Financial Crime World

Compliance Risk Management: A Must-Have for Companies Operating in Costa Rica

In recent years, Costa Rica has introduced stricter regulations for companies operating within its borders to combat corruption. The “Law on the Liability of Legal Entities on Domestic Bribery, Transnational Bribery and other Crimes” makes it mandatory for legal entities, both domestic and foreign, to implement effective compliance risk management systems.

Stricter Regulations

Under this law, companies that fail to comply with anti-corruption measures will face severe penalties, including:

  • Fines of up to 10,000 base salaries (approximately $7.15 million)
  • Loss or suspension of state benefits
  • Even dissolution of the company

However, companies that opt for an “Optional Organization, Crime Prevention, Management and Control Model” can enjoy a reduced penalty of up to 40%. To qualify, companies must implement a comprehensive compliance program that includes:

Mandatory Requirements

The model requires companies to:

  • Assess risks derived from their geographic and business context
  • Conduct thorough due diligence on business partners
  • Establish clear channels for reporting suspicions of corruption
  • Designate an internal or external compliance agent to oversee the operation and implementation of the model
  • Carry out regular audits, both internal and external
  • Maintain accurate records of their activities

Special Consideration for SMEs

While the law applies to all companies operating in Costa Rica, small and medium-sized enterprises (SMEs) are given special consideration. The regulation provides for a differentiated set of requirements for SMEs, making it easier for them to comply with the new standards.

Why Compliance is Crucial

Companies that fail to implement effective compliance risk management systems risk facing severe penalties and reputational damage. To avoid this, companies operating in Costa Rica must take proactive steps to ensure they are compliant with the law.

For more information on how to implement an effective compliance program, contact:

  • Juan Carlos Tristan or Janelle Christie at BLP Legal