San José, Costa Rica, since 1956

Intelligence Network Threatens to Drop Country

If Costa Rica’s Legislative Assembly doesn’t hurry up and approve legislation to make terrorism financing a crime here, the country could be kicked out of an international group of intelligence agencies designed to combat money laundering and terrorism financing.

The Toronto-based Egmont Group, an intelligence network of more than 100 state intelligence units worldwide, has given Costa Rica until March of next year to pass the legislation.

According to Costa Rica’s Drug Control Institute Director Mauricio Boraschi, the group’s warning is long overdue.

Despite a surge in drug trafficking there is little oversight in Costa Rica on potentially laundered money and the laws that do exist are arcane, Boraschi said.

Money laundering is the process of making funds generated by illegal activities appear legitimate. It’s a crime punishable in Costa Rica by up to 20 years in prison. “It’s a two-way road. The drugs go north and the money has to come back down. If you’re moving drugs, money will move somehow, too,” said Boraschi, who received the letter from Egmont that threatened to revoke Costa Rica’s 19-year-old membership with the group.

“If we aren’t a part of that network, most importantly we lose access to a secure intelligence network and information exchange.

We’d be practically isolated,” Boraschi explained, adding that the institute uses the Egmont network on a daily basis to exchange information about investigations with investigators in other countries.

Boraschi, who has been trying to push reforms that would toughen laws on money laundering and terrorism financing for several years, said the country’s real estate, casino and tax-free zone sectors have all seen booms in foreign investment that aren’t sufficiently regulated.

He said there can be regulation “without Satanizing” foreign investment activity.

“They’re activities that can be developed legally with adequate controls,” Boraschi told The Tico Times in a phone interview this week.

Though Costa Rica has had much success combating drug trafficking with the help of the U.S. Coast Guard – seizing more than 50 metric tons of cocaine in the past year –authorities here have seized only $3.4 million in laundered money so far this year.

“That suggests there’s a big problem here,” Boraschi said. “We’re seizing only a tiny part of the drug money.”

Costa Rican authorities have found Mexican and Colombian drug cartels operating here in recent years, as well as rebel groups that are considered terrorist organizations by the U.S. government.

For instance, Héctor Orlando Martínez, a leader of the Revolutionary Armed Forces of Colombia (FARC) arrested here last August, was extradited to Colombia in December of last year. The leftist rebel group FARC is considered a terrorist organization by the U.S. government. Martínez is also believed to be part of the “Frente 58” FARC group responsible for moving drugs and arms through Central America (TT, Jan 5).

Boraschi’s 5-year-old institute, a government agency created to coordinate the government’s fight against drugs, has investigated nearly 900 reports of suspicious transactions in the past three years, 280 so far this year, he said. The institute’s Financial Analysis Unit is a squad of seven investigators who trace the money. The vast majority of the reports end up lacking enough evidence to merit charges, he said.

But efforts to give Costa Rican laws more teeth to prosecute money laundering haven’t made it far.

In 2005, the administration of then-President Abel Pacheco (2002-2006) submitted a proposal to create a law against financing terrorism, but the proposal hasn’t made it yet to the assembly floor.

Earlier this year Boraschi helped design a reform to combat organized crime that would also include provisions to create more oversight for potentially “dirty” money. He submitted his suggestions to the Arias administration’s High Commission on Crime, but the proposal still hasn’t been submitted to the Legislative Assembly. The High Commission has been promising to submit a reform to combat organized crime since June (TT, June 15).

The Tico Times tried contacting Chief Prosecutor Francisco Dall’Anese for comment, but he was at a conference on transnational crime in Spain.

Judicial Branch spokesman Fabian Barrantes said the proposal to combat organized crime still hasn’t been submitted to the assembly and he knows of no reform to define terrorism financing as a crime.

“It seems there hasn’t been political will,” he said.

National Unity Party (PUN) legislator José Manuel Echandi agreed.

“The executive branch is probably most interested in Immigration reform right now,” said Echandi, the secretary of the assembly’s commission on drug trafficking.

Echandi said the legislators in the drugtrafficking commission have designed a reform to crack down on money laundering in the public sphere. The reform, which is currently being discussed, would require public officials to submit periodic financial reports and would guarantee access to financial info of public officials.

Boraschi said he will participate in the drug-trafficking commission next week to discuss the terrorism-financing proposal, which would punish the crime with up to 15 years in prison.

Boraschi said the country should establish a superintendence to supervise potential money-laundering sectors such as the budding casino industry here, which he says is an easy place to launder money.

“You walk into a casino with $15,000 and you can just report that you won thousands off of that.Who controls you?” he asked. Property prices can also be inflated to launder money.

“We need to exercise more controls over real estate agents, to make sure they know who their clients are and their market and that they report their operations,” he said, adding that his suggestions are long-term solutions.


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