Asset and portfolio management
FinTechs belonging to this category offer asset and portfolio management services via an internet platform or software programs and usually manage and dispose of the assets of their customers long or short term according to their specifications without actually holding the property or the possession of those assets. FinTechs, which provide information about and access to overnight or time deposit accounts at national and foreign banks and which execute the transactions to these accounts, also belong to this category. Some FinTechs however only act on request of the customer.
Aside from that some FinTechs offer software or internet solutions enabling users to manage and plan their personal finances on their own by providing graphics, overviews and compilations of their financial data and sometimes indicating financial risks or opportunities, but without actually managing the assets.
Attitude of the country towards modern asset and portfolio management services
FinTechs related to asset and portfolio management services through online platforms or software programs are unknown to a big percentage of the Costa Rican population. The country is more familiarised to trust and escrow companies that offer their services as a guarantee of credit transactions, for the purchase of properties or business, corporate and real estate transactions, for asset planning, distribution of assets by will, shareholder agreements and business continuity, for the protection of assets against third-party lawsuits and to execute the development of a property.
Obligations and requirements to provide asset and portfolio management, or ancillary services described above
Article 15 (d) of the Law on Narcotic Drugs, Psychotropic Substances, Drugs for Unauthorised Use, Related Activities and Financing of Terrorism, specifically provides that persons engaged in the administration of trusts, or any type of resource administration must comply with this obligation to register with the SUGEF, carried out by persons – natural or legal – who are not financial intermediaries.
The SUGEF clarifies that in the case of this subsection d), registration proceeds only when the trustee or administrator assumes the administration or regency of financial resources, and these must be understood as movable investments such as shares, bonds, investment certificates and any other type of obligations, as well as any type of numerary, regardless of whether it is national or foreign, and that these are represented by negotiable securities or securities in an electronic account, or in any other means that serves for their identification, transfer or negotiation.
Therefore, natural, or legal persons who serve as trustees of “guarantee trusts” constituted in light of the article 648 of the Commercial Code – and limited to the function established by that article that do not involve in any way the administration of resources or financial assets – do not require registration with the SUGEF.
In addition, the SUGEF points out that in the case of those natural or legal persons who effectively manage resources or financial assets on their own account or in the name of another, as trustees or any other legal or de facto figure, who are not duly registered with the SUGEF or under the supervision of any other Superintendence of the country, they must suspend their activities immediately and proceed with the respective registration.
Additional comments regarding the legal situation for asset and portfolio management services or what FinTech’s must be aware of in this business area
Market size for asset and portfolio management services and biggest companies in this business area
Costa Rica provides one (1) of the largest investment markets in Central America with an increasing amount of assets held by institutional investors in special funds. This market share is growing more rapidly than the mutual funds segment. The asset and portfolio management market thus has become incredibly large, highlighting COIN and ATA Trust as the largest asset managers in Costa Rica.
Costa Rica attracted the newest foreign direct investment (FDI) in the world during 2020, with respect to the size of its economy, thus surpassing Lithuania and the United Arab Emirates (UAE).
According to the study published on 16 August by the international journal FDI Intelligence, the country scored 11.4 on the 2021 annual Greenfield Performance Index, while Lithuania scored 8.3 and the UAE 7.1.
Costa Rica’s score means that the country attracted 11 times as much new FDI as it would be expected given the size of its economy.
Additional comments regarding the economic situation for asset and portfolio management services or what FinTech’s must be aware of in this business area