CROATIA INTRODUCES NEW FINANCIAL COMPLIANCE REGULATIONS

The Republic of Croatia has introduced a new set of regulations aimed at enhancing financial compliance in the country. The Act on Restrictive Measures, which came into effect on November 15, 2023, establishes more effective due diligence and reporting procedures to facilitate the implementation of complex sanctions regimes from the European Union and United Nations.

Key Provisions of the Act

• Restrictive Measures: The Act outlines various restrictive measures that can be imposed, including:
  • Restrictions on asset disposal
  • Prohibition of entry or transit through the national territory
  • Termination of economic relations
  • Trade restrictions
  • Embargos on weapons and military equipment
• Scope of Application: The scope of application is broad, covering entities under the supervision of several key institutions, including:
  • Croatian National Bank
  • Croatian Financial Services Supervisory Agency
  • Financial Inspectorate
  • Tax Administration

Implementation Requirements

As of May 15, 2024, entities are required to:

• Adopt Written Policies: Adopt written policies, controls, and procedures for implementing restrictive measures.
• Appoint Compliance Officer: Appoint a person responsible for compliance.
• Establish Reporting Channels: Establish reporting channels.
• Maintain Data Records: Keep data on the application of these measures.

Consequences of Non-Compliance

Non-compliance with the new statutory provisions may result in monetary fines ranging from approximately €4,500 to €90,000 for legal entities and €600 to €4,500 for the responsible person within legal entities.

Implications for Companies Operating in Croatia

The European Union has recently imposed additional restrictions on Russia, further increasing the pressure on targeted entities. In light of these developments, it is essential for companies operating in Croatia to navigate these restrictions carefully to ensure compliance with the new regulations.