Banking

Be on the lookout for this scam, it could cost you thousands of dollars

July 16th, 2014 (InsideCostaRica.com) While not a new problem in Costa Rica, credit and debit card fraud through the use of electronic devices called ‘skimmers’ is becoming ever more common as the skimming devices become ever easier to obtain.

 

The devices do their work after a criminal inserts the thin plastic device into an ATM machine’s card reader.  The device than reads and stores every ATM users’ card information the moment they insert the card into the machine.  The criminal returns later in the day and retrieves the device, which may by then have the full data of hundreds of cards stored on it. That information is later used to create clones of the users’ cards, or for online purchases.

 

Most of the devices allow the ATM machine to function like normal, and as a result many users have no idea that their card information has just been stolen.

 

Inside Costa Rica first reported on a rash of such scams in March 2013.  Recent reports by readers indicate that the scam is back and claiming more victims.

 

One reader reported to Inside Costa Rica that criminals nabbed $600 from her account and $2,000 from two other friends’ accounts earlier this month using ATM skimming devices, one of which was apparently installed at the Banco Costa Rica branch location in Grecia.

 

Upon notifying their banks (both U.S. and Costa Rican cards were cloned), the reader’s friends were directed to file a report at the courthouse, where she reportedly learned that a rash of clonings have occurred in recent weeks in six cities across the country.

 

Francisco Segura of the Judicial Investigation Organization (OIJ) said last year that many cardholders have no idea that they have become victims, and that many times it is instead the banks that alert judicial authorities to possible fraud.

 

In an operation last year, the OIJ conducted 13 raids in various locations, collecting evidence such as payment receipts, skimming devices, and computers.

 

The skimmers are also sometimes placed in the credit card terminals at retail establishments, restaurants, and other places that accept credit cards.

 

The skimming devices used by criminals can be found for sale on certain web sites in Costa Rica, sometimes carrying a price tag of nearly 1 million colones ($2,000).

 

To avoid becoming the victim of these fraudsters, it is suggested to check closely the area on ATM machines where you insert your card for anything that may look like a hidden our out of place device, and also to not allow retail clerks, gas station attendants, and others to take your card out of sight.

 

Image courtesy of Banco de Costa Rica.

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FACTA July 1st Implementaion Starts With 30% Penalties for Banks

Costa Rica News – In 2013, 2,999 Americans renounced citizenship, the highest number on record. The four highest totals have all occurred since Fatca became law, though the exact reasons for renunciations aren’t reported.

fatca implementationThe Internal Revenue Service is about to get an unprecedented look at bank accounts and investments U.S. citizens hold abroad, through a law that is making it harder to hide assets from the tax collector.

Tomorrow, the U.S. government will start imposing 30 percent taxes on many overseas payments to financial institutions that don’t share information with the IRS.

That new burden has frustrated overseas banks and U.S. expatriates. It’s also created a new standard of global bank-to-government information sharing designed to throw light on often difficult-to-trace accounts.

No one knows yet how successful the law will be in combating tax evasion. Still, it allows the U.S. to scoop up data from more than 77,000 financial institutions and 80 governments about its citizens’ overseas financial activities.

“I don’t think anything on this scale has ever been tried before,” said John Harrington, a former international tax counsel at the Treasury Department who is now a partner at Dentons in Washington. “The idea that it would go off without a hitch is sort of hard to imagine.”

What led to the 2010 Foreign Account Tax Compliance Act, or Fatca, was the inability of federal tax authorities to obtain clear information about financial accounts that U.S. citizens have outside the country. That’s especially important for the U.S., because unlike many other countries, it taxes citizens on their worldwide income regardless of where they actually live.

‘Honor’ System
“If you had an account outside of the U.S., you were pretty much on your honor to disclose that information,” said Denise Hintzke, the global tax leader for Deloitte Tax LLP’s Fatca practice.
In establishing the law, Congress and President Barack Obama in effect threatened to cut off banks and other companies from easy access to the U.S. market if they didn’t pass along such information. The U.S. was able to leverage its status as a financial center to demand action from governments and banks in other countries.

The proposal was barely debated when Congress in 2010 passed it as a budgetary offset to a tax credit for hiring. It was projected to raise $8.7 billion in revenue over a decade.

Congress hasn’t addressed it since then, although the Republican National Committee voted earlier this year in favor of repeal.

Withholding Tax
Under Fatca, U.S. banks and other companies making certain cross-border payments — such as interest and dividends — to foreign financial institutions must withhold a 30 percent tax if the recipient isn’t providing information about its U.S. account holders.

Later phases of the law will apply to a broader set of cross-border payments, such as gross proceeds from stock sales. Many non-financial companies will be affected, too.

The law has been accompanied by a new set of regulations and definitions, creating a cottage industry of advisers and interpreters. It was supposed to start Jan. 1, 2013, which was put off until tomorrow to give taxpayers more time to comply.

Fatca prompted more than 77,000 financial institutions to register for the program to avoid the withholding tax. As a result of that compliance, the government doesn’t expect to collect much direct revenue from the 30 percent levy, said a senior Treasury official who spoke on condition of anonymity to discuss planning for Fatca.

Direct Disclosurefatca implementation 1
In most cases, the law isn’t being implemented as written, because foreign banks said direct disclosure to the IRS would violate local laws. The prospect of withholding spurred negotiations between the U.S. and foreign governments, and other countries saw the potential benefits of reciprocal information exchange.
“This will become a sharing, automatically, between the various countries,” Hintzke said.

So far, the U.S. has reached final or provisional agreements with more than 80 jurisdictions, allowing for government-to-government information exchange or streamlined business-to-government exchanges.
The list includes jurisdictions that often are labeled as tax havens, such as the British Virgin Islands, the Cayman Islands and Guernsey. It also includes most of the world’s major economies, such as Germany, Japan, Canada and the U.K.

Renouncing Citizenship
In 2013, 2,999 Americans renounced citizenship, the highest number on record, according to Treasury data compiled by Andrew Mitchel, an international tax lawyer. The four highest totals have all occurred since Fatca became law, though the exact reasons for renunciations aren’t reported.

“Fatca has been a pretty difficult blow for our U.S. expatriates,” said Martin Karges, senior director in international tax at BDO USA LLP in New York. “They may be shifting money to noncompliant jurisdictions.”

As the account information comes into the U.S. starting in 2015, the focus shifts to the IRS, which will use the data to guide its investigations into offshore tax evasion.

Even without Fatca in place, the U.S. has used prosecutions against Credit Suisse AG (CSGN) and UBS AG (UBSN) to glean information on Americans hiding overseas accounts.

Bankers, Lawyers
Prosecutors have charged more than 70 U.S. taxpayers and three dozen bankers, lawyers and advisers in their crackdown on offshore tax evasion. Those charged include H. Ty Warner, the billionaire creator of Beanie Babies plush toys; Igor Olenicoff, a billionaire real estate developer; and Brad Birkenfeld, a former UBS AG banker who blew the whistle on the bank.

The IRS has sponsored offshore voluntary disclosure programs since 2009 that have brought in about $6.5 billion in interest, taxes and penalties and prompted more than 45,000 Americans to reveal offshore holdings.

The tax agency has said it’ll have a relatively light enforcement touch for the first two years of Fatca for financial institutions that are trying to comply.

The resource-constrained IRS is making Fatca a priority without spending too much time on “small-scale” compliance matters, Commissioner John Koskinen said in a speech at a Washington tax conference earlier this month.

In ‘Shadows’
“The IRS and other enforcement agencies around the world will be able to focus on the structures and arrangements that, unfortunately but inevitably, will be devised to stay in the shadows in a new world of tax transparency,” he said. “And in that new world, governments will need to work closely together to shine light into those shadowy spaces until they no longer exist.”

Almost right up to the deadline, the IRS has been issuing forms and instructions and Treasury has been signing international agreements.

“We can question whether the cost is worth the benefits,” Harrington said. “But there’s no question there’s a cost, a big one. And it’s going to be ongoing too.”

By Richard Rubin, bloomberg.com

Pura Vida!

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Banco Popular Selling Homes at 50% Discount All Over Costa Rica

Banco Popular Selling Homes at 50% Discount All Over Costa Rica

Banco Popular Selling Homes at 50% Discount All Over Costa Rica

The Costa Rica News (TCRN) – The People’s Bank and Community Development announced it will sell 775 properties across the country, which will have attractive financing up to 50% off.

The supply of houses and lots will have alternative financing up to 100% of its value with terms ranging up to 30 years to repay.

Milagro Hernandez, head of the Popular Credit Bank and Community Development, said that these properties allow families to buy a property at a good price with excellent financing options.

Those interested in one of these properties may obtain further information at their web site or in any of the 100 banks nationwide.

The Costa Rica News (TCRN)

San Jose, Costa Rica

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How to Avoid Personal Banking Disasters in Costa Rica

Coopenae Bank Costa Rica

Personal banking at the large state-sponsored institutions in Costa Rica is not for the squeamish. There are many horror stories among expatriates about frozen funds, incorrect account information, blocked debit cards, lost term deposits, excessive red tape, etc. Most of the time, these problems can be avoided in the first place with the assistance of a bilingual account executive who really cares. Asdrubal Zamora of credit union COOPENAE tells us more about this:

About 30 years ago, I remember going to a state-sponsored bank and standing in line for over an hour. More than 15 years later, I returned to that bank and endured a similar experience. In late 2013, I happened to visit that same bank and noticed that the building had been nicely remodeled, but the long lines and slow customer service had not changed at all, which did not surprise me.

Over the years, I’ve had the opportunity of listening to expatriates in Costa Rica talk about their experiences in dealing with state-sponsored banks. I am going to share some of them, and I should mention that they are not the usual complaints about long waiting lines, dubious service and excessive red tape: The following experiences are caused by the sad fact that major language and culture barriers persist at state-sponsored banks to this very day.

1 – Residency Status and the Future of Personal Banking in Costa Rica

Every day, I get inquiries by expats who ask about the possibility of opening a personal account or a fixed term deposit such as a Certificate of Deposit (CD). In general, this will require a residency permit; in fact, even some who opened bank accounts in Costa Rica with just their passports in the past may have troubles using the SINPE transfer system these days.

What everyone should be aware of is that inquiring about the possibility of opening an account is a good first step. Each case may be different, and there may be a chance to open an account, but it is highly recommended to do it. The current political climate is ripe for the creation of new taxes and levies, which in the future may very well apply to expats who wish to open bank accounts. Personal banking in Costa Rica is bound to get more restrictive and invasive in the future, which is why expats should try to get their accounts now so that they can be grandfathered later.

2 – The Frustration of Debit Cards Not Working Overseas

One of the most unfortunate situations travelers can run into is having their debit or credit cards declined abroad. Imagine going back home and trying to access funds deposited in Costa Rica, only to find out that it is impossible. On top of that, there’s also the likelihood of the card being blocked upon return.

Account executives must be notified when a debit card is intended to be used outside of Costa Rica, but this is something that many expat account holders are not aware of because they are never notified inasmuch. There goes the language and cultural barrier again, but the fact is that must be done at all banks, I always tell my clients to contact us before they travel to activate their cards overseas, and to also keep all their purchase and payment receipts, which must be attached to all claims and chargebacks within one month.

3 – Zombie Certificates of Deposit in Costa Rica

An expat couple once contacted me for assistance in transferring their CD, which was issued by a state-sponsored bank, into a COOPENAE account. On the maturity and expiration date of the contract, they personally went to their bank and were not able to get cash in their CD. The problem? It was set to renew automatically; the account holders were expected to notify the bank well in advance to prevent this feature from being triggered.

The couple was able to withdraw the funds and terminate the CD the next day; albeit by having to pay an expensive penalty. This is what I tell my clients: If you are going to be away from Costa Rica when your term deposit matures, it is better to be able to renegotiate the terms than to have renew by default. In terms of customer service, the bank should be making an effort to contact the CD holders beforehand to notify them of the upcoming maturity and expiration.

4 – Exorbitant Credit Card Rates and Unreasonable Collateral

Credit card rates in Costa Rica tend to be extremely high. We are talking about 23 to 52 percent, depending on the bank. Under such terms, I cannot recommend them. Still, some people like them and such was the case with this expat couple who wanted to transfer their money from their bank into COOPENAE so that they could take advantage of certain investments that were performing well at the time. It turns out that their money was tied up because their CD served as a collateral for their high-interest credit card!

Naturally, the couple’s request to cancel their credit card and liberate the funds in their CD was denied by the stuffy state-sponsored bank, which had created a Catch-22 situation by using the term deposit as collateral for the credit card. In the end, I went to the bank and performed the required, yet confusing, steps on behalf of the couple: Paying off the balance on the card with funds outside of the collateral, terminating the credit account, turning over the CD to my clients, and finally having them endorse it to my bank. It is important to remember that physical bonds in Costa Rica are as negotiable as check.

The lesson here is that complex personal banking transactions such as putting up term deposits as guarantees for credit cards should not be attempted by expats who are not familiar with the language or the system. It’s ok to handle certain basic transactions in rudimentary Spanish or English, but more involved procedures require bilingual assistance.

5 – The Case of the Lost CD and the Four-Year Wait

So an expat CD investor asked for a replacement since he lost the original paper certificate. It should be noted that CDs in Costa Rica, whether they are issued by a state-sponsored or private bank, can be obtained in physical or virtual (electronic) formats. Investors who take their physical CDs are responsible for their safekeeping.

By law, investors who lose their physical CDs in Costa Rica must wait four years until they see get their money, and only after filing a report with OIJ, sitting down with a notary to issue a public affidavit, and publishing the latter in the newspaper of record. This should not have to happen since:

  • Banks should be encouraging virtual CDs, which are eco-friendly and cannot be lost.
  • Virtual CDs promote savings and disciplined investing since they cannot be negotiated as checks before maturity.
  • Banks should offer physical CD investors to keep custody of their paper certificates in their safe or strongbox.

For more information about COOPENAE’s services and investment options, please contact Mr. Zamora directly.

Originally posted at http://news.co.cr/how-to-avoid-personal-banking-disasters-in-costa-rica/34452/

Pura Vida!

 

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12% Return! Banking in Costa Rica by Mr. Asdrúbal Zamora of COOPENAE

Coopenae logo

The banking culture in C.R.

Costa Rica has a very particular banking culture. A couple of weeks ago, an expat related a story to me about her relative in the U.S. who was dissatisfied with his bank there. He had to wait for service, felt that he was being ignored, so he closed his accounts and withdrew from the bank. In Costa Rica, if you expect immediate service you will be disappointed.

The financial system in C. R. is small, just $ 40.639 US Million $ (Jan. 2014), however it is very stable. You can get all kinds of financial services and first order banking, including excellent access to internet banking, however, you must arm yourself with a little patience and prepare to wait an average of fifteen minutes in line at the bank. Lines can be long and service slow, especially in the national banks.

How secure is to invest in C.R.

The vast majority of financial institutions in C.R. are regulated by the government through the Sugef (Superintendent of Financial Institutions ) which issues a monthly rating on major financial indicators for each bank. It’s a pretty demanding state agency whose guidelines are obligatory for all institutions within the financial system. There are also several financial institutions which are not regulated, due to their small size.

In terms of financial and bank auditing, some banks are turning to local audit companies.  Others, particularly some of the larger banks, use international auditing firms especially highly recognized worldwide such as Deloitte, Peat Marwick and Price Waterhouse. Coopenae is audited by Peat Marwick. These three audit firms are supported by Sugef to audit local financial institutions in C.R.

The C.R. financial system

The financial system consists of 51 financial institutions regulated by Sugef (Jan. 2014).  Of these, there are 4 state banks, 9 private banks, 2 mutuals, some financial companies, and several credit unions. The majority of the 51 are small credit unions.  In the past, there were more private banks, however in the last two decades, some have merged, leaving us with the present 9.  The largest by assets is BAC San José and the third is Banco Davivienda, both from Colombian capital.  The second is Scotiabank and the fourth, my bank, Coopenae,  a credit union, the largest and strongest in C.R., which is internationally audited, with an outstanding financial performance and 100 % “Tica”.

Coopenae has been in the local financial market for more than 47 years and currently is the 4th largest credit union in Latin America.  Our credit default rate for loans paid late (more than 90 days) has been under 1% for the last decade, it is currently well rated by Fitch Ratings and, as of March 2014, has more than 90.000 members, including expats investors from all over the country.

How to access C.R. banking system

Keep in mind that to perform banking transactions in C.R. (opening accounts, investments, internet banking, etc.) a “cédula” or residency card is required. The residency card is a permit to reside in the country (not as a tourist) but permanently while the document is in force. If you do not have yours, I suggest you start the process to get legal residency so you can open a bank account in Costa Rica.

The foregoing information has been provided by Mr. Asdrúbal Zamora of COOPENAE. He is in charge of investments and routinely helps foreign investors in Costa Rica with earning sound profits from their investment money.  He can be reached at azamora@coopenae.fi.cr

Current CD Rates at COOPENAE:

cd rates

A question was asked that I felt would be good to add tot his posting.

 If you have a corporation could you open an account with that cedula.

As we are a credit union we cannot deal with corporations, only nonprofit corporations. Also, we don´t manage checking accounts, only savings accounts.

Regards, Asdrúbal

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