Bad For Its Image.(online gambling operations and money laundering concerns in Costa Rica)

Costa Rica has long been recognized for its idyllic charm. The small, central American nation is democratic, stable and well-known for its progressive environmental policies. More than half a million U.S. tourists visited the country last year, mostly to loll on pristine beaches, hike through rain forests and espy some of Costa Rica's many monkeys. U.S. companies like Intel and Abbot Laboratories, attracted by an educated work force and flexible tax laws, have invested there. It's no wonder some locals proudly call their country "the Switzerland of Latin America."

But Switzerland has secretive banks that have been known to attract "dirty" money. And now similar worries about what unsavory types the country may be attracting are beginning to circulate in Costa Rica. The capital, San Jose, has become a major headquarters for Internet gambling companies, also known as "sports books," which authorities say have migrated to the country to take advantage of lax banking laws and to serve U.S. customers. Local officials estimate that more than 200 gambling firms are based in downtown San Jose. And that's not their only concern. Colombians are now funneling large sums of money through the country, much of it apparently deposited in bank accounts and then quickly transferred to other countries. The fear, of course, is that drug dealers and other law-breakers are taking advantage of Costa Rica's soft regulatory system. "The laws here are not strong enough," says Jose Silva, a police financial investigator. "Unfortunately, that makes Costa Rica a paradise for money laundering."

Unlike the United States, Internet gambling businesses are legal in Costa Rica so long as betting money from abroad isn't deposited in Costa Rica bank accounts. But authorities say that may be what is happening, raising concerns that organized-crime groups are infiltrating the country. The United States has 13 extradition requests pending in Costa Rica, several of which involve fugitives who have been associated with sports books. One of them is Dominique Curra, who U.S. officials say was once the personal accountant for John Gotti, the late king of the Gambino crime family. He was arrested last March in San Jose, ...