Unusual Transactions in Croatia: Reporting Requirements and Penalties

Croatia has implemented measures to prevent money laundering (ML) and terrorist financing (TF), requiring financial institutions and professionals to report unusual transactions without apparent economic or lawful purpose. The country’s Anti-Money Laundering Office (AMLO) is responsible for monitoring these reports.

Reporting Requirements

Financial institutions and professionals must report any suspicious transaction, regardless of its value or execution manner. The report should include detailed information about the transaction, including:

• Names and addresses of parties involved
• Purpose of the transaction
• Amount involved

Penalties for Non-Compliance

Failure to report a suspicious transaction or providing false information can result in severe penalties, including:

• Fines

• Imprisonment Additionally, financial institutions that fail to comply with reporting requirements may face:

• License revocation

• Regulatory actions

Risk-Based Approach

Croatia has adopted a risk-based approach to combat ML/TF, focusing on high-risk sectors such as:

• Correspondent banking
• Casinos
• High-value goods

The country’s Financial Inspectorate and Tax Administration are responsible for supervising professional activities and enforcing the anti-money laundering regulations.

Identification and Verification Requirements

Financial institutions must identify and verify customer identities through examination of original documents or notarized copies. For legal entities, identification and verification is performed by examining:

• Court or public register documentation presented by a legal representative or person authorized by power of attorney

Case Law and Constitutional Law Impacts

EU case law on data protection may impact the transfer of information to Croatia, as the country has been subject to EU regulations since 2013. Additionally, Croatia’s bank secrecy laws protect confidential information, but exceptions apply for disclosures made to the AMLO.

Key Points

• Unusual transactions without apparent economic or lawful purpose must be reported to the AMLO.
• Failure to report or providing false information can result in severe penalties.
• Croatia has adopted a risk-based approach to combat ML/TF, focusing on high-risk sectors.
• Identification and verification requirements are in place for customer identities.
• EU case law on data protection may impact the transfer of information to Croatia.

By implementing these measures, Croatia aims to prevent money laundering and terrorist financing, ensuring the integrity of its financial system.