Here is the rewritten article in markdown format:
Risk and Supervision in Croatian Financial Sector
==============================
The report highlights several weaknesses in risk understanding, risk mitigation measures, supervision, and transparency and beneficial ownership across various sectors in Croatia.
Risk Understanding
Chapter 5; IO.2; R.1-15
- Financial Institutions (FIs), Virtual Asset Service Providers (VASPs), lawyers, notaries, and casinos: These sectors have varying levels of understanding of Money Laundering/ Terrorist Financing (ML/TF) risks.
- Advanced practices in applying a risk-based approach: FIs and MVTS demonstrated advanced practices in applying a risk-based approach, while other sectors applied mitigating measures uniformly without tailoring to their risk characteristics.
Key Takeaways
- The understanding of ML/TF risks varies across different sectors.
- Only some sectors have implemented effective risk management strategies.
Risk Mitigation Measures
Chapter 5; IO.2; R.1-15
- Customer Due Diligence (CDD) measures: The effectiveness of CDD measures varied across sectors, with FIs and MVTS performing better than DNFBPs.
- Enhanced Due Diligence (EDD) measures: EDD measures were not always proportionate to the level of observed risks.
Key Takeaways
- CDD measures are not equally effective in all sectors.
- EDD measures may not be tailored to individual risk levels.
Supervision
Chapter 6; IO.3; R.14, R.26-28, 34, 35
- Legislative requirements: All licensing authorities and Supervisory Review Bodies (SRBs) have legislative requirements on preventing criminals from holding management functions or being beneficial owners.
- Supervisory practices: The Croatian National Bank (CNB) applies robust measures, while the Central State Administrative Office for Security (CFSSA) does so to a lesser extent.
Key Takeaways
- There are legislative requirements in place for supervisory bodies.
- Supervisory practices vary across different institutions.
Transparency and Beneficial Ownership
Chapter 7; IO.5; R.24, 25
- Publicly accessible information: Information on creation and types of legal persons and arrangements is publicly accessible.
- Understanding ML vulnerabilities: Croatian authorities have some understanding of ML vulnerabilities of legal persons and arrangements but are reluctant to flag certain types as most vulnerable vehicles for ML.
Key Takeaways
- There is a lack of transparency in beneficial ownership information.
- Authorities are aware of ML vulnerabilities but need to improve their approach.
Key Findings
The report highlights weaknesses in risk understanding, risk mitigation measures, supervision, and transparency and beneficial ownership across various sectors in Croatia. FIs, MVTS, authorized exchanges, and online casino providers performed relatively better than other sectors in terms of risk understanding and application of risk mitigation measures.