Costa Rica Struggles to Stem Tide of Financial Crime

$4.2 Billion Laundered Annually in Costa Rica

Every year, an estimated $4.2 billion is laundered in Costa Rica, a staggering figure that has government officials and experts sounding the alarm about the country’s vulnerability to financial crime.

Construction Industry Used for Money Laundering

According to Mariano Figueres, head of Costa Rica’s intelligence agency (DIS), the widespread problem of money laundering is seen by everyone in the country on a daily basis. The crime is often channeled through the construction industry, with criminal organizations investing in real estate or construction projects to bring illicitly obtained income into the legitimate financial system.

Financial Institutions and Casinos Used for Money Laundering

Financial institutions, casinos, and currency exchange houses are also used to wash dirty money, making it difficult for authorities to track and prevent such activity. Figueres noted that Costa Rica’s role as a transshipment point in the regional drug trade makes the country particularly susceptible to financial crime, with illegal money flowing through its economy.

Historical Cases of Financial Crime

The problem is not new, with InSight Crime finding connections between criminal organizations, the drug trade, arms and human trafficking activities in a 2011 investigation. A notable example of Costa Rica’s struggle to combat financial crime was the shutdown of online currency exchange Liberty Reserve in 2013, which US law enforcement said was a key hub for the criminal underworld.

Efforts to Improve Anti-Money Laundering Regulations

Costa Rica has since attempted to improve its anti-money laundering (AML) regulations, submitting to an audit from the Financial Action Task Force for Latin America (GAFILAT) in January. While the country has enacted most of the recommended regulations designed to combat money laundering, it still lags behind other countries in the region.

Comparison with Other Countries

The US State Department’s 2015 International Narcotics Control Strategy Report notes that Costa Rica has implemented all but two of the 21 recommended AML regulations, while Panama has only three remaining. Both countries remain on the State Department’s list of countries of “primary concern” for money laundering.

Key Points

• $4.2 billion is laundered in Costa Rica annually.
• The construction industry is often used for money laundering.
• Financial institutions, casinos, and currency exchange houses are also used to wash dirty money.
• Costa Rica’s role as a transshipment point in the regional drug trade makes it particularly susceptible to financial crime.
• The country has attempted to improve its anti-money laundering regulations but still lags behind other countries in the region.