Costa Rica -- Sanctions Compliance Regulatory Overview

Costa Rica does not maintain its own national sanctions regime specifically targeting cryptocurrencies or crypto entities. Instead, as a member of the United Nations and a participant in global anti-money laundering and counter-terrorism financing (AML/CFT) efforts, Costa Rica is obligated to adhere to and enforce international sanctions.

This means that entities dealing with virtual assets (Virtual Asset Service Providers or VASPs) in Costa Rica must comply with global AML/CFT standards, which inherently include sanctions compliance.

Here's a breakdown of the relevant sanctions and restrictions:

I. International Sanctions Compliance Requirements for VASPs

Costa Rican financial institutions, including VASPs, are expected to comply with international sanctions regimes, primarily through the lens of their AML/CFT obligations.

A. UN Sanctions

• Requirement: As a member state of the United Nations, Costa Rica is legally bound to implement sanctions resolutions adopted by the UN Security Council under Chapter VII of the UN Charter. This includes asset freezes, travel bans, arms embargoes, and other targeted measures against designated individuals, entities, and countries.

• Compliance for VASPs: VASPs in Costa Rica must screen their customers and transactions against the UN Security Council's Consolidated Sanctions List. This is a fundamental requirement of AML/CFT programs.

  • Legal Reference:
    • UN Security Council Resolutions: Various resolutions, e.g., those establishing sanctions regimes for specific countries (DPRK, Iran, etc.) or terrorist groups (Al-Qaida, ISIS).
    • UN Consolidated Sanctions List: https://www.un.org/securitycouncil/content/un-sc-consolidated-list

B. OFAC (U.S. Department of the Treasury's Office of Foreign Assets Control) Sanctions

• Requirement: While OFAC sanctions are primarily extra-territorial U.S. law, their global reach means that any VASP or financial entity operating internationally, interacting with U.S. persons, or using U.S. dollar infrastructure, must consider OFAC compliance. Failure to do so can lead to severe penalties, even for non-U.S. entities.

• Compliance for VASPs: VASPs in Costa Rica that have direct or indirect dealings with the U.S. financial system, U.S. persons, or U.S.-origin technology must screen customers and transactions against OFAC's Specially Designated Nationals (SDN) and Blocked Persons List, as well as other OFAC sanctions lists.

  • Legal Reference:
    • OFAC Sanctions Programs and Country Information: https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-country-information
    • OFAC SDN List: https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-country-information/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists

C. EU Sanctions

• Requirement: Similar to OFAC, EU sanctions (e.g., asset freezes, restrictions on financial transactions) have a significant impact globally, especially for entities dealing with EU persons, entities, or operating within the EU's sphere of influence.

• Compliance for VASPs: VASPs in Costa Rica conducting business with EU customers or partners should implement screening against the EU's consolidated list of sanctions.

  • Legal Reference:
    • EU Sanctions Map: https://www.sanctionsmap.eu/
    • EU Consolidated List: https://data.europa.eu/data/datasets/consolidated-list-of-persons-groups-and-entities-subject-to-eu-financial-sanctions?locale=en

II. Costa Rica's Domestic AML/CFT Framework and Sanctions Compliance

Costa Rica's primary legal framework for AML/CFT is:

• Law No. 7786: "Ley sobre Estupefacientes, Sustancias Psicotrópicas, Drogas de Uso no Autorizado, Actividades Conexas, Legitimación de Capitales y Financiamiento al Terrorismo" (Law on Narcotics, Psychotropic Substances, Unauthorized Drugs, Related Activities, Money Laundering, and Financing of Terrorism). This law, and its subsequent reforms, establishes the general AML/CFT obligations for supervised entities.

  • Legal Reference: Ley No. 7786 (available through the official legislative information system, e.g., Procuraduría General de la República - Sistema Costarricense de Información Jurídica): http://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?param1=NXT&nValor1=1&nValor2=39485&nValor3=44622&nValor4=59762&strTipM=TC

• SUGEF (Superintendencia General de Entidades Financieras): The General Superintendency of Financial Entities (SUGEF) is the primary regulator for financial institutions and is responsible for overseeing AML/CFT compliance. While Costa Rica has been cautious in fully regulating crypto as traditional financial assets, SUGEF has clarified that entities involved in certain crypto-related activities (especially those meeting the FATF definition of a VASP) fall under its purview concerning AML/CFT obligations. SUGEF issues regulations and circulars, such as:

  • Circular SUGEF 15-2019 (Reglamento sobre la gestión de riesgo de legitimación de capitales, financiamiento al terrorismo y financiamiento de la proliferación de armas de destrucción masiva): This regulation outlines the risk management framework for money laundering, terrorism financing, and proliferation financing. It applies to all supervised entities and implicitly requires adherence to international sanctions lists as part of a robust risk assessment and due diligence process.

    • Legal Reference: Check SUGEF's official website for current regulations: https://www.sugef.fi.cr/ (Look for "Normativa" or "Reglamentos").

A. Sanctioned Entity Screening Obligations for VASPs

VASPs operating in Costa Rica, to comply with their AML/CFT obligations, must implement robust Know Your Customer (KYC) and Know Your Transaction (KYT) procedures. This includes:

1. Customer Due Diligence (CDD): Identifying and verifying the identity of all customers, including beneficial owners.
2. Sanctions Screening: Screening all new and existing customers (individuals and entities), beneficial owners, and, where appropriate, transaction counterparties against relevant international sanctions lists (UN, OFAC, EU). This should be an ongoing process.
3. Risk-Based Approach: Implementing a risk-based approach to identify and mitigate the risks associated with sanctions evasion, particularly given the anonymity potential of some virtual assets.
4. Reporting: Reporting suspicious transactions, including those potentially related to sanctions violations or attempts to evade sanctions, to the Financial Intelligence Unit (UIF) of Costa Rica, which operates under the Costa Rican Institute on Drugs (ICD).

B. Geographic Restrictions

Geographic restrictions are implicitly enforced through the sanctions regimes adopted. VASPs must identify and restrict or prohibit transactions involving:

• Sanctioned Jurisdictions: Countries or regions subject to comprehensive sanctions (e.g., Cuba, Iran, North Korea, Syria under certain regimes).
• Designated Individuals/Entities: Individuals or entities located anywhere in the world who are on international sanctions lists (UN, OFAC, EU).

Transactions linked to these geographies or entities carry extremely high risk and are generally prohibited, or subject to stringent licensing requirements from the relevant sanctions authority (e.g., OFAC).

C. Penalties for Violations

Violations of Costa Rica's AML/CFT laws, including failures to comply with sanctions obligations, can result in significant administrative and criminal penalties:

• Administrative Penalties: SUGEF can impose fines on supervised entities for non-compliance with AML/CFT regulations. These fines can be substantial and are calculated based on the severity and recurrence of the violation.
• Criminal Penalties: Individuals involved in money laundering or terrorism financing activities, or those who knowingly facilitate such activities by failing to comply with their obligations, can face imprisonment under Law 7786.

  • Law 7786 specifies penalties for money laundering (legitimación de capitales) and financing of terrorism, which can range from 10 to 20 years of imprisonment.

  • Legal Reference: Consult Law No. 7786 for specific penalty clauses.

D. Country-Specific Sanctions Lists Applicable to Crypto

Costa Rica does not maintain its own specific national sanctions list targeting virtual assets or particular entities for sanctions directly related to crypto. Instead, it relies on the implementation of the international sanctions lists mentioned above (UN, OFAC, EU).

Any entity involved in virtual assets in Costa Rica is expected to integrate these global lists into their compliance screening programs as part of their broader AML/CFT obligations.

Conclusion

In summary, while Costa Rica does not have a unique "crypto sanctions list," VASPs and other entities dealing with virtual assets in the country are subject to stringent AML/CFT regulations derived from international standards. This requires robust compliance programs that include screening against UN, OFAC, and EU sanctions lists, adherence to geographic restrictions imposed by these regimes, and reporting suspicious activities to the authorities. Failure to comply can lead to significant administrative fines and severe criminal penalties.

Disclaimer: This information is for general informational purposes only and does not constitute legal advice. Entities operating in Costa Rica should consult with legal professionals specialized in Costa Rican law and AML/CFT compliance to ensure full adherence to all applicable regulations.