Authors

Adriana Castro
Partner

Costa Rica
E-mail

Elena Foltrán
Associate
Costa Rica
E-mail

Under the regulations on Transparency Registration and Final Beneficiaries in Costa Rica, legal entities and other legal structures domiciled in the country, administrators of third-party resources on behalf of their clients, non-profit organizations, and private trusts, including foreign trusts that carry out activities in Costa Rica, must declare and present the information of their final beneficiaries in the Central Directo system, created and administered by the Central Bank of Costa Rica.

This obligation has been in effect for several years in Costa Rica. Although it has not remained intact and has suffered several changes, Executive Decree No. 44390-H, published in March 2024, issued a new Regulation of the Transparency Registry and Final Beneficiaries (RTBF), which consequently repealed the previous regulation, issued on April 5, 2018, through Executive Decree No. 41040-H, which until then had regulated the operation of this Registry.

The new Regulation of the Transparency Registry and Final Beneficiaries brings with it significant changes that seek to strengthen transparency and accountability in business structures and public entities. Obligated subjects and their legal representatives must be attentive to the modifications and ensure compliance with the new provisions to avoid possible and future legal contingencies.

The main changes introduced are:

  1. Ordinary Declaration Period

For a single time in 2024, obligated parties must submit ordinary declarations between July 1 and 31. Next year, the declarations must be filed in April, unless otherwise reported.

  1. Expansion of Obligated Subjects

The following are incorporated as new subjects obligated to provide information:

  • State public companies
  • Non-state public companies
  • Non-state public entities.

The above pertains as long as said subjects have the participation of private individuals or legal entities in their share capital.

  1. Powers for Filing Returns

The new regulation eliminates the possibility of special representatives of the obligated subjects presenting the declarations, and in exceptional and justified cases, their general representatives may do so. However, on April 19, 2024, the Contentious Administrative Court accepted a request for a Very Provisional Precautionary Measure presented by the Bar Association of Costa Rica against the State, ordering the provisional suspension of the third paragraph of article 5 of the new Regulation. As a result, a special representative, as in previous years, may present an ordinary declaration unless the Court decides otherwise before July.

  1. Verification and Validation of Information

The regulation also establishes the obligation of the person responsible for providing information to verify and validate the accuracy of all the information submitted to the RTBF. In addition, such designee must identify the final beneficiaries by carrying out the due diligence necessary to obtain the information that identifies the shareholding structure and the identity of the participants of the obligated entity, as well as maintaining the relevant supporting documentation that supports said declaration.

  1. Document Conservation

The information, records, and documents that support the due diligence conducted by the person responsible must be kept and available immediately, accurately, and updated to attend to any audit and supervision processes carried out for five years from the date on which to register and send the last declaration.

  1. Determination of Final Beneficiaries

Established detailed provisions determine the final beneficiaries of legal entities and other subjects required to report information. Classified by this Registry as final beneficiaries are those with direct or indirect control over the share capital, majority voting rights, the ability to appoint or dismiss administrative bodies, or control over the legal entity by any mechanism. Without such designation, the final beneficiary will be a manager or senior representative. Except for the above, in the case of trusts, in which the final beneficiaries are all the parties involved, that is, settlor, trustee, and fiduciary, and for non-profit organizations, the representatives are the individuals with executive or managerial positions.

  1. Required information of Final Beneficiaries

The obligated subject must declare the personal information that allows it to identify its final beneficiaries and/or legal structures that are part of its share chain for as long as they are foreign until the identification of final beneficiaries. The failure to present information about any final beneficiary will cause the failure of the obligated party to submit the Transparency and Final Beneficiary Registry.

However, if the final beneficiaries of foreign legal entities are unidentified after exhausting regulatory actions, the final beneficiary will be presumed as the administrator in Costa Rica. The person responsible must swear under oath the steps taken and the limitations found, keeping this documentation for the General Directorate of Taxation and the Costa Rican Institute on Drugs. The affidavit must include supporting documents, such as certifications from foreign authorities or any certified document, which must be consularized or apostilled and, if necessary, translated.

Frequently Asked Questions and Answers about RTBF

What is RTBF?

The RTBF is the Transparency and Final Beneficiaries Registry that seeks to identify the natural persons who own or control legal entities in Costa Rica as final beneficiaries. The Central Bank of Costa Rica manages this registry.

What is the objective of RTBF?

The main objective is to prevent and combat money laundering, terrorist financing, and other illicit activities by providing transparency about the beneficial owners of legal entities.

Who is required to submit the RTBF declaration?

All legal persons and legal structures domiciled in Costa Rica, including corporations, limited liability companies, and other legal forms, such as national and foreign trusts with activity in the country, non-profit organizations, third-party resource administrators, and now also state public companies, non-state public companies, and non-state public entities that have the participation of private individuals or legal entities in their share capital, must submit the RTBF declaration.

How is the RTBF declaration submitted?

The declaration is presented digitally through the Central Directo technological platform of the Central Bank of Costa Rica, using a digital signature certificate. This procedure can only be conducted by the registered legal representative and, in exceptional and justified cases, by a general representative. Previously, a Special Power of Attorney could present such a declaration. However, the determination is pending on whether or not such power supports the presentation. For now, the declaration of July 2024 serves as the Very Provisional Precautionary Measure presented by the Bar Association of Costa Rica to the Contentious Administrative Court, as long as it does not rule differently before then.

What information should the RTBF declaration include?

The declaration must include detailed information on the entity’s beneficial owners, i.e., the natural persons who directly or indirectly own or control a significant percentage of the share capital or voting rights. Likewise, in the case of having a shareholding structure with foreign legal entities, the information on such legal structure must be detailed, including its share capital and shareholding chain, until the identification of final beneficiaries.

What is the periodicity of the RTBF declaration?

Ordinarily, a declaration must be submitted once a year, usually in April, unless the deadline is changed. Likewise, an extraordinary presentation is acceptable when necessary and whenever there is a change of control or participation in the direct shareholders or final beneficiaries, which equals or exceeds 15%.

What happens if the RTBF return is not filed?

Failure to submit the declaration may result in administrative and economic sanctions, in addition to the possibility that the entity will be disqualified from carrying out certain legal and financial procedures since, as a consequence, it paralyzes the operation of the entity before the National Registry of Costa Rica. Within these economic sanctions, the obligated subject who fails to submit the RTBF declaration will incur a fine of 2% of the gross income tax income, which has a minimum of 3 base salaries and can reach up to a maximum of 100 base salaries.

What security measures are implemented to protect RTBF information?

The information in the RTBF is protected by technological and legal security measures, guaranteeing the confidentiality and appropriate use of the data provided. Moreover, the Regulation establishes and orders officials who have access to RTBF information to maintain the confidentiality of the information during the relationship with this registry and even after it has ended. Failure to comply with this duty will be considered a fault and will be subject to the provisions of the internal regulations of the respective institution.

Who can access RTBF information?

Only competent authorities, such as the General Superintendence of Financial Entities (SUGEF), the Ministry of Finance, and other regulatory entities, can access RTBF information for supervision and control purposes.

What is a beneficial owner?

A beneficial owner is a natural person who owns or controls, directly or indirectly, a significant percentage of the share capital and voting rights that owns, controls, or benefits from a legal person or legal structure and exercises ownership and the final effective control of these entities.

What documents are needed to complete the RTBF declaration?

The identity cards or passports of the final beneficiaries and information about the entity’s ownership structure are necessary.  If foreign entities exist within the share structure, it is required to have supporting documentation that verifies their existence and validity in their respective jurisdiction(s).

What happens if incorrect information is declared in the RTBF?

The declaration of incorrect information may lead to sanctions and the obligation to correct the information within a period established by the authorities.

How is RTBF information corrected if there are errors?

Corrections must use the same technological platform of the Central Direct of the Central Bank of Costa Rica through a corrective declaration that must be made by the person responsible, following the procedure indicated for modifications and updates.

What happens if a legal entity does not have identifiable final beneficiaries?

In this case, the natural persons who occupy senior management positions in the entity, such as members of the Board of Directors, must be declared as long as corresponding supporting documentation supports and justifies the impossibility of declaring the final beneficiaries.

Is professional assistance required to complete the RTBF declaration?

It is not mandatory, but it may be advisable to seek professional assistance, such as that of a lawyer or accountant, to ensure correct compliance with the reporting obligations, given that the Central Directo platform is constantly changing the necessary information on essential personnel making it advisable to obtain such information in advance of the declaration.