Financial Crime World

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Croatia Fails to Implement UN Asset Freeze Requirements

A recent report has highlighted concerns over Croatia’s failure to actively implement United Nations (UN) asset freeze requirements, despite being a signatory to the Terrorist Financing Sanctions regime.

Ministry of Foreign and European Affairs Criticized

The Ministry of Foreign and European Affairs (MFEA) has been criticized for not demonstrating sufficient understanding and application of UN sanctions-related requirements. While banks and other regulated entities (REs) that are part of larger financial groups have shown adequate knowledge of TF and PF-related UN sanctions requirements, smaller REs have demonstrated weaknesses in understanding certain requirements.

Supervision and Implementation

Supervision of compliance with PF-related TFS is conducted within the scope of Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) inspections. However, there is a need for more frequent supervisory efforts focused on weaker performing sectors and adequate resourcing. Despite this, REs have shown ability to detect matches with UN sanctions-listed persons, but no real matches were detected and no assets frozen.

Non-Profit Organization Sector

The report also highlights concerns over Croatia’s NPO sector, which was considered during two National Risk Assessments conducted in 2016 and 2020. Despite this, none of the exercises led to the identification of the subset of NPOs that fall under the FATF definition and are likely to be at risk of TF abuse.

Conclusion

While some REs have shown adequate knowledge of UN sanctions-related requirements, there is a need for more effective supervision and implementation of AML/CFT measures. The Croatian authorities have been urged to take immediate action to address these concerns and ensure compliance with international standards.

Key Findings

  • Croatia’s MFEA has failed to demonstrate sufficient understanding and application of UN sanctions-related requirements.
  • Some REs have shown adequate knowledge of TF and PF-related UN sanctions requirements, but smaller REs have demonstrated weaknesses in understanding certain requirements.
  • Supervision of compliance with PF-related TFS is conducted within the scope of AML/CFT inspections, but there is a need for more frequent supervisory efforts focused on weaker performing sectors and adequate resourcing.
  • The NPO sector has not been effectively addressed, despite being considered during two National Risk Assessments.
  • REs have shown ability to detect matches with UN sanctions-listed persons, but no real matches were detected and no assets frozen.

Recommendations

  • Croatia’s MFEA should take immediate action to demonstrate sufficient understanding and application of UN sanctions-related requirements.
  • The Croatian authorities should conduct more effective supervision and implementation of AML/CFT measures.
  • REs should be required to implement additional measures to mitigate the risk of TF and ML.
  • The NPO sector should be prioritized for further investigation and attention.

Source

[Name of report or organization]