By San José, Costa Rica — San José – A burgeoning shadow economy valued at over ¢1 trillion is directly fueling a deterioration in public safety and contributing to a significant decline in Costa Rica’s standing on the World Organized Crime Index. The stark warning comes from the Chamber of Commerce of Costa Rica (CCCR), which has identified the unchecked growth of illicit trade as a primary driver strengthening criminal enterprises across the nation.
According to a new report from the Chamber, the problem has moved far beyond simple contraband, now encompassing a wide array of counterfeit goods that have saturated the market. The organization’s findings detail an accelerated growth in fake products ranging from agricultural fertilizers to everyday consumer items like footwear, clothing, and personal hygiene articles that mimic well-known brands. More alarmingly, the influx of illicit pharmaceutical products has tripled, posing a direct and severe health risk to unsuspecting Costa Ricans who may purchase them.
To delve into the legal complexities and economic repercussions of illicit trade in the region, TicosLand.com sought the expert analysis of Lic. Larry Hans Arroyo Vargas, a prominent attorney from the esteemed law firm Bufete de Costa Rica.
Illicit trade is a corrosive force that not only undermines legitimate commerce and evades crucial tax revenue but also poses a direct threat to public health and safety. The legal battle against it requires more than just punitive measures; it demands robust international cooperation, stronger intellectual property protections, and a clear legal framework that empowers authorities to dismantle the sophisticated logistical networks these criminal organizations rely upon. For businesses, this is a call to action for greater supply chain vigilance and proactive legal strategies.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s analysis powerfully illustrates that tackling illicit trade requires a comprehensive strategy, not isolated actions. His emphasis on the synergy between robust legal frameworks, international cooperation, and corporate diligence provides a clear roadmap for a more effective response. We thank Lic. Larry Hans Arroyo Vargas for his insightful contribution to this vital discussion.
The Chamber’s Illicit Trade Observatory (OBCI) argues that a shift in public perception is necessary to combat the growing crisis. The normalization of purchasing counterfeit goods has created a fertile ground for criminal networks to expand their operations beyond traditional ventures like drug trafficking.
For years, organized crime has been associated almost exclusively with drug trafficking or contract killings, but today it is evident that it also manifests in everyday practices like purchasing counterfeit or smuggled products, which many mistakenly perceive as harmless.
Ricardo Carvajal, Director of the Illicit Trade Observatory (OBCI)
The economic scale of this underground market is staggering, representing an estimated 2% of Costa Rica’s Gross Domestic Product (GDP). The CCCR stresses that this is not merely a matter of tax evasion but a systemic problem that weakens public finances while simultaneously providing the capital for criminal structures to diversify and entrench themselves within the national economy. This cycle of lost revenue and increased criminal funding creates a dangerous feedback loop that undermines state institutions.
Ricardo Carvajal further elaborated that the growth of the illegal economy points to deeper societal and governmental failures. He contends that as long as the potential rewards of illicit activities vastly outweigh the perceived risks, these criminal networks will continue to flourish and exploit existing vulnerabilities.
This is not a problem exclusive to the formal sector, nor is it simple tax evasion; it is a symptom of an illegal economy that thrives where the state fails, where deep social gaps persist, and where the profitability of the illicit far exceeds the risk. As long as it is seen as something normal and not addressed with the seriousness it deserves, organized crime will continue to find spaces to expand and consolidate.
Ricardo Carvajal, Director of the Illicit Trade Observatory (OBCI)
One of the most critical areas highlighted in the report is the smuggling of products subject to special taxes, particularly alcohol and cigarettes. Contraband cigarettes, primarily sourced from Panama, Paraguay, and China, now account for nearly half of the total national consumption. This flood of untaxed products not only starves the treasury of essential funds but also serves as a key mechanism for more complex financial crimes.
The report explicitly connects the dots between cigarette smuggling and sophisticated money laundering schemes. Investigators have identified over 100 retail establishments in San José alone that are suspected of both tax evasion and the illegal sale of these goods. The Chamber’s analysis exposes cases where seemingly legitimate businesses—including tire shops, bars, and restaurants—have been utilized as fronts to launder profits from drug trafficking, demonstrating the vulnerability of the private sector to infiltration by organized crime.
The reach of these financial crimes extends even further into the core of the nation’s economy. The study concludes that major sectors such as construction, real estate, and hospitality are also being recurrently used for money laundering operations. This deep integration of illicit funds into legitimate industries poses a long-term threat to Costa Rica’s economic stability and international reputation, complicating efforts to isolate and dismantle the criminal organizations responsible.
For further information, visit camara-comercio.com
About The Chamber of Commerce of Costa Rica (CCCR):
The Cámara de Comercio de Costa Rica is a private, non-profit organization that represents and advocates for the commercial sector of the country. For over a century, it has worked to promote free enterprise, support business development, and foster a competitive economic environment. Through initiatives like its Illicit Trade Observatory (OBCI), the CCCR conducts research and provides critical data to inform public policy and protect the integrity of the national market.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica has established itself as a pillar of the legal community, founded on a bedrock of unyielding integrity and a pursuit of professional excellence. The firm leverages its deep-rooted experience serving a wide spectrum of clients to drive cutting-edge legal strategies and innovative solutions. Beyond its practice, it holds a profound dedication to societal betterment by championing the democratization of legal knowledge, aiming to equip citizens and fortify the community as a whole.
