Financial Crime World

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Terrorist Financing Risks in Croatia: A Growing Concern

A recent report by the Financial Action Task Force (FATF) has highlighted concerns over terrorist financing risks in Croatia. The report assesses the country’s compliance with international anti-money laundering and counter-terrorism financing standards, revealing several areas of concern.

Compliance and Deficiencies

Croatia is “largely compliant” in several key areas, including:

  • Assessing risk and applying a risk-based approach (R.1)
  • National cooperation and coordination (R.2)
  • Money laundering offence (R.3)

However, there are significant deficiencies in other areas, including:

  • Lack of progress on confiscation and provisional measures (R.4) and terrorist financing offence (R.5)
  • Failure to implement effective targeted financial sanctions related to terrorism and terrorist financing (R.6)

Concerns with Non-Profit Organisations and Financial Institution Secrecy Laws

Croatia’s approach to non-profit organisations (R.8) has been identified as “non-compliant”, and its financial institution secrecy laws (R.9) have raised concerns.

Progress and Challenges in Customer Due Diligence, Record Keeping, and Internal Controls

Croatia has made progress in:

  • Customer due diligence (R.10)
  • Record keeping (R.11)
  • Internal controls and foreign branches and subsidiaries (R.18)

However, there are still challenges to be addressed.

Areas for Further Improvement

The report highlights the need for further improvement in several areas, including:

  • Correspondent banking (R.13)
  • Money or value transfer services (R.14)
  • New technologies (R.15)
  • Wire transfers (R.16)
  • Reliance on third parties (R.17)
  • Transparency and beneficial ownership of legal persons and arrangements (R.24)

Conclusion

The FATF report has raised concerns about the risks posed by terrorist financing in Croatia, particularly given its strategic location in Southeastern Europe. The government must take immediate action to address these deficiencies and ensure that it is doing enough to prevent the misuse of its financial system for terrorist financing purposes.

Source: Financial Action Task Force (FATF) Report on Benin Follow-Up Report 2023