Costa Rica Banks Face Huge Fines For Non Compliance Of AML Law

The reason for the exaggerated requirements by banks in Costa Rica for requirements to open an account and for existing customers to, in some cases, to completely reapply for their existing accounts is based on the Ley de Psicotrópicos, to avoid money laundering from drug trafficking, imposing heavy fines on institutions that do not comply.

The Banco de Costa Rica (BCR) and the Banco Nacional (BN) are two banks owned by the state that have been militant in forcing customers to update their account information or face the freezing or closure of their account, as has been reported, if they do not comply.

Since April of this year, banks have implemented new anti money laundering rules and regulations under the program “Conozca a su cliente” (know your client) and face a fine of up to 1% of their assets, up from 0.01% before the new law, which can be "disproportionate and irrational" for those institutions that do not comply.

In the case of the Banco Nacional, the fine could amount to as much as us$5 million dollars.

In the case of the Banco de Costa Rica, they are strict in the efforts to comply. New customers have to provide a series of documents with clearly establishes the source of the funds to be deposited into the account. Existing customers have to keep their personal information (address, telephone number, business activity or employment, among other things) updated at all times.

In some cases, the bank has cut off customers from access to their accounts for lack of all or any of the foregoing, claiming it is their duty in the effort to combat money laundering.

On the other hand, banks who are excessive in their efforts can also be penalized. Cinthya Zapata director of the Comisión de Apoyo al Consumidor, said that overzealous banks can face a legal process and fines under the Ley de Protección al Ciudadano (citizen protection law).

zapata says that some banks have been violating the Ley de Protección al Ciudadano law requiring customers to provide information by their call centre staff or at the teller windows, negatively affecting consumers.

The director added that violations occur when the banks are not crystal clear in their publicity in which it requires customers to update their account information.

"If there is suspicious activity in an account, the customer should have the opportunity to demonstrate the contrary or permitted the right to defend oneself", said Zapata.

The president of the Consumidores de Costa Rica, Eric Ulate, reinforces the words of Zapata, saying that at times the banks leave their customers confused at what documents are required and in some cases have been overly stringent on requiring additional and alternate documents.

Ulate added that in some cases where a employment record or a utility bill is not available, banks have required items like marriage certificates or rental agreements.

The banks are not particularly happy with the situation either, facing sanctions by the Superintendencia General de Entidades Financeiras (Sugef) if one or more documents is missing from the customer file, leading to a cumbersome process and in some cases a source of frustration for both the bank and the customers.

Source: Inside CostaRica