Costa Rica’s Hidden Role in Global Money Laundering Scandal
Behind the Facade: Costa Rica’s Underground Economy
SAN JOSE - Beneath Costa Rica’s reputation as a peaceful tourist haven lies a thriving underground economy, where money laundering techniques are used by drug cartels and organized crime syndicates to wash dirty cash into legitimate assets.
A Top Destination for Laundered Money
According to recent reports from the US State Department and Global Financial Integrity, a nonprofit research group, Costa Rica is one of the top destinations for laundered money. In 2000-2008, an average of $4.47 billion was siphoned through the country annually, equivalent to over one-fifth of its GDP.
The Consequences
The influx of dirty cash has turned Costa Rica into a haven for international mafia and drug lords, who inject their ill-gotten gains into local businesses, including banks, real estate, and auto mechanic shops. The funds are then laundered through legitimate channels, making it difficult for authorities to track and prosecute the criminals.
A Recent Case: Rodney Morrison and Carlos Pascal
A recent case involving a New York cigarette kingpin and a Costa Rican soccer team owner highlights the country’s struggle to stem the flow of illegal money. Rodney Morrison, who was convicted in May 2011, allegedly used his stepbrother Carlos Pascal to launder millions through Costa Rican properties.
- Prosecutors claim that Pascal has been involved in illegal activities for years
- Pascal claims that his funds and businesses are legitimate
The Case of Facundo Cabral
Another high-profile investigation involves Argentine singer-songwriter Facundo Cabral, who was shot dead in July after a concert in Guatemala. Guatemalan authorities allege that his murder was linked to narco-trafficking and that the mastermind behind the killing was Costa Rican Alejandro Jimenez, also known as “Paleface.”
- Jimenez is accused of using money laundering techniques to transfer cash between Nicaragua, Costa Rica, and Panama
- Possible links to drug trafficking have been reported
The Loss of Illegal Capital Flight
Experts warn that the loss of illegal capital flight is huge for developing countries like Costa Rica, which is seeing a growing gap between rich and poor. The illicit flow of capital can perpetuate a “vicious cycle” of corruption and money laundering, feeding off the country’s wealthy elite who find ways to move their fortunes away from government scrutiny.
A Call for Action
Despite being considered one of the stronger rule-of-law countries in Central America, Costa Rica’s authorities have faced criticism for allowing criminals to go unpunished. The UN Office on Drugs and Crime estimates that $1.6 trillion was laundered globally in 2009, equivalent to 2.7 percent of global GDP.
- “It’s now impossible to distinguish what part of the economy is illicit money and what part is legitimate,” said Chief Prosecutor Jorge Chavarria
- “They’re so mixed up it’s impossible to distinguish”