Financial Inclusion and Money Laundering Concerns in Croatia Amidst Migrant Remittances
Croatia’s efforts to promote financial inclusion for migrants are being hindered by concerns about the impact of anti-money laundering measures on remittance flows.
The Dichotomy between Promoting Financial Inclusion and Preventing Money Laundering
The European Union’s directive on access to payment accounts has created a dichotomy between promoting financial inclusion and preventing money laundering. While banks are required to prevent money laundering, they must also provide migrants with access to payment accounts. This has resulted in:
- Undue, excessive, or discriminatory policies and practices on the ground
- A lack of clarity on how to balance competing priorities
Challenges Faced by Migrant Remitters in Croatia
A recent study found that remittance market infrastructure is lacking in Croatia, making it difficult for migrants to send and receive funds safely and cheaply. This has led to:
- Reliance on informal channels, which can facilitate money laundering and terrorist financing
- A lack of access to payment systems and bank accounts, exacerbating financial exclusion
The Impact of UN Instruments on Financial Exclusion
Experts argue that the UN’s instruments against money laundering and terrorist financing have a strong impact on financial exclusion of migrants, despite promoting financial inclusion. Similarly, the EU’s directive on combating the use of the financial system for the purpose of money laundering or terrorist financing has been criticized for its potential to harm migrant remitters.
The Need for Nuanced Policies
The Croatian government must strike a balance between preventing money laundering and ensuring that anti-money laundering measures do not impede migrant remittances. To achieve this, it is crucial to:
- Establish effective remittance infrastructure
- Ensure access to payment systems
- Promote financial inclusion while combating illicit financial flows and money laundering
As Croatia continues to grapple with these challenges, experts warn of the need for nuanced policies that address the complex issues surrounding financial inclusion and money laundering.