Financial Crime World

Croatia’s Anti-Money Laundering and Combating the Financing of Terrorism Efforts Face Challenges

Background

A recent assessment has revealed that Croatia’s efforts to combat money laundering (ML) and the financing of terrorism (TF) are hampered by a lack of understanding of ML/TF risks, weaknesses in supervision, and inadequate implementation of measures.

Assessment Findings

  • While Croatia has taken steps to enhance its anti-money laundering and combating the financing of terrorism framework, including introducing new requirements for customer identification and improving transparency of legal persons and arrangements, there are still significant shortcomings.
  • The Croatian National Bank (CNB) and Financial Inspectorate have a reasonable supervisory framework in place, with their AML/CFT supervisory efforts largely aligned to understanding ML/TF risks. However, the effectiveness of sanctions varies across supervisors, with the CNB and Financial Inspectorate having stronger sanctions than the Croatian Financial Services Supervisory Agency (CFSSA) and the Tax Authority (TA).
  • Information on legal persons and arrangements is publicly accessible, but there are weaknesses in verifying information and ongoing monitoring, which undermines the accuracy of the data.
  • Sanctions are not applied systematically.

International Cooperation

  • Croatia provides constructive assistance in the field of mutual legal assistance and extradition, but occasionally experiences delays when requests are sent through the Ministry of Justice and Administration (MoJA).

Main ML Risks and Measures

  • The main ML risks detected by Croatia are related to tax crime, corruption, and drug trafficking.
  • The country has taken measures to prevent these risks, including setting up a BO Register and requiring notaries public to participate in the registration process.

Challenges Faced by AML/CFT Efforts

  • Technical shortcomings in implementing UN sanctions
  • Preventive measures related to non-profit organizations (NPOs)
  • Gaps in implementation of measures related to financial sector secrecy laws
  • Inadequate resourcing of competent authorities

Conclusion

While Croatia has made progress in enhancing its AML/CFT framework, significant challenges remain. The country’s efforts to combat ML/TF will require continued attention and resources to ensure effective supervision, coordination, and policy setting.