Financial Crime World

Croatia Falls Short in Implementing UN Traveler’s Financial Sanctions (TFS) Requirements

Assessment Reveals Weaknesses in Implementation

A recent assessment has revealed that Croatia’s Ministry of Foreign and European Affairs (MFEA) is not actively performing its role in implementing the United Nations’ Traveler’s Financial Sanctions (UN TFS) requirements. The assessment found weaknesses in the country’s implementation, particularly in the Non-Profit Organization (NPO) sector.

Risk Assessment Lacking in NPO Sector

  • Croatia failed to conduct a risk assessment in the NPO sector, despite conducting two National Risk Assessments (NRAs) in 2016 and 2020.
  • This has affected the implementation of targeted measures towards the sector.

Preventive Measures Ineffective

  • The level of understanding of money laundering risks varies across sectors, with banks and Money Value Transfer Services (MVTS) having a better grasp of the issue.
  • However, preventive measures are ineffective in some areas, such as the lack of verification of criminal background information by some licensing authorities.

Supervisory Framework Needs Improvement

  • All licensing authorities and Supervisory Review Bodies have legislative requirements on preventing criminals from holding management functions or being the beneficial owner of Reporting Entities (REs).
  • However, the Central Bank of Croatia (CNB) has a more robust approach to verification of received information compared to other authorities.

Financial Inspectorate Faces Challenges

  • The Financial Inspectorate has a reasonable supervisory framework, but its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) supervisory efforts are impacted by resource shortages and IT support issues.
  • The overall quality and effectiveness of the supervisory regime remain unaffected.

Call for Improvement

The assessment highlights several areas that require improvement in Croatia’s implementation of UN TFS requirements, including:

  • Conducting regular risk assessments
  • Enhancing preventive measures
  • Strengthening supervision and enforcement mechanisms

Croatia is urged to take immediate action to address these weaknesses and ensure effective implementation of the UN TFS requirements.