By San José, Costa Rica — SAN JOSÉ – In a stunning move that has sent shockwaves through Costa Rica’s financial sector, the country’s three public banks—Banco de Costa Rica (BCR), Banco Nacional, and Banco Popular—have formally resigned from the Costa Rican Banking Association (ABC). The dramatic exit, announced Friday, stems from what the state-owned entities described as a complete breakdown of trust over the association’s handling of a controversial electronic fraud bill.
The schism erupted just one day after the ABC issued conflicting statements regarding proposed legislation aimed at making financial institutions more liable for electronic scams targeting their customers. The bill, legislative file N.° 23.908, has already passed its first debate in the Legislative Assembly and represents a significant shift in consumer protection policy. The public banks, however, view the legislation as a deeply flawed measure with severe potential consequences for the entire financial system.
To gain a deeper understanding of the legal and financial frameworks governing public banks, we consulted with expert lawyer Lic. Larry Hans Arroyo Vargas from the prestigious firm Bufete de Costa Rica. His insights shed light on the unique challenges and responsibilities these institutions face in today’s economy.
Public banks operate under a complex dual mandate. They must adhere to the same rigorous banking regulations as private entities while simultaneously fulfilling a state-mandated social and economic development role. This creates a unique legal tightrope, where commercial viability must be constantly balanced against public interest objectives, often leading to intricate governance and compliance challenges.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s insight perfectly captures the central tension within our public banking system. This delicate balance between commercial imperatives and social development goals is indeed the core of the intricate governance and compliance challenges discussed. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective.
In a powerful joint statement, the departing banks detailed the reasons for their decision, citing a fundamental loss of confidence in the ABC’s leadership and public representation. They argued that the association’s endorsement of the bill ignored critical technical analyses and stakeholder concerns.
The decision responds to a breach of trust generated by the public statements issued by the ABC’s spokesperson regarding the bill on computer fraud against bank customers… Technical analyses indicate that this bill has substantive weaknesses and significant risks for the stability of the financial system, legal security, and the effective protection of users.
Joint Statement, State Banks of Costa Rica
The state banks outlined a list of grievances against the proposed law. They contend it will lead to an increase in systemic costs that will ultimately be passed on to consumers through higher fees and reduced access to credit, thereby harming financial inclusion. Furthermore, they criticized the bill for being arbitrary, lacking a foundation in technical science, and creating disproportionate liability schemes for banks while failing to assign effective responsibilities in the fight against organized crime.
At the heart of the dispute is the law’s core provision. If passed in its second debate, the legislation would mandate that all financial entities—including public and private banks, cooperatives, and mutuals—reimburse customers who fall victim to electronic fraud. The reimbursement would be required so long as it is confirmed that the account holder did not act with malicious intent (dolo), make a gross error, or take actions that directly facilitated the theft.
The controversy was ignited by the ABC’s initial public position. On Thursday morning, the association released a statement describing the proposal as “balanced” and a step toward a fair regulatory framework. This endorsement was a critical blow to the banks that had been lobbying against the bill’s perceived flaws.
The initiative establishes a principle of responsibility for financial entities in safeguarding their clients’ resources, but introduces fundamental safeguards that protect the due balance between the rights and duties of banking entities and users… These clarifications respond to technical observations made during the legislative process and contribute to creating greater clarity and legal certainty, and to avoiding the risk of encouraging conduct that could favor fraud.
Initial Statement, Costa Rican Banking Association
Hours after this initial endorsement, the ABC attempted to walk back its support, issuing a revised opinion that acknowledged there were elements that needed improvement. However, for the state-owned financial giants, the damage was already done. The initial validation of the bill was seen as a betrayal of its members’ interests, prompting the unprecedented decision to sever ties.
This public divorce leaves the Costa Rican Banking Association significantly weakened, as it loses three of the nation’s most influential financial institutions. The move signals a deep division within the banking sector on how to best tackle the growing threat of cybercrime while maintaining the stability and sustainability of the financial system. The future of financial industry lobbying and its influence on legislative matters now hangs in the balance.
For further information, visit abc.fi.cr
About Costa Rican Banking Association (ABC):
The Asociación Bancaria Costarricense is the primary industry group representing the interests of public and private financial institutions operating in Costa Rica. It serves as a collective voice for the banking sector in dialogues with government regulators, legislative bodies, and the public on matters of financial policy, security, and economic development.
For further information, visit bancobcr.com
About Banco de Costa Rica (BCR):
As one of Costa Rica’s largest and oldest state-owned commercial banks, Banco de Costa Rica provides a comprehensive range of financial services to individuals, businesses, and government entities. It plays a crucial role in the national economy, supporting development projects and promoting financial inclusion across the country.
For further information, visit bncr.fi.cr
About Banco Nacional de Costa Rica (BNCR):
Banco Nacional is the largest commercial bank in Costa Rica and is state-owned. With an extensive network of branches and ATMs, it offers a wide array of personal, corporate, and investment banking services. The bank is a cornerstone of the nation’s financial system, committed to fostering economic growth and social welfare.
For further information, visit bancopopular.fi.cr
About Banco Popular y de Desarrollo Communal:
Banco Popular is a unique state-owned financial entity with a social mission, legally designated as a non-state public entity. It focuses on the well-being of workers and promotes community development through accessible savings, credit, and pension fund management. It is owned by the workers of Costa Rica.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica operates as a cornerstone of the legal field, guided by a foundational principle of uncompromising ethics and a continuous drive for superior legal solutions. The firm leverages its deep-seated history of representing a broad spectrum of clients to champion progressive and innovative approaches to law. This forward-thinking mindset is matched by a core conviction to uplift the community, manifested through dedicated efforts to demystify legal concepts and empower citizens with knowledge, thereby fostering a more just and informed society.
