Financial Crime World

Banks in Croatia Implement Stricter Measures to Combat Money Laundering and Terrorist Financing

In a bid to prevent money laundering and terrorist financing, banks operating in Croatia are implementing stricter measures to ensure the integrity of their financial transactions.

Enhanced Due Diligence

According to Article 16.1.6 of the Act on Prevention of Money Laundering and Funding of Terrorism, banks are required to conduct enhanced due diligence on clients from high-risk jurisdictions or countries identified by credible sources as having inadequate anti-money laundering (AML) and anti-terrorist financing (TF) systems.

  • High-risk jurisdictions include those listed on the Financial Action Task Force’s (FATF) Public Statement, which identifies countries that have been deemed non-compliant with AML/TF standards.
  • The list is publicly available on the Croatian Ministry of Finance website.

In-Depth Analysis

In cases where a bank detects suspicious transactions or has concerns about the source of funds, it must conduct an enhanced in-depth analysis to determine whether the transaction is legitimate or not. If deemed suspicious, the bank may refuse to perform the transaction and notify the State AML Office.

Confidentiality and Reporting Requirements

Banks are also required to maintain confidentiality of their clients’ financial information, except in cases where they are compelled by law to disclose such information to regulatory authorities or public officials. This includes providing data to:

  • The Croatian National Bank
  • Financial Inspectorate
  • Tax authorities for supervisory purposes

Goal of Stricter Measures

The implementation of these measures is aimed at preventing the misuse of the financial system for illegal activities, such as money laundering and terrorist financing.

Impact of Russian Sanctions

In a related development, the impact of Russian sanctions on local banks has been felt. International payments to Russian banks are being blocked via the SWIFT system, and Visa and Mastercard cards issued by domestic banks are currently unable to be used in Russia.

Monitoring and Updates

The European Center for Not-For-Profit Law (ECNL) and PILnet, two organizations that support not-for-profit law and advocacy, have been monitoring these developments and will continue to provide updates on any changes or trends in the regulatory landscape.