The legal framework governing the prevention of money laundering and terrorist financing in the Republic of Croatia is defined in the Anti Money Laundering and Terrorist Financing Law (OG 108/2017 and 39/2019) and the Criminal Code (OG 125/2011, 144/2012, 56/2015, 61/2015 – corrigendum, 101/2017 and 118/2018). Article 265 of the Criminal Code regulates the definition of money laundering, and Articles 97 – 103 the definition of terrorist financing and other related criminal acts.
The ordinances of the Ministry of Finance of the Republic of Croatia prescribe in more detail the enforcement of certain provisions of the Anti Money Laundering and Terrorist Financing Law. All obligated persons handling cash must comply with the Ordinance on the obligation to report cash transactions of HRK 200,000.00 or above to the Anti-Money Laundering Office (OG 1/2019).
The ordinance prescribes the manner and the extent of reporting on cash transactions of HRK 200,000.00 or above.
Ordinance on the obligation to report suspicious transactions, funds and persons to the Anti-Money Laundering Office (OG 1/2019) provides the basis for the prevention of money laundering and terrorist financing, which prescribes the manner and deadlines as well as additional information in reporting suspicious transactions to the Office.
The novelty is the possibility of identification by using new technologies, as prescribed in detail in the Ordinance on the minimum technical requirements for the means of video-electronic identification (OG 1/2019), which specifies the minimum technical requirements for the means of video-electronic identification for the purpose of establishing and verifying the identity of natural persons, craftsmen or persons engaged in other self-employed activities and natural persons who represent legal persons established in a Member State by the persons obligated to implement anti-money laundering and terrorist financing measures.
Supervisory bodies must also adopt subordinate legislation for obligated persons they supervise to provide detailed instructions for the implementation of the prescribed measures and action obligated persons should undertake in order to prevent money laundering or terrorist financing. The Croatian National Bank thus adopted the Decision on the measures of payment service providers in accordance with Article 25 of Regulation (EU) 2015/847 (OG 57/2018) – to determine the sender of the funds with certainty for each transaction and the Decision on the assessment procedure of the money laundering and terrorist financing risk and on the manner of applying simplified and enhanced customer due diligence measures (OG 57/2018), which should be read together with the Ordinance on the process of assessing money laundering and terrorist financing risk and the manner of applying simplified and enhanced customer due diligence measures (OG 59/2018), which was adopted by the Croatian Financial Services Supervisory Agency (HANFA), since some obligated persons, owing to the different services they render, are subject to supervision by both supervisory bodies.
Article 40 of the Foreign Exchange Act defines that natural persons entering or leaving the European Union towards third countries are obliged to declare any cash movements of EUR 10,000.00 or more on a Cash declaration form.
In order to precisely identify, assess, understand and mitigate money laundering and terrorist financing risks, the Republic of Croatia carries out a national assessment of money laundering and terrorist financing risks, which is regularly updated every four years. The assessment covers the institutional structure and procedures of each stakeholder with a score indicating his overall exposure and vulnerability to money laundering and terrorist financing.
Based on the results of the National Assessment, adopted is the Action Plan for the Reduction of Identified Money Laundering and Terrorist Financing Risks in the Republic of Croatia.
When implementing the national risk assessment, the following shall be taken into account: Supranational Risk Assessment and recommendations of the European Commission on the measures suitable for addressing the identified risks as well as Joint Opinion of the European Supervisory Authorities on money laundering and terrorist financing risks affecting the reporting entities performing financial activity.
EU legislation directly applicable in the Republic of Croatia in the area of the prevention of money laundering and terrorist financing
Commission Delegated Regulation (EU) 2018/1108 of 7 May 2018 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council with regulatory technical standards on the criteria for the appointment of central contact points for electronic money issuers and payment service providers and with rules on their functions (Text with EEA relevance) (OJ L 203, 10.08.2018.).
Regulation (EU) 2015/847 of the European parliament and of the Council of 20 May 2015 on information accompanying transfers of funds and repealing Regulation (EC) No 1781/2006 (Text with EEA relevance) (OJ L 141, 5.6.2015).
Commission Delegated Regulation (EU) 2019/758 of 31 January 2019 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council with regard to regulatory technical standards for the minimum action and the type of additional measures credit and financial institutions must take to mitigate money laundering and terrorist financing risk in certain third countries (Text with EEA relevance) (OJ L 125, 14.5.2019.).
High-risk third countries are jurisdictions with strategic deficiencies in their national anti-money laundering and terrorism financing regimes. Their legal and institutional deficiencies and poor standards for controlling money flows pose significant threats to the integrity of financial markets and the proper functioning of the internal market of the Union. Therefore, all Union obliged entities under Directive (EU) 2015/849 are obliged to apply enhanced due diligence measures in their relationship to natural persons and/or legal entities established in high-risk third countries.