Financial Crime World

Preventing Money Laundering in Croatia: Obligations and Responsibilities of Reporting Entities

Introduction

The Law on Prevention of Money Laundering (NN 69/97) outlines the obligations and responsibilities of reporting entities in Croatia, including banks, insurance companies, and other financial institutions. This article provides an overview of the key points from the text.

Reporting Entities

  • Reporting entities are required to identify clients and record transactions.
  • During account opening or establishment of a permanent business relationship, they must ask for a statement on the beneficial owner and the list of members of the Board.

Identification Thresholds

  • For cash, foreign currency, securities, precious metals, and gems transactions:
    • If the amount exceeds 200,000 kuna, reporting entities must report to the FIU (Financial Intelligence Unit).
    • If the transaction amount is between 105,000 kuna and 200,000 kuna, the entity only has to keep records.

Beneficial Owner Identification

  • Reporting entities must identify the beneficial owner of a legal person or list members of the Board during account opening or establishment of a permanent business relationship.
  • Detailed procedures for identifying the beneficial owner are prescribed in the Rules accompanying the law.

Exemptions

  • Certain transactions do not require identification, such as:
    • Between banks, saving banks, the Financial Agency, Croatian Post and insurance companies
    • When performing transactions related to purchasing foreign cash and cheques, or accepting foreign checks to be cashed

Reporting Insurance Transactions

  • Reporting entities also report on life insurance business if the annual sum of premiums exceeds 40,000 kuna.

Conclusion

The Law on Prevention of Money Laundering (NN 69/97) emphasizes the importance of identifying clients and reporting certain transactions to prevent illegal activities. By understanding these regulatory requirements, financial institutions in Croatia can play a crucial role in preventing money laundering and maintaining transparency within their operations.