Croatia’s Fight Against Money Laundering: Strengthening the Judiciary and Financial System
In an effort to combat money laundering and terrorist financing, the Croatian authorities must strengthen their judiciary and financial system to meet international standards.
Need for Consistent Guidance on Confiscation Orders
According to a recent report by a leading international organization, one of the key issues is the need for consistent guidance on the minimum level of proof required to pursue confiscation orders. The Ministry of Justice should consider modifying the regime to include practices that have been successful in other jurisdictions, such as:
- Reversing the burden of proof
- Applying the civil standard of proof
Proactive Use of Provisional Measures
Prosecutors also need to be more proactive in using provisional measures, such as:
- Seizing funds
- Freezing bank accounts
The report recommends legislative amendments to explicitly state what can be subject to provisional measures and when.
International Cooperation
The Croatian authorities have made progress in international cooperation, including:
- Mutual legal assistance
- Exchange of information with foreign anti-money laundering authorities
However, the report notes that experience is limited, and more needs to be done to strengthen this area.
Customer Identification Requirements
In terms of customer identification requirements, the report recommends:
- Extending obligations to non-cash transactions above a certain threshold
- Identifying beneficial owners of corporate accounts
Anti-Money Laundering Supervision
The Croatian National Bank, as bank supervisor, must develop special audit programs to thoroughly test anti-money laundering systems put in place by banks. The report also highlights the need for regular anti-money laundering supervision in the non-banking financial sector, particularly in areas such as:
- Bureaux de change
Feedback and Coordination
The issue of feedback is also addressed in the report, which notes that investigations and prosecutions are taking a long time to complete. The Croatian authorities must examine whether parts of the law enforcement procedure are slowing down the process unnecessarily.
To combat money laundering more effectively, greater coordination is needed between institutions involved in anti-money laundering efforts. The report recommends creating a body to review periodically how the system as a whole operates in practice.
Conclusion
By taking stock now, the Croatian authorities can build on their basically sound legal structure and make their system fully operational.