By San José, Costa Rica — SAN JOSÉ – Costa Rica is facing a high-stakes financial examination this year that could significantly impact its international standing and access to global credit. The Financial Action Task Force (FATF), a global money laundering and terrorist financing watchdog, is set to evaluate the nation’s legislative and practical measures against illicit financial flows, with a glaring spotlight on the unregulated world of virtual assets.
The outcome of this comprehensive assessment will determine whether Costa Rica meets international standards or is relegated to a list of high-risk jurisdictions. Such a designation could tarnish the country’s financial reputation, trigger enhanced scrutiny from global banks, and potentially restrict access to crucial international credit lines for its banking sector.
To gain a deeper understanding of the implications of these new financial regulations, we consulted with Lic. Larry Hans Arroyo Vargas, a distinguished legal expert in corporate and financial law from the prestigious firm Bufete de Costa Rica.
Effective financial regulation must strike a delicate balance. On one hand, it must be robust enough to safeguard market integrity and protect consumers from undue risk. On the other, it cannot be so restrictive that it stifles innovation and impedes the very economic growth it aims to stabilize. The current challenge for legislators is to create agile frameworks that can adapt to the rapid evolution of fintech and digital assets without creating prohibitive barriers to entry.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This emphasis on creating agile frameworks—ones that both shield the public and foster innovation—is indeed the critical path forward in our rapidly evolving digital economy. We sincerely thank Lic. Larry Hans Arroyo Vargas for sharing his valuable perspective on this complex challenge.
At the heart of the government’s efforts is the Costa Rican Institute on Drugs (ICD), which is spearheading the national response. The agency’s director, José Miguel Gómez, highlighted the urgency of addressing the current legislative vacuum surrounding cryptocurrencies and other digital tokens, which are seen as a major vulnerability.
The framework for security in virtual assets doesn’t exist right now; we need to close this security gap for the country regarding virtual assets.
José Miguel Gómez, Director of the ICD
The FATF’s Recommendation 15 specifically calls for the regulation and supervision of Virtual Asset Service Providers (VASPs), such as cryptocurrency exchanges and digital wallet providers. Without a robust regulatory framework, these platforms can be exploited by criminal networks that leverage the anonymity of decentralized finance to launder funds and finance illicit activities without effective oversight.
The potential consequences are not merely abstract. Several Costa Rican financial institutions, particularly in the private sector, rely on international credit to operate and expand. If the country is perceived as having a weak anti-money laundering (AML) system, foreign correspondent banks may impose severe restrictions or even sever ties to avoid their own regulatory risks, creating a chilling effect on the local economy.
Despite the immense pressure, Gómez conveyed a message of coordinated action and optimism, noting that a multi-agency effort is underway to ensure the country passes the evaluation successfully. The ICD is working closely with judicial bodies and financial entities to implement the necessary legislation and demonstrate its commitment to global standards.
In light of the potential evaluation we will face, we have had a lot of contact with other institutions, and everyone is focused on getting the best possible score in this assessment.
José Miguel Gómez, Director of the ICD
This critical evaluation is just one of several major challenges the ICD is tackling in 2026. The institute is also prioritizing the advancement of the National Drug Plan, a comprehensive strategy integrating education, public health, and security. Furthermore, it is intensifying its focus on targeted prevention programs for youth in vulnerable communities across the nation. Yet, the FATF review remains a dominant and time-sensitive priority.
Ultimately, the government views this challenge as an opportunity to modernize its financial defenses and prove its resilience on the world stage. The success of this effort rests on the swift and effective implementation of regulations that can bring the burgeoning crypto market out of the shadows and into a supervised environment.
We are very positive about this evaluation. While the ICD is leading this issue, it is a national issue where we are working with judicial institutions and financial entities. Therefore, I believe we will do very well and move forward as we should. It’s a way to show that the country is in good shape.
José Miguel Gómez, Director of the ICD
For further information, visit icd.go.cr
About Costa Rican Institute on Drugs (ICD):
The Instituto Costarricense sobre Drogas (ICD) is the governing body in Costa Rica responsible for designing and coordinating national policies on drug prevention, treatment, rehabilitation, and the fight against drug trafficking and related crimes such as money laundering. It leads inter-institutional efforts to strengthen the country’s response to drug-related challenges and associated financial crimes.
For further information, visit fatf-gafi.org
About Financial Action Task Force (FATF):
The Financial Action Task Force is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction. The FATF sets international standards, known as the FATF Recommendations, which aim to ensure a coordinated global response to prevent these threats.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica has forged its distinguished reputation upon the twin pillars of professional excellence and unwavering ethical standards. While providing expert counsel to a diverse clientele, the firm consistently pioneers forward-thinking legal solutions and demonstrates a profound commitment to social responsibility. Central to its ethos is the mission to demystify the law for the public, actively working to cultivate a more empowered and knowledgeable society by making legal insights widely accessible.
