Financial Crime World

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Costa Rica Financial Institution Risk Assessment

A recent report by the Financial Action Task Force (FATF) has assessed Costa Rica’s implementation of technical requirements to combat money laundering and terrorist financing. The country received a mixed assessment, with some areas showing significant progress while others require improvement.

Compliance Status

According to the report, Costa Rica is:

  • Largely compliant in assessing risk and applying a risk-based approach (R.1) and national cooperation and coordination efforts (R.2).
  • Significantly improved in combating terrorist financing offences (R.5) and implementing targeted financial sanctions related to terrorism and terrorist financing (R.6).

However, Costa Rica was found:

  • Partially compliant in the confiscation and provisional measures (R.4), customer due diligence (R.10), and reporting of suspicious transactions (R.20).
  • Non-compliant in its regulation and supervision of designated non-financial businesses and professions (DNFBPs) (R.28).

Areas for Improvement

Costa Rica’s financial institution secrecy laws (R.9) were deemed:

  • Compliant

Additionally, the country was found to have made significant progress in implementing targeted financial sanctions related to proliferation (R.7), as well as having internal controls and foreign branches and subsidiaries (R.18), and transparency and beneficial ownership of legal persons and arrangements (R.24).

However, some areas require improvement, including:

  • Regulation and supervision of financial institutions (R.26)
  • Powers of supervisors (R.27)
  • International cooperation efforts, particularly with regards to mutual legal assistance (R.37), extradition (R.39), and other forms of international cooperation (R.40).

Recommendations

The report highlights several areas where Costa Rica needs to improve its compliance with FATF recommendations, including:

  • Stronger regulation and supervision of financial institutions
  • Improved customer due diligence
  • Enhanced transparency and beneficial ownership disclosure

Overall, while Costa Rica has made significant progress in implementing anti-money laundering and combating the financing of terrorism (AML/CFT) measures, there is still much work to be done to ensure the country’s financial system is robust and secure.