The Legislative Assembly of Costa Rica approved an amendment to Law No. 7786 that incorporates virtual asset service providers as reporting entities subject to the framework for the prevention of money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction.
The amendment provides for a period of up to three months for the issuance of the corresponding regulations and establishes that its provisions will enter into force three months after official publication.
A New reporting entity: Virtual asset service providers
The amendment adds Article 15 quater to Law No. 7786 and includes entities engaged in activities such as:
- Exchanges between virtual assets and legal tender.
- Exchanges between different virtual assets.
- Transfers of virtual assets.
- Custody, administration, or control of virtual assets.
- Financial services related to the issuance, marketing, or offering of virtual assets.
What is a virtual asset?
A virtual asset is a digital representation of value that can be digitally transferred or traded and used for payments or investments, without being recognized as legal tender by the Central Bank of Costa Rica.
New AML/CFT obligations
Virtual asset service providers will be required to implement measures similar to those applicable to financial institutions, including:
- Identification of customers and beneficial owners.
- Customer due diligence.
- Recordkeeping.
- Management of politically exposed persons (PEPs).
- Assessment of risks associated with new technologies.
- Controls over virtual asset transfers.
- Reporting of suspicious transactions.
- Confidentiality procedures.
- Internal risk assessments.
Mandatory registration with SUGEF
Virtual asset service providers must register with the General Superintendence of Financial Institutions (SUGEF), which will supervise them with respect to the prevention of money laundering and terrorist financing. Registration does not constitute authorization to operate, but it is a mandatory requirement to conduct these activities.
In addition, the amendment requires providers to obtain and maintain information on the origin and destination of virtual asset transfers, in accordance with the international standards of the Financial Action Task Force (FATF).
It is also important to note that entities subject to Law No. 7786 may not maintain commercial relationships with virtual asset service providers that are not registered with SUGEF.
Sanctions regime
The amendment extends the existing sanctions regime to the new reporting entities, including fines for failure to comply with customer identification and due diligence obligations, failure to report suspicious transactions, refusal to provide information, failure to register with the supervisory authority, and maintaining commercial relationships with unregistered entities.
