High-Risk Business in Costa Rica: Legal Requirements and Compliance Challenges

When it comes to high-risk business registration, offshore structures remain on the rise due to their regulatory and financial flexibility, as well as the opportunities they offer companies for future growth. One of such offshore jurisdictions is Costa Rica, an advantageous option, and yet risky in its own way. This page explores the main features of high-risk business registration in Costa Rica and what to expect from it.

What types of businesses are considered high-risk in Costa Rica?

Like most offshore jurisdictions, Costa Rica considers sectors like online gambling, forex trading, cryptocurrency services, fintech startups, payday lending, pharmaceuticals, and adult entertainment risky due to the highly strict international oversight they are facing. The process of Costa Rica Company formation takes into account all the nuances of high-risk businesses and their operations, both internal and external. The aim is to devise an incorporation process that would legalise high-risk businesses and put them under a certain umbrella that the authorities can control, all of this without a rigid, detailed oversight. In simple terms, your high-risk company, when incorporated right, remains internationally compliant and operationally flexible at the same time.

Why do entrepreneurs choose Costa Rica for high-risk businesses?

Costa Rica is located in Latin America and is considered one of the easiest offshore hubs to launch a company in. It provides businesses with fast access to the major and beneficial American markets. Compared to other Latin American jurisdictions, Costa Rica provides a smoother incorporation process and access to experienced legal and financial professionals. Its growing tech and fintech ecosystem also makes it attractive for businesses in digital services and online operations. Furthermore, many entrepreneurs opt for Costa Rica for its light and beneficial taxation regime, fast and painless company set-up, and the country’s overall political stability.

What legal requirements must high-risk companies comply with before incorporating?

Before incorporating, high-risk businesses in Costa Rica must prepare to meet corporate registration, disclosure, and compliance obligations. This includes submitting detailed shareholder and director information to ensure transparency. Companies must also establish a registered office in Costa Rica and appoint a resident agent (usually a local attorney). Depending on the industry, additional background checks on beneficial owners and financial statements may be required. Authorities often request proof of business purpose and risk management procedures. These steps are designed to ensure the company’s operations align with Costa Rica’s anti-money laundering and financial security laws.

What licenses and permits are required for high-risk businesses?

High-risk businesses in Costa Rica will be required to obtain licenses and extra permits depending on the sectors and industries they operate in. For example, online gaming companies must register with the Ministry of Finance, while fintech and crypto-related companies may need authorization from financial supervisory authorities. Entrepreneurs who aim for a crypto license in Costa Rica always start by opening a local office and incorporating a legal entity. The country also offers a separate online gambling license for businesses in the sector, and the two can be combined to create a third business model, a crypto casino (or a Web3 game), which has been rapidly gaining popularity lately.

How are anti-money laundering (AML) and know-your-customer (KYC) regulations applied?

Costa Rica enforces AML and KYC rules in line with global standards, particularly those set by the Financial Action Task Force (FATF). High-risk companies must implement procedures to verify the identity of clients, monitor transactions, and report suspicious activity to regulators. This often involves collecting identification documents, proof of address, and in some cases, information about the source of funds. Businesses are also expected to keep detailed records and provide them upon request during audits. Financial institutions in Costa Rica work closely with regulators to flag unusual patterns. For high-risk businesses, strict adherence to these regulations is non-negotiable.

What compliance challenges do high-risk companies typically face in Costa Rica?

High-risk companies in Costa Rica often struggle with the cost and complexity of compliance. Meeting AML and KYC requirements can demand significant administrative resources, especially for startups and businesses with no prior experience in legal compliance. Regulatory expectations may also shift, as Costa Rica adapts its laws to align with evolving international standards. Businesses sometimes face difficulties opening or maintaining bank accounts due to their classification as high-risk. Language barriers and bureaucratic delays can further complicate compliance. These challenges highlight the need for proper planning and ongoing monitoring of legal obligations, and a reliable legal consultant by your side can make all the difference when incorporating a high-risk entity in Costa Rica.

How can local legal and financial advisors help mitigate compliance risks?

A local legal and financial advisor is a natural or legal person who is well-versed in the peculiarities of Costa Rica for high-risk business registration. Lawyers can ensure incorporation documents, licenses, and contracts meet all legal requirements. Financial advisors assist with tax planning, AML/KYC policies, and preparing for audits. They also help businesses communicate with local regulators and banks, which is crucial for maintaining operations. Advisors can flag potential risks early and recommend strategies to remain compliant. Cooperating with a compliance advisor early on is a smart investment. It helps you avoid hefty fines or serious charges in the future, should you fail to comply with certain rules due to the lack of professional insight or expertise.

What are the penalties for non-compliance with Costa Rica’s regulations?

The penalties for non-compliance in Costa Rica can be severe and costly. Companies that fail to follow AML/KYC rules risk heavy fines, suspension of licenses, or even forced closure. In cases of serious violations, authorities may pursue criminal charges against company directors or shareholders. Non-compliant businesses also risk losing access to local banking services, which can paralyze operations. In addition, reputational damage can harm relationships with clients and international partners. These consequences make it clear that strict adherence to Costa Rica’s regulatory framework is essential for long-term success