Financial Crime World

Croatia Tightens Noose on Money Laundering with Risk-Based Approach

Zagreb, Croatia - In a significant move to combat money laundering and terrorist financing, Croatia has strengthened its preventive framework, according to a recent report by MONEYVAL.

Implementing FATF Recommendations

The follow-up report highlights the country’s progress in implementing the Financial Action Task Force (FATF) Recommendations. Notable improvements have been made in areas such as:

  • Customer Due Diligence: Croatia has strengthened its customer due diligence requirements, ensuring that financial institutions and other reporting entities properly identify and verify their customers.
  • Third-Party Reliance: The country has also improved its third-party reliance measures, which are designed to prevent the use of third parties to circumvent anti-money laundering (AML) and combating the financing of terrorism (CFT) controls.
  • Correspondent Banking: Croatia has enhanced its correspondent banking relationships, ensuring that banks and other financial institutions maintain robust AML/CFT systems.
  • International Cooperation: The country has strengthened its international cooperation powers, enabling it to share information and coordinate efforts with other countries to combat money laundering and terrorist financing.

Recent Amendments to AML/CFT Legislation

Since December 2021, Croatia has taken several steps to enhance its anti-money laundering and terrorist financing (AML/CFT) systems. The country’s AML/CFT legislation was amended to address significant shortcomings, including:

  • Disclosure System for Cash Couriers: A new disclosure system has been introduced for cash couriers, requiring them to report cash transactions above a certain threshold.
  • New Procedures for International Cooperation: Competent authorities now have strengthened powers to cooperate with other countries and international organizations in the fight against money laundering and terrorist financing.

National Action Plan and Registration Regime

The report also notes progress in the adoption of a national action plan, which outlines Croatia’s strategy for implementing its AML/CFT obligations. Additionally:

  • Registration Regime: A registration regime has been established for virtual asset service providers (VASPs), ensuring that these entities are properly registered and subject to AML/CFT requirements.
  • Beneficial Ownership Registers: The country has improved its beneficial ownership registers, providing enhanced transparency over corporate structures.

Remaining Recommendations

While several recommendations remain rated Partly Compliant, including risk assessment and transparency requirements, Croatia has made significant strides in addressing technical compliance shortcomings. The country now boasts:

  • 5 Compliant Recommendations
  • 23 Largely Compliant Recommendations
  • 12 Partially Compliant Recommendations out of the 40 FATF Recommendations

Enhanced Follow-Up Procedure

Croatia remains under MONEYVAL’s enhanced follow-up procedure and is expected to report back on further progress made towards strengthening its AML/CFT system by December 2024.