The Black Market in Costa Rica: Counterfeiting and Money Laundering

Costa Rica's Black Market

The Largest Open-Air Money Laundering Operation in Central America The Black Market is used principally to purchase and sell American dollars (although you can sometimes buy Nicaraguan cordobas also), checks, and money orders. It is very difficult and expensive, although not impossible, to exchange other foreign currency there. It is routinely used by foreigners (which includes American tourists and businessmen), drug traffickers, Costa Rican private citizens and government officials. It operates openly 24 hours a day 7 days a week in the very center of town despite the fact that it is technically against Costa Rican law. The local military police even stand guard (sometimes) so that things don't get out of hand. Money laundering and the illegal purchase and sale of American dollars and other negotiable instruments is a fact of life in all Latin American countries and is so routine that you shouldn't even think of it as we normally do in the U.S. There are many things that go on in Latin American countries that are just accepted as necessary evils that everyone has to contend with in order to survive. Smuggling of contraband goods especially from Panama, such as clothing and electronic appliances, is a huge business in Costa Rica where the mark up after taxes on legitimately imported clothing is often 300-500%! Always remember that although the Black Market operates openly, it is still an illegal operation and is run by dangerous criminals, don't ever take chances!

Typically, if a Costa Rican businessman wants to import merchandise from another country (not just the U.S.), he needs to obtain American dollars in order to pay the foreign company which is exporting the merchandise to Costa Rica. If a businessman needs a large sum of dollars, he usually establishes a Letter of Credit (Carta de Credito) or Sight Draft (Giro a la Vista) to pay the foreign exporter. Few countries doing business with Latin America are willing to accept other foreign currencies for payment. The businessman therefore, absolutely has to pay with American dollars or their equivalent, which are the standard currency for international business, so if he can't obtain the dollars within a reasonable period of time, he can't go through with the importation and his business will suffer. If the businessman goes through the normal, legal procedure of purchasing dollars from the Central Bank of Costa Rica, sometimes the bank is too slow or for one reason or another doesn't allow the businessman to buy the number of dollars that he needs to do his business. This is the reason why many legitimate businesses find it necessary to use the Black Market. The government often finds itself in this same predicament and end up illegally purchasing the dollars they need in the same way.Another reason for using the Black Market is so that no paper trail of documentation is left as evidence when exporters and importers deliberately undervalue or sub-invoice (called subfacturacion or subvaluacion in Spanish) merchandise so as to pay much less import or export taxes. This is very illegal, damages the economy, but is very common everywhere. If the government didn't allow the Black Market to operate, it would actually have a negative effect on the whole economy of the country. Although Costa Rica usually doesn't enforce its own Black Market laws, some countries in Latin America do frown on the Black Market and will arrest violators.

The Black Market is located on the corner downtown just below the offices of "Radio Monumental", where a gang of very dangerous criminals do a regular business of passing off counterfeit money (American dollars) when people try to buy dollars. It operates 24 hours a day with full knowledge by the American and Costa Rican governments - just 100 ft from the Central Bank of Costa Rica (Banco Central de Costa Rica), their equivalent of the U.S. Treasury. The government office that checks for counterfeit bills is located only 25 ft from where the counterfeiters and money launderers stand to openly ply their trade! Hundreds of foreign tourists get ripped off there every month and the U.S. Embassy and the Costa Rican government do nothing about it. These counterfeit American dollars are easily purchased on the street in Colombia, South America for about 30 cents on the dollar and then passed off in Costa Rica to unsuspecting foreign tourists who are sometimes cheated out of hundreds of dollars and left stranded without sufficient funds to return home to their country.

Once, at great risk, we captured a guy in the Black Market who had passed off $300 in phony bills to a Canadian and when we got the guy to the police station an undercover cop told us that we were wasting our time and that they would have to release the guy within a couple of hours. About an hour later I saw the cop and the thief laughing and joking around like they were old friends. By the way, we were almost knifed by two of the guy's buddies when we grabbed him in the Black Market. Don't try this on your own because several of them will gang up on you and you could get killed. Almost every man you see standing at that intersection is part of the same group, If you ask the police why they don't arrest the counterfeiters they'll tell you that they can't do anything about it because Costa Rican law says that unless you can PROVE that the counterfeiter KNEW that the money was counterfeit, then no crime was committed. You have to prove that someone had the intention to defraud you. Sounds like a good racket huh? It is. What would criminals do if it weren't for astute lawmakers and corrupt police?

Believe it or not, millions of dollars of legitimate money are also exchanged at this intersection (and the immediate vicinity) each month. Since many criminals operate regularly in this area of the city, it is also possible to buy automatic weapons, grenades, counterfeit and stolen credit cards, passports and automobiles, crack, and almost any other illegal merchandise you can imagine.

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