Croatia Required to Have Written Policies, Controls, and Procedures for ML/TF Risk Management

FATF Reiterates Importance of Written Policies for ML/TF Risk Management

Zagreb, Croatia - The Financial Action Task Force (FATF) has emphasized the need for written policies, controls, and procedures for mitigating and effectively managing money laundering and terrorist financing (ML/TF) risks. In its latest report, FATF highlighted that Croatia needs to strengthen its efforts in this regard.

A Comprehensive Framework is Necessary

The report stressed that a comprehensive framework is essential to prevent ML/TF threats. This includes:

• Establishing clear roles and responsibilities
• Implementing robust risk assessment processes
• Ensuring effective coordination among relevant authorities

Progress Made, but More Needs to be Done

Croatia has made some progress in recent years, including the adoption of an Action Plan for Strengthening the Effectiveness of the Croatian System for Preventing Money Laundering and Terrorist Financing in May 2022. The plan outlines measures to improve ML and TF investigations and prosecutions, as well as tracing and confiscation of proceeds of crime.

However, FATF noted that while the Action Plan is comprehensive, it mostly replicates a list of measures based on previous recommendations rather than presenting an updated strategic document highlighting the country’s AML/CTF priorities and the way forward to achieve identified strategic goals.

Effective Coordination among Relevant Authorities

The report highlighted the importance of effective coordination among relevant authorities. In this regard, FATF welcomed Croatia’s efforts to establish an Interinstitutional Working Group (IIWG) composed of 11 competent authorities in the field of AML/CTF, coordinated by the Croatian Financial Services Agency (AMLO).

Commitment from Policymakers Needed

Despite these efforts, FATF noted that support at the policy-making level is yet to be demonstrated enough for effective fight against ML/TF. The report emphasized the need for high-level officials and policymakers to demonstrate their commitment to the fight against ML/TF.

Recommendations

To strengthen its efforts to combat ML/TF, Croatia needs to:

• Establish written policies, controls, and procedures for the mitigation and effective management of ML/TF risks
• Ensure effective coordination among relevant authorities, including the IIWG
• Demonstrate commitment to the fight against ML/TF by high-level officials and policymakers

Conclusion

While Croatia has made some progress in its efforts to combat ML/TF, it needs to strengthen its framework by establishing written policies, controls, and procedures for the mitigation and effective management of ML/TF risks. The country also needs to ensure effective coordination among relevant authorities and demonstrate commitment from policymakers at the highest level.

By implementing these recommendations, Croatia can strengthen its efforts to prevent ML/TF threats and fulfill its international obligations.