lavado de Dinero del Organismo de Investigación Judicial – OIJ Money Laundering Unit.
Investigated for money laundering are the owners of casinos, gaming houses and bakeries, among others.
Suspicious transactions ares analyzed thoroughly to determine the relationship between the money flowing through the bank accounts and the owners of the businesses.
“These are very complex cases. Sometimes something we can look very suspicious but there is justification for the money or property, ” said the director of ICD, Carlos Alvarado.
The OIJ’s Money Laundering Unit reports sixteen “active” major cases, related to capital invested in casinos and including bakeries and “lavacars” (car washes)”.
The problem for investigators is to prove that the investments are the result of organized crime. In fact, in Costa Rica there is only one reported conviction, a judgement against a Cuban found guilty of money laundering.
A report by the Tax Justice Network, a non-governmental organization dedicated to the study of tax-havens, places Costa Rica in position 41 globally and 14th in Latin America for banking secrecy.
“The money trail is usually Mexico, Guatemala, Honduras, Nicaragua and Costa Rica by land. That money is usually invested and earnings sent to Panama”, said the director of the OIJ, Francisco Segura.
To combat capital crimes, the ICD requires tools like the proof of provenance of capital or the form in which goods and properties where obtained, or the owners (suspects) face forfeiture, in the same way it is applied in other countries, like Mexico and Colombia.
The director of the OIJ, Francisco Segura and former economic crimes prosecutor, Guillermo Hernandez, agree that this legal concept is essential to improve results in the fight against money laundering.
The “forfeiture bill” is being currently written by the ICD, though it is not known if and when it will be presented to the Legislature, which then has to approve any such law.
Money laundering is the process of concealing the source of money obtained by illicit means. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount of money laundered, either worldwide or within their national economy. In 1996, the International Monetary Fund estimated that two to five percent of the worldwide global economy involved laundered money. However, the Financial Action Task Force on Money Laundering (FATF), an intergovernmental body set up to combat money laundering, stated that “overall it is absolutely impossible to produce a reliable estimate of the amount of money laundered and therefore the FATF does not publish any figures in this regard”.
Regardless of the difficulty in measurement, the amount of money laundered each year is in the billions (US dollars) and poses a significant policy concern for governments. As a result, governments and international bodies have undertaken efforts to deter, prevent and apprehend money launderers. Financial institutions have likewise undertaken efforts to prevent and detect transactions involving dirty money, both as a result of government requirements and to avoid the reputational risk involved.
How Money Laundering Works
Money laundering, at its simplest, is the act of making money that comes from Source A to look like it comes from Source B. In practice, criminals are trying to disguise the origins of money obtained through illegal activities so it looks like it was obtained from legal sources. Otherwise, they can’t use the money because it would connect them to the criminal activity, and law-enforcement officials would seize it.