Croatia’s Financial Crime Risk Assessment Tools Under Scrutiny: Moneyval Report Highlights Shortcomings
Introduction
A recent report by Moneyval has shed light on Croatia’s efforts in combating financial crimes, revealing a patchy understanding of money laundering (ML) and terrorist financing (TF) risks among authorities. The report highlights several weaknesses in the country’s risk identification and assessment processes, as well as inadequate cooperation between law enforcement agencies.
Understanding of ML and TF Risks
The report reveals that Croatia’s National Bank has a comprehensive understanding of ML risks, while the tax administration lacks a full grasp of the issue. In contrast, all authorities have a poor understanding of TF risks. This disparity is attributed to weaknesses in identifying and assessing risks, including the absence of information on ML and TF risks in strategy documents.
Key Findings
- Croatia’s National Bank has a comprehensive understanding of ML risks
- Tax administration lacks a full grasp of ML risks
- All authorities have a poor understanding of TF risks
- Weaknesses in identifying and assessing risks, including the absence of information on ML and TF risks in strategy documents
Investigations and Prosecutions
The report notes that although Croatia’s legislation provides law enforcement agencies with broad powers to investigate ML, investigations often focus on predicate offenses rather than ML itself. Judges and prosecutors also have limited understanding of ML offenses, which hinders effective investigations.
Key Findings
- Investigations often focus on predicate offenses rather than ML
- Judges and prosecutors have limited understanding of ML offenses
- Financial intelligence information is rarely used in ML investigations and never used for TF investigations
Confiscation and Prosecution of Proceeds from Crime
The report highlights that Croatia has made progress in confiscating proceeds from crime related to domestic predicate offenses but has failed to yield tangible results in ML cases. The country’s risk profile shows a low ratio of disseminated cases to launched investigations, with criminal sanctions applied to ML offenses being neither effective nor dissuasive enough.
Key Findings
- Croatia has made progress in confiscating proceeds from crime related to domestic predicate offenses
- Low ratio of disseminated cases to launched investigations for ML offenses
- Criminal sanctions applied to ML offenses are not effective or dissuasive enough
Awareness and Cooperation
The report criticizes Croatia’s authorities for their lack of awareness about TF and its various forms. Despite some inquiries, no formal investigations or prosecutions have been carried out for TF offenses. The report notes that the country’s national risk assessments have failed to identify high-risk non-profit organizations (NPOs) vulnerable to TF abuse.
Key Findings
- Lack of awareness about TF and its various forms
- No formal investigations or prosecutions for TF offenses
- National risk assessments have failed to identify high-risk NPOs vulnerable to TF abuse
Recommendations
The report concludes that Croatia’s authorities should strengthen their understanding of ML and TF risks, improve cooperation between agencies, and enhance the use of financial intelligence information in investigations. Additionally, the country should prioritize incoming requests for international cooperation and develop a systematic approach to addressing systemic problems related to extradition requests.
Recommendations
- Strengthen understanding of ML and TF risks
- Improve cooperation between law enforcement agencies
- Enhance use of financial intelligence information in investigations
- Prioritize incoming requests for international cooperation
- Develop systematic approach to addressing systemic problems related to extradition requests