Thursday, 29 October 2020

Implications of Costa Rica’s Money Laundering Law Reform

In the photo, one of the cars seized in Costa Rica from Liberty Reserve founder Arthur Budovsky,  sentenced in the U.S. to 20 years for laundering hundreds of millions of dollars through his global digital currency business, one of the largest operations of money laundering in the world, based in Costa Rica. (Courtesy of OIJ.)

Q COSTA RICA – Lawyers, notaries, accountants, real estate agents, casinos, and non-profit organizations and others will be required to report suspicious transactions made by their clients that may be used as a tool for money laundering or for financing terrorism.

Bill 19.951 approved in first reading in the Legislative Assembly last Thursday, April 21, reforms the Ley sobre estupefacientes, sustancias psicotrópicas, drogas de uso no autorizado, actividades conexas, legitimación de capitales y financiamiento al terrorismo (Law on narcotic drugs, psychotropic substances, drugs of unauthorized use, related activities, legitimation of capital and financing of terrorism).

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The reform establishes the obligations on professionals engaged in non-financial activities, such as lawyers, accountants, notaries and real estate agents, among others.

The bill needs to be approved in second reading before the law can be enacted.

The La Nacion report says that “…Specifically, the legal initiative obliges liberal professionals and merchants to maintain “know their client” policies, register with the Superintendency of Financial Entities (Sugef) and, with the criteria established in the law, report to the National Council For the Supervision of the Financial System (Conassif) any operations suspected as being laundering or financing for terrorism.”

The statement by the Legislative Assembly details:

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“… According to the initiative for the purpose of combating the legitimacy of capital, financing of terrorism and the proliferation of weapons of mass destruction, the following activities will be subject to this law:

  • Systematic or substantial operations of exchange of money and transfers, through instruments such as checks, bank drafts, bills of exchange or similar.
  • Systematic or substantial operations of emission, sale, rescue or transfer of traveler’s checks or money orders.
  • Substantial systematic transfers of funds, by any means.
  • Administration of trusts or any type of management of resources, carried out by persons, physical or legal, who are not financial intermediaries.
  • Remittances of money from one country to another.
  • Credit card issuers, as well as credit card operators, when carrying out these activities under the parameters and definitions determined by the National Financial System Supervision Board, at the proposal of the Superintendency of Financial Institutions.

Failure of Costa Rica to comply with the implementation of these legal tools against risky activities would expose the country to be included in a grey list of non-cooperative countries, including Afghanistan, Bosnia and Herzegovina, Ethiopia, Iraq, Laos , Syria, Uganda, Vanuatu and Yemen.
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Source: Nacion.com

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