Croatia Urged to Strengthen Efforts Against Money Laundering and Terrorism Financing

Croatian authorities are under pressure to improve their efforts in preventing and combating money laundering (ML) and terrorism financing (TF) following a report by MONEYVAL, the Council of Europe’s anti-money laundering body.

Progress Made, but More Work Needed

While Croatia has made progress in implementing the Financial Action Task Force (FATF) standards, particularly in international cooperation, further improvements are necessary. The report highlights several areas where Croatian authorities need to strengthen their efforts and capacities.

Key Recommendations

Here are some of the key recommendations from the MONEYVAL report:

• Strengthen understanding of ML and TF risks: Croatian authorities must improve their understanding of the risks associated with money laundering and terrorism financing.
• Improve transparency: The country must enhance transparency of legal persons, arrangements, and beneficial ownership to prevent money laundering and terrorism financing.
• Enhance supervisory efforts: Supervisory bodies must be more proactive in identifying and preventing ML/TF activities.
• Private sector engagement: The private sector must be more proactive in implementing ML/TF preventive measures.
• Confiscation laws: Croatia’s confiscation laws must be improved to effectively combat money laundering.

Challenges Ahead

The report highlights several challenges that Croatia must address:

• Financial Intelligence Unit (FIU): While the FIU is a crucial source of financial intelligence, its results are not effectively used by law enforcement agencies.
• Coordination: Croatia needs to improve coordination between the FIU, law enforcement agencies, and prosecutors when dealing with terrorism financing cases.
• Non-profit organizations: The country must develop a better understanding of its exposure to terrorism financing risks for non-profit organizations and apply targeted measures to those entities more vulnerable to TF abuse.

Next Steps

As a result of this report, Croatia will be subject to MONEYVAL’s enhanced follow-up reporting process. This means that the country will need to submit regular reports on its progress in implementing the FATF recommendations and addressing the challenges highlighted by the report.