QCOSTARICA — The possibility that drug trafficking has penetrated Costa Rica’s dollar exchange system cannot be completely ruled out.
The alert comes after the Banco Central de Costa Rica (Central Bank) reported strong growth in the currencies of the account called “others”, which registered movements of US$5.75 billion in 2023, which meant an increase of 46% compared to US$3.93 billion in 2022.
In that sense, the Central Bank is already investigating the inexplicable origin of dollars. At this moment, 48% of the dollars exchanged over the counter have an unknown origin.
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However, specialists doubt this possibility and rather warn of other answers, such as, for example, that the unusual movement could be due to swallow capitals – those investment resources that arrive in a country in the short term and then leave again – that try to take advantage of high-interest rates.
“To come out and say that this is an issue of money laundering is quite irresponsible. For example, if we point out that this money is from drug traffickers, we would be saying that more than 66 financial corporations, including banks, mutuals, cooperatives and others, are not doing their job of monitoring that money and that the controls to stop drug trafficking are not working.
“Now, with all the shielding we have, what we must ask ourselves is where this money is coming from and that it stays for a short time. I think that interest rates, being very high, cause a lot of temporary capital to come to Costa Rica,” said Daniel Suchar, an economic analyst.
Meanwhile, Daniela Córdoba Solano from the UCR Economic Sciences Research Institute, indicated that it is impossible to quantify an illicit activity such as drug trafficking and, therefore, the analysis cannot be carried out.
In that sense, everything would be pure speculation.
Daniela Córdoba Solano del Instituto de Investigaciones en Ciencias Económicas de la UCR, señala que no es posible determinar si el narcotráfico ha penetrado el sistema cambiario de dólares #narco #dolares @La_Republica pic.twitter.com/fkoDw3ekE6
— Esteban Arrieta (@estarrar) February 19, 2024
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“In reality, it cannot be estimated, because there is no data to be able to estimate the effect that the entry of dollars from drug trafficking into the exchange market may or may not have. Let’s remember that we are talking about an illicit market that is not regulated, there is a reason it is drug trafficking and there is no data to be able to measure with certainty if there is an impact or, if there is, we do not know how to quantify it. We cannot quantify that impact,” Córdoba said.
Another vision
Since the end of last week, the issue gained notoriety due to the demands of the productive sectors to know the origin of this increase and also due to the complaints of Albino Vargas, secretary of the ANEP, who has repeated on several occasions that it is about the impact of drug trafficking.
Costa Rica is experiencing a gang war for territory without parallel in the country’s history, which has not only increased the number of murders to record numbers but has also revealed the penetration of drug trafficking in various structures.
“The Central Bank intends (although it seems very late) to determine what other productive activities are moved by this account because, to date, the records are very generalized and categorized as imports, exports, net tourism, net capital and the now famous account ‘Others’. The reality of all this is that it is an open secret that the movements in the BCCR’s ‘Others’ account are attributed, to a large extent, to flows of money resulting from organized crime and drug trafficking activity,” said Vargas Barrantes.
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In recent days, Sylvia Saborío, member of the National Council for Supervision of the Financial System (Conassif), expressed to the Semanario Universidad the possibility of the entry of illicit activities.
“I think there could be other transfers that include illicit transactions that are difficult to detect, that could not be estimated, but that could be large. We cannot evade it because we have the dead to prove it,” said the official.
The business sector is among the groups that requested the Central Bank for greater detail of the “Others” account, which last year reported US$1.82 billion more than in 2022.
For business owners, it is vital to know what is happening, since the movement of money in dollars affects their operations.
This is because the colón has appreciated more than necessary.
In this way, companies and sectors that have profits in dollars, but have their expenses in colones, are losing money, as is the case of free zones, the tourism sector, and exporters.
“We request copies of documents that justify this increase in foreign currency income negotiated over the counter for others, as well as a report on the source or origin that justified these increases. We do not omit that this information is of high importance because it is a topic of public interest due to the social significance it has for the sector that employs more than 30 thousand people,” said Abel Fernández, president of the National Pineapple Chamber.
Cross-checking Data
On the other hand, on Monday the Central Bank announced that all banks must include a new form when clients buy or sell dollars over the counter or through digital channels, and the amount for each transaction.
The measure will apply starting in April and aims to cross-check data such as identification number and economic activity of clients to rule out the penetration of drug trafficking in the exchange market.
The possibility that drug trafficking has penetrated the dollar exchange system cannot be completely ruled out, even though at the moment, there is no evidence of illicit money flows, according to authorities.
“The exchange intermediary classified them as “Others” because it did not have enough information to give it a corresponding classification. There are also differences between intermediaries,” said Hazel Valverde, general manager of the Central Bank.
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