Croatia Falls Short in Implementing UN Asset Freeze Requirements

Zagreb, Croatia - A recent report has raised concerns over Croatia’s implementation of United Nations asset freeze requirements, specifically with regards to freezing assets related to terrorist financing and money laundering.

Financial Institutions’ Understanding of Requirements

According to the report, larger financial institutions that are members of bigger financial groups have demonstrated a sufficient understanding of the UN’s Terrorist Financing (TF) and Proceeds of Crime (PC) requirements. However, smaller financial institutions have shown weaknesses in their understanding of certain requirements related to frequency and scope of checks.

Larger financial institutions: Sufficient understanding of TF and PC requirements
Smaller financial institutions: Weaknesses in understanding requirements for frequency and scope of checks

Detection of False Positive Matches

While no real matches were detected, several financial institutions confirmed having had false positive matches with UN-listed persons, demonstrating the ability to detect matches.

The report noted that supervision of compliance with PC-related TF is conducted within the scope of anti-money laundering and combating 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.

Non-Profit Organization Sector

Croatia has made efforts to conduct risk assessments in the non-profit organization (NPO) sector, but none of these exercises have led to the identification of a subset of NPOs that fall under the FATF definition and are likely to be at risk of TF abuse due to their characteristics. This has affected the implementation of targeted measures towards the sector.

Transparency and Beneficial Ownership

The report highlighted concerns over transparency and beneficial ownership, with information on the creation and types of legal persons and arrangements publicly accessible. However, authorities have demonstrated a limited understanding of ML but not TF vulnerabilities of legal persons and arrangements.

Conclusion and Recommendations

In response to these findings, Croatian authorities are urged to take immediate action to improve their implementation of UN asset freeze requirements. The report concludes that while progress has been made, more needs to be done to ensure the effective implementation of AML/CFT measures in Croatia.