Know Your Customer Guidelines in Costa Rica (2018–2019 Regulatory Framework)

Regulatory Background: From Agreement 11-06 to Agreement 11-18

Much has been said about the enactment of new regulations regarding the mandatory registration of obligated parties in order to combat money laundering and the financing of terrorism. It is important to remember that Agreement 11-06 remained in force until the end of 2018. Under that framework, registering a company with the General Superintendence of Financial Entities was widely regarded as a complex and burdensome process.

The registration procedure required formal application letters, bank account statements, certifications—and often additional certifications—creating a process that was both time-consuming and document-heavy. Compliance, in practice, became a difficult task for many obligated parties.

This changed with the enactment of Agreement 11-18 by the National Council of Supervision of the Financial System (CONASSIF). This agreement introduced technological improvements through the SUGEF Directo online platform, administered by the General Superintendence of Financial Entities, allowing for a more streamlined registration process using digital tools and internet-based submissions.

Coexistence With Agreement 12-10 and Its Practical Challenges

Despite the improvements introduced by Agreement 11-18, the regulatory landscape must be viewed realistically. The new system continues to coexist with Agreement 12-10, which establishes the procedural rules and guidelines for implementing anti-money-laundering and counter-terrorism-financing measures.

Agreement 12-10 was originally designed for financial institutions such as banks and investment entities. Its application to non-financial activities and professions has raised practical concerns. Activities supervised by SUGEF—including precious gemstone merchants, casinos, lawyers, notaries, and real estate brokers—are required to apply compliance controls originally designed for complex banking structures.

At the time, the Superintendence was still working toward clearer regulatory distinctions for Designated Non-Financial Businesses and Professions (APNFDs). Until such distinctions were formally adopted, all obligated parties were required to comply fully with the existing provisions, under the risk of administrative penalties or potential criminal liability.

Why the Know Your Customer Guidelines Costa Rica Matter

Within this regulatory framework, the Know Your Customer Guidelines Costa Rica play a central role. These guidelines form part of the obligations established under Agreement 12-10 and are essential for preventing money laundering and the financing of terrorism.

Know Your Customer (KYC) guidelines are designed to allow obligated parties to:

• Properly identify their clients

• Verify the accuracy of client information

• Monitor operations associated with money-laundering risks

The primary instrument for implementing these guidelines is the Know Your Customer Form, a document widely used within Costa Rican financial institutions and increasingly required across non-financial regulated activities.

The Know Your Customer Form: Purpose and Handling

The Know Your Customer Form must be completed at the beginning of any contractual relationship and must always be signed by the client. For security and confidentiality purposes, the form must be filed in a dedicated customer folder and safeguarded for a specific period of time.

Access to these files must be limited to a small number of authorized employees. This restriction is intended to prevent unauthorized disclosure and protect sensitive personal and corporate information.

Once the form is completed, the obligated party must analyze the information provided. This analysis forms the basis for establishing the customer’s risk profile. Based on this assessment, the obligated party may decide to proceed with the commercial relationship or, where appropriate, generate an alert to the Financial Intelligence Unit of the Costa Rican Drug Institute and to the General Superintendence of Financial Entities.

Mandatory Information Requirements for Natural Persons

At a minimum, the Know Your Customer file must contain valid identification documentation:

• Costa Rican citizens: a copy of the national identity card

• Foreign nationals: a copy of a valid passport or immigration identification document

• Serving diplomats: the corresponding document issued by the Ministry of Foreign Affairs and Worship

All identification documents must be valid at the time of submission.

Additional required information includes:

• Full name

• Nationality

• Date of birth

• Marital status

• Sex

• Current address

• Occupation or trade

• Nature of business activities, where applicable

• Income tax affidavit for the most recent fiscal period

Documentation for Legal Persons and Foreign Companies

The documentation requirements vary depending on the legal nature of the client. Legal entities must provide, among other items:

• A legal personality certificate (personería jurídica)

• A notarized certification based on the shareholders’ registry identifying each shareholder and their ownership interest

For companies incorporated abroad, all documentation must be translated into Spanish and duly apostilled.

Additional information required for legal persons includes:

• Corporate name

• Type of entity (corporation, limited liability company, partnership, etc.)

• Corporate identification number

• Place and date of incorporation

• Contractual address and operational address

• Description of business activity

• Income tax affidavit for the most recent fiscal period

Legal entities must also provide full information regarding their legal representatives.

Politically Exposed Persons and Risk Classification

Both natural and legal persons must declare whether they qualify as a Politically Exposed Person (PEP). This designation triggers enhanced monitoring and reinforced controls due to the higher risk profile associated with such positions.

The Know Your Customer Guidelines Costa Rica require that all collected information be verified using methods deemed appropriate by the obligated party, in order to mitigate risk and ensure regulatory compliance.

Updating Customer Information and Risk-Based Review Cycles

Client information must be reviewed and updated periodically, based on the assigned risk level:

• High Risk: every 12 months

• Medium Risk: every 24 months

• Low Risk: every 36 months

Inactive customers are required to update their information when they resume activity.

Compliance Importance for Obligated Parties

As outlined above, Know Your Customer obligations are not inherently complex, but they are critical. Failure to comply with these requirements may expose obligated parties to financial penalties and other legal consequences. Proper awareness, documentation, and periodic review are essential components of compliance under Costa Rica’s anti-money-laundering and counter-terrorism-financing framework.

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