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Costa Rica – Costa Rica casinos could be targeted to finance terrorism

By - 1 February 2016

Online and land based casinos have been singled out as vulnerable to money laundering for terrorist purposes according to a report released by the Financial Action Task Force (GAFILAT).

GAFILAT, a regionally based inter governmental organisation that gathers 16 countries from South America, Central America and North America in order to combat money laundering and terrorist financing, concluded that casinos alongside real estate brokers, construction companies and lawyers in Costa Rica could be used as a way to finance terrorism if the country does not enforce and strengthen their anti-money laundering and anti-terrorist measures quickly.

In a strongly worded report entitled “Mutual Evaluation Report of the Republic of Costa Rica“, GAFILAT concluded that for the Costa Rican authorities “terrorism and financing thereof do not seem to be a threat, and there are no investigations related to terrorist financing.”

The report was particularly damning of the land based and online gaming sectors concluding that:
“As regards physical casinos, the Ministry of Public Security cannot prevent criminals from having a significant participation in them. To operate in Costa Rica, casinos must be authorised by the Ministry of Public Security, although to get this authorisation they only have to comply with formal aspects, so the Ministry cannot prevent criminals from having a significant participation in them. The situation is even more complicated with online casinos, considered (together with casinos with a physical presence) in the National Risk Diagnosis of Money Laundering and Terrorist Financing to have a high level of exposure to money laundering and terrorist financing risk, as they are not subject to regulation and they do not require any type of authorisation.”

Director of the Costa Rican Drug Institute Guillermo Araya, told local press that if the country did not impose new measures soon and failed to comply with the recommendations as outlined in the report then it could be “gray listed” as uncooperative but said that reforms to punish the financing of terrorist organisations have been prepared.

In 2011 the Costa Rican government began looking at casino gaming as a way to raise money in order to combat the rise of gang violence. Passed by 42 votes to 1 in 2012 the “Law on Casino Taxation” regulates both casinos and call betting centres in Costa Rica. According to the new law, casinos may only be permitted in hotels rated four stars and above. However the implementation of a new tax rate on the gaming industry has been delayed due to the size of the project but should go into effect later this year.

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