According to Article 1 of the SSM Regulation, the scope of ECB’s supervisory tasks is limited to the prudential supervision of credit institutions. Supervisory tasks not conferred on the ECB remain with the national supervisory authorities. The CNB will therefore remain solely responsible for the supervision of banks in areas which go beyond the scope of the SSM Regulation.
Such areas include those regulated by the Credit Institutions Act and subordinate legislation of the Croatian National Bank, e.g. limits on holdings of tangible assets, rules for the accounting and classification of exposures, methods for determining credit losses and consumer protection.
These regulations were adopted to accommodate the specific characteristics of the Croatian banking system and address the need for further regulation to reduce, and achieve better management of, the risks to which credit institutions are exposed in these areas. Based on previous CNB experience in the supervision of credit institutions, these areas have proved to be particularly important at the onset of recessions or economic and financial crises.
In addition, the CNB continues to play an important role supervising the implementation of national regulations governing the prevention of money laundering and combatting the financing of terrorism (AML/CFT). In Croatia, several institutions are responsible for AML/CFT; their specific roles and the nature of the cooperation between them are defined by law.
There are three broad categories of authority participating in the AML/CFT system:
- preventative bodies (banks, exchange offices, brokers, insurance firms, gambling operators, etc.);
- supervisory authorities (Office for the Prevention of Money Laundering, Financial Inspectorate of the Republic of Croatia, Tax Administration, Croatian National Bank, Croatian Financial Services Supervisory Agency); and
- prosecuting authorities (the State Attorney’s Office, the courts and the police).
As a supervisor, the CNB checks whether banks take all legally prescribed measures to prevent the use of the banking system for money laundering purposes. However, the CNB is not responsible for investigating bank clients who are potential perpetrators of money laundering: this responsibility lies with the prosecuting authorities.