Moving money around legally becomes even harder

Moving money into and out of Costa Rica is becoming more difficult even if the motive is clearly legal.

An expat who might wish to purchase real estate property here might find great difficulty in bringing the purchase money into the country. In fact, banks here have been known to refuse wire transfers.

Other expats who do business here but live in the United States may have problems with their home institution. One sometime expat in the tourism business here collects the bulk of his income in the United States. But he has to pay expenses here with monthly deposits of cash into a Costa Rican bank. His home institution just shut down his accounts because of what was thought to be their suspicious nature.

Of course, expats can carry funds in cash to Costa Rica as long as they declare amounts in excess of $10,000 both leaving the United States and when entering Costa Rica. Even if they are not stuck up leaving the airport, they might have problems depositing the cash into local banks.

Most expats know that they should not travel within Costa Rica with substantial amounts of cash. That could mean just several thousand dollars. Most U.S. currency has been tainted with microscopic amounts of drugs, and the local drug dogs will find the money.

Then the nightmare begins.

New legislation has increased the possibility of  nightmares even for an expat who is not traveling. A new law showed up in the official newspaper this month that gives police agencies broad powers to seize assets, including cash, without notice.

This is law No. 9387 that was designed to update the criminal code to punish terrorism-related crimes. President Luis Guillermo Solís signed the measure July 28.

Although called an anti-terrorism law, this update covers all money laundering and other illegal activities and allows officials to confiscate the assets at their own discretion.

This is one of those asset forfeiture laws that has been the subject to strong criticism

elsewhere.  In order to get back the assets, the owner will have to prove in court that the assets are legitimate. All banks and financial institutions are obligated to report suspicious transactions, and bankers here usually overcompensate to protect themselves. The Registro Nacional also is instructed to freeze property designated by investigators.

The freezing takes place without any notification of the owners.

So an expat may wake up one morning to find that his bank accounts, home and vehicles are frozen and perhaps confiscated because investigators believe he has behaved suspiciously. He would face a lengthy court battle to recover his goods.

An investigative agency like the Unidad de Inteligencias Financiera del Instituto Costarricense sobre Drogas has the power to freeze the assets and then ask prosecutors to seek a court ruling validating their action.

To get around the local paranoia over large sums of money, some expats are conducting real estate closings through title companies in the United States. That works well if both the buyer and seller are U.S. residents with bank accounts there.

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