Financial Compliance Crucial for Croatian Businesses
With the entry into force of the Act on Restrictive Measures (OG No. 133/2023), Croatia has strengthened its due diligence and reporting procedures to comply with European Union and United Nations sanctions regimes.
Key Provisions of the Act
The Act introduces a range of restrictive measures, including:
- Restrictions on asset disposal: Limitations on the transfer or sale of assets.
- Prohibition of entry into Croatian territory: Restricting access to individuals targeted by sanctions.
- Termination of economic relations: Prohibiting business dealings with sanctioned entities.
- Embargos on weapons and military equipment: Restrictions on the export, import, and transfer of defense-related goods.
Who Needs to Comply?
Entities supervised by the following bodies must adhere to the Act’s obligations:
- Croatian National Bank
- Croatian Financial Services Supervisory Agency
- Financial Inspectorate
- Tax Administration
This means all legal entities active in Croatia are affected, making compliance crucial for businesses operating within the country.
New Obligations as of May 2024
As of May 15, 2024, entities must:
- Implement written policies and controls: Establishing procedures for restrictive measures.
- Appoint a compliance officer: Designating an individual responsible for ensuring compliance.
- Establish reporting channels: Creating mechanisms for reporting suspicious activities.
- Maintain data on restrictive measure applications: Keeping records of applied restrictions.
Consequences of Non-Compliance
Non-compliance with the Act’s provisions may result in:
- Monetary fines ranging from approximately €4,500 to €90,000 for legal entities
- Fines of €600 to €4,500 for responsible individuals within those entities
European Context
The European Union recently adopted a 14th package of restrictive measures targeting Russia, imposing restrictions on 69 individuals and 47 entities. These sanctions already in force exert pressure on targeted entities by limiting their access to services and resources, making compliance crucial for affiliated companies operating in Croatia.
As the business landscape continues to evolve, Croatian businesses must ensure they are aware of and comply with the Act’s requirements to avoid potential consequences and maintain a strong reputation within the European market.