Croatia’s Grey Listing by FATF: A New Hub for Money Laundering Amidst Corruption Scandals

Washington, DC - The Financial Action Task Force (FATF), an international money laundering and terrorist financing watchdog, added Croatia to its Grey List on June 22, 2023. This move placed the European Union (EU) member state under increased monitoring, raising concerns over its financial probity and growing role as a potential money laundering hub.

FATF’s Concerns and Urgent Calls for Action

The FATF’s statement expressing concerns about Croatia’s strategic deficiencies in countering financial crimes urged the country to address these issues immediately:

“The FATF strongly urges Croatia to swiftly address the deficiencies identified in its mutual evaluation report… (and) adequately implement its AML/CFT commitments in order to meet the FATF Standards.”

Retired FBI agent Debra LaPrevotte, an expert in international corruption, emphasized the importance of this listing:

“The addition of Croatia to the FATF ‘Grey List’ should be the stimulus needed to increase scrutiny of the illicit money and assets flowing to and through Croatia.”

Recurring Corruption Scandals and Attractive Destination for Illicit Funds

Croatia’s persistent corruption scandals involving its political class have attracted a growing number of illicit funds, making the country an attractive destination for organized crime networks and even Russian and Ukrainian oligarchs. Natasha Srdoc of the International Leaders Summit noted:

“National and local politicians, along with their private partners, reap huge profits from the property market.”

Corruption scandals and controversial dealings have become a recurring theme in the country, as criticisms regarding the rule of law mount.

Misappropriation of EU Funds and Lackluster Approach to Accountability

The EU’s commitment to combating money laundering and corruption has been put to the test following Croatia’s grey listing. A recent report by the European Public Prosecutor’s Office (EPPO) revealed significant misappropriation of European Union taxpayer funds in the City of Rijeka and criticized USKOK, the Croatian anti-corruption agency, for its lackluster approach to these allegations.

EU’s Response to Holding Croatia Accountable

With concerns about the country’s rule of law and financial probity, the European Union and its partners must act to restore confidence and protect their financial systems. European institutions and sovereign states have a responsibility to hold Croatia accountable and ensure the full implementation and enforcement of necessary laws.

Implications for the Broader Challenge of Money Laundering in the Balkan Region

This turn of events highlights the broader challenge of money laundering in the Balkan region and the need for increased cross-border cooperation to combat these illicit activities. As the situation unfolds, scrutiny of Croatia’s financial dealings is expected to continue, and potential consequences from international partners will be felt.