Money Laundering in Croatia: A Growing Concern

The Consequences of Money Laundering in Croatia: A Growing Concern

Money laundering and terrorist financing have become increasingly prevalent concerns in Croatia, with the country’s legislative framework struggling to keep pace with the evolving threats.

The Current State of Anti-Money Laundering Measures in Croatia

Anti-Money Laundering and Terrorist Financing Law: This law provides a foundation for preventing money laundering and terrorist financing activities.
Criminal Code: The Criminal Code is also an essential component of the legislative framework, providing a basis for prosecuting individuals involved in these illicit activities.

However, the ordinances of the Ministry of Finance and the Croatian National Bank have raised concerns about the effectiveness of these measures.

Transparency in Financial Transactions: A Major Issue

One of the primary issues is the lack of transparency in financial transactions, particularly in the case of cash movements exceeding EUR 10,000. The Foreign Exchange Act requires individuals to declare such transactions on a Cash Declaration Form. However, this requirement has not been effectively implemented, leaving room for exploitation by money launderers and terrorist financiers.

National Assessment of Money Laundering Risks: A Critical Component

The national assessment of money laundering risks conducted every four years is intended to precisely identify, assess, understand, and mitigate these threats. However, the Action Plan for the Reduction of Identified Money Laundering and Terrorist Financing Risks in Croatia has been criticized for being ineffective in addressing the root causes of these issues.

European Commission’s Recommendations: Ignored by Croatian Authorities

The European Commission’s recommendations on measures suitable for addressing identified risks have also been largely ignored by Croatian authorities. This lack of cooperation with supranational risk assessment bodies further exacerbates the challenges faced by the country in combating money laundering and terrorist financing.

EU Legislation: Not Effectively Implemented

Furthermore, the EU legislation directly applicable in Croatia in the area of prevention of money laundering and terrorist financing is not effectively implemented. The Commission Delegated Regulation (EU) 2018/1108 and Regulation (EU) 2023/1113 are examples of regulatory technical standards and rules that have been largely ignored by Croatian authorities.

Conclusion

The lack of cooperation with supranational risk assessment bodies, ineffective implementation of EU legislation, and failure to address the root causes of money laundering and terrorist financing in Croatia pose significant threats to the integrity of financial markets and proper functioning of the internal market of the Union. These challenges underscore the need for more effective measures to combat these illicit activities.

In conclusion, while the Croatian legislative framework provides a foundation for preventing money laundering and terrorist financing, its effectiveness is hindered by the lack of transparency in financial transactions, ineffective implementation of EU legislation, and failure to address the root causes of these issues. Therefore, it is essential that the country takes more effective measures to combat these illicit activities.