Costa Rica -- Travel Rule Implementation Regulatory Overview

Costa Rica has made significant strides in implementing the FATF Travel Rule, primarily through regulations issued by its financial regulator, the Superintendencia General de Entidades Financieras (SUGEF).

Here's a breakdown of the status:

Status of FATF Travel Rule Implementation in Costa Rica

1. Whether Adopted: Yes, the FATF Travel Rule requirements have been adopted into Costa Rican law and regulation. The key regulatory instrument is:

• SUGEF Circular 001-2022 "Reglamento para la Inscripción y Supervisión de los Proveedores de Servicios de Activos Virtuales" (Regulation for the Registration and Supervision of Virtual Asset Service Providers). This circular directly addresses the registration and AML/CFT obligations of VASPs, including requirements for information sharing consistent with the Travel Rule. It was published in La Gaceta, the official Costa Rican government gazette.

This regulation aligns Costa Rica with the revised FATF Recommendation 15 on new technologies and Recommendation 16 (Wire Transfers), as interpreted for Virtual Assets.

2. Effective Date: SUGEF Circular 001-2022 came into effect on February 24, 2022, the day after its publication in La Gaceta.

3. Threshold Amounts: SUGEF Circular 001-2022 establishes thresholds for the collection and transmission of originator and beneficiary information, generally aligning with FATF guidance:

• Collection of Information (Art. 24): VASPs must obtain and maintain information on the originator and beneficiary for all virtual asset transfers equal to or greater than USD $1,000 (or its equivalent in other currencies or virtual assets), regardless of whether the other party is another VASP or an unhosted wallet. For transfers below this amount, only basic information (e.g., name of the client) is typically required.
• Transmission of Information (Art. 25): For virtual asset transfers equal to or greater than USD $1,000 (or its equivalent in other currencies or virtual assets) to another regulated VASP, the sending VASP must securely transmit the required originator and beneficiary information to the receiving VASP.
  • For transfers to or from unhosted wallets, the VASP is responsible for collecting and retaining the information from its own customer, but cannot transmit information to an unhosted wallet directly.

4. Which VASPs are Covered: SUGEF Circular 001-2022 defines and covers "Proveedores de Servicios de Activos Virtuales" (PSAVs), which include any natural or legal person that, as a business, carries out one or more of the following activities or operations for or on behalf of another natural or legal person:

• Exchange between virtual assets and fiat currencies.
• Exchange between one or more forms of virtual assets.
• Transfer of virtual assets.
• Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.
• Participation in and provision of financial services related to an issuer's offer and/or sale of a virtual asset.

These PSAVs are required to register with SUGEF.

5. Technical Implementation Requirements: The SUGEF Circular 001-2022 mandates the outcome of information sharing but does not prescribe a specific technical protocol or solution. It requires VASPs to:

• Implement mechanisms that allow them to obtain, verify, store, and transmit the required information accurately and securely.
• Ensure confidentiality and data protection in the transmission process.
• Have systems in place to monitor transactions for suspicious activity.

While the regulation doesn't specify, VASPs operating in Costa Rica typically look to industry-standard solutions that enable Travel Rule compliance, such as:

• TRISA (Travel Rule Information Sharing Architecture)
• Sygna Alliance
• OpenVASP

These solutions facilitate the secure, peer-to-peer exchange of required information between VASPs.

6. Penalties for Non-Compliance: Non-compliance with SUGEF regulations, including those related to the Travel Rule, can lead to significant penalties. These are primarily outlined in:

• 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 Terrorism Financing), as amended by Law No. 9449. This law provides the general framework for AML/CFT penalties in Costa Rica.

Penalties can range from administrative fines to the suspension or revocation of the VASP's registration. Specific sanctions for financial entities (which PSAVs are considered for AML/CFT purposes) typically include:

• Monetary fines: Proportional to the severity of the infringement and the VASP's size and revenue.
• Corrective measures: Imposition of specific actions to rectify deficiencies.
• Suspension of operations: Temporary halt of activities.
• Revocation of registration: Permanent loss of authorization to operate as a PSAV.

SUGEF is the body responsible for imposing and enforcing these penalties.

References:

• SUGEF Circular 001-2022:

  • Direct link to the Circular (often published in La Gaceta or on SUGEF's website): A direct government link is preferable, but these can be difficult to maintain. Many legal information portals host it. For instance, it can often be found via a search on the SUGEF website: https://www.sugef.fi.cr/ (Navigate to Normativa > Normas Vigentes > Normativa de Prevención de Legitimación de Capitales)
  • Official Publication (La Gaceta): Alcance Digital N° 40 a La Gaceta N° 35 del 23 de febrero del 2022. (Searching "SUGEF Circular 001-2022 La Gaceta" will usually lead to it).

• Law No. 7786 (as amended by Law No. 9449):

  • Often found on official legislative databases: https://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?param1=NXT&nValor1=1&nValor2=52458&nValor3=64861&strTipM=TC (This is a link to the Sistema Costarricense de Información Jurídica (SCIJ) for Law 7786).

• GAFILAT Mutual Evaluation Report (MER) for Costa Rica (2021):

  • While the 2021 MER might predate Circular 001-2022 (which came out in early 2022), it details Costa Rica's AML/CFT framework and any deficiencies at the time of evaluation. It's a foundational document.
  • https://www.gafilat.org/index.php/es/documentos/evaluaciones-mutuas/costa-rica/2387-informe-de-evaluacion-mutua-de-costa-rica-2021

This comprehensive regulatory framework demonstrates Costa Rica's commitment to aligning its virtual asset sector with international AML/CFT standards, including the FATF Travel Rule.