Financial Crime World

Croatia Steps Up Efforts to Combat Money Laundering with Politically Exposed Persons (PEPs) Screening

In an effort to prevent the misuse of its financial system, Croatia is implementing stricter measures to screen politically exposed persons (PEPs), individuals who hold prominent public offices or have done so in the past. This move comes as part of a broader international effort to combat money laundering and terrorist financing.

What are PEPs?

According to the Financial Action Task Force (FATF), PEPs are at higher risk of being involved in criminal activity such as corruption, bribery, and illicit fund laundering due to their positions of influence. This is why financial institutions in Croatia will be required to apply additional anti-money laundering and combating the financing of terrorism (AML/CFT) measures when dealing with PEPs.

FATF Guidelines

The FATF has developed guidelines to help countries effectively implement these additional measures, which include:

  • Identifying PEPs, their family members, and close associates
  • Conducting customer due diligence, requiring financial institutions to know who their customers are and be able to verify that information
  • Using a combination of internal research and external sources to identify potential PEPs

Red Flags

The guidelines also provide a list of red flags that may indicate suspicious activity by PEPs, including:

  • The use of corporate vehicles to conceal ownership
  • Inconsistent information provided during account opening
  • Doing business with individuals connected to high-risk countries or industries

Financial institutions will need to be aware of these indicators and take appropriate steps to investigate any suspicious activity.

Benefits

By implementing these stricter measures, Croatia is taking a critical step in combating money laundering and terrorist financing. The move is expected to increase transparency and accountability within the financial sector, ultimately helping to protect the country’s economy and prevent illicit activities.

In conclusion, Croatia’s efforts to combat money laundering with PEPs screening are an important step towards preventing the misuse of its financial system. By implementing these stricter measures, financial institutions can help protect the country’s economy and prevent illegal activities.