Financial Crime World

Croatia Fails to Meet UN Requirements for Asset Freezing

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The Ministry of Foreign and European Affairs (MFEA) in Croatia has come under fire for its lackluster performance in implementing United Nations (UN) sanctions against terrorist organizations.

Weaknesses Identified

  • Smaller financial institutions have shown weaknesses in freezing assets linked to UN-designated individuals and entities.
  • Several financial institutions reported false-positive matches with UN-listed persons, indicating that they are capable of detecting potential matches.
  • The report highlights the need for more frequent supervisory efforts focused on weaker performing sectors and adequate resourcing.

Risk Assessment

  • Croatia has failed to conduct a comprehensive risk assessment in the non-profit organization (NPO) sector, hindering the implementation of targeted measures against terrorist abuse.
  • The level of understanding of money laundering risks varies across sectors, with banks and other financial institutions showing a stronger grasp of these risks.

Supervisory Authorities Criticized

  • The Croatian National Bank (CNB) has been criticized for its robust approach to preventing criminals from holding management positions or being beneficial owners of financial institutions.
  • Other supervisory authorities such as the Central State Administration (CFSSA) and the Agency for Supervision of Insurance and Pension Funds (TA) have been criticized for their administrative checks without verifying criminal background information.

Call for Action

The report calls on the Croatian government to take immediate action to address these shortcomings and ensure compliance with UN sanctions. This includes:

  • Conducting a comprehensive risk assessment in the NPO sector
  • Improving the effectiveness of asset freezing measures
  • Enhancing supervisory authorities’ powers to prevent criminal activity

Consequences of Non-Compliance

Failure to comply with UN sanctions could have serious consequences for Croatia’s international reputation and its relationships with other countries. It is imperative that the government takes immediate action to address these shortcomings and ensure compliance with UN sanctions.

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