Croatia Lands on Financial Watchdog’s Grey List for Money Laundering Concerns

Croatia, the only European Union country to do so, has been placed on the grey list by the Financial Action Task Force (FATF), an international organization dedicated to combating money laundering and terrorism financing. The move is seen as a major setback for Croatia, which has long been considered a stable and well-regulated financial hub.

Reasons for Inclusion

The FATF announced that it had added Croatia to its list of countries under increased monitoring due to deficiencies in its prevention of money laundering and terrorism financing. Specifically, the organization expressed concerns about:

• The country’s ability to prevent the misuse of legal persons and legal arrangements
• Its use of cash in the real estate sector

Action Plan Required

In a statement, T Raja Kumar, the FATF’s chairman, urged Croatia to implement an action plan aimed at addressing these deficiencies as soon as possible. The action plan includes:

• Assessing risks associated with the misuse of legal persons and legal arrangements
• Addressing the use of cash in the real estate sector

Global Concerns about Money Laundering and Terrorism Financing

The FATF’s move comes amid growing concerns about money laundering and terrorism financing globally. In February, the organization suspended Russia’s membership due to its failure to comply with anti-money laundering regulations.

Current and Emerging Risks

The FATF also reiterated that all jurisdictions should be vigilant to current and emerging risks from the circumvention of measures taken against the Russian Federation in order to protect the international financial system.

Grey List Countries

Croatia joins other countries such as:

• United Arab Emirates
• Panama
• Mali

on the grey list, which includes countries that have been identified as having significant shortcomings in their anti-money laundering efforts, but are not yet considered to be non-cooperative.