Banks and financial institutions have been growing in Croatia in recent years. Financial crime risks are very high for the developing financial sector. But Croatia effectively fights money laundering, terrorist financing, corruption and bribery with effective anti-money laundering legislation and regulations. Thus, the risks of money laundering and terrorist financing in Croatia are low. Croatia is also among the member states of the European Union.
The Croatian National Bank
The Croatian National Bank's role is the central bank of the Republic of Croatia. Also, The Croatian National Bank is part of the European Central Banks System. The main goal of CNB is to achieve price stability and the stability of the financial system as a whole. The National Bank of Croatia executes monetary policy and supervises the activities of credit institutions, credit unions, payment institutions and electronic money institutions. Institutions affiliated with the Croatian Central Bank are obliged to ensure Anti-Money Laundering compliance.
Anti-Money Laundering Office
The Anti-Money Laundering Office is Croatia's Financial Intelligence Unit. The Anti-Money Laundering Office was established as an independent and private unit operating under the Croatian Ministry of Finance. The Anti-Money Laundering Office aims to create an effective AML process by regulating AML / CFT regulations according to international standards. Apart from these, AMLO is responsible for the collection, examines and transmission of AML data to competent government bodies. Banks and other financial institutions are obliged to report suspicious transactions detected to Apart from these, AMLO.
AML Requirements in Croatia
Croatia enacted a new Money Laundering and Terrorism Financing Prevention Act in 2017 to address incompatibilities between existing AML legislation and European Union regulations. We examine the main AML requirements in Croatia under this law in this article. In this article, you can learn about Know Your Customer, Customer Due Diligence, Enhanced Due Diligence and Reporting of Suspicious Transactions.
Know Your Customer procedures enable companies to detect potential risks and threats by collecting information about the customer. It is compulsory for companies to fulfill Know Your Customer procedures in the processes of opening accounts for customers. During the customer account opening process, the customer's identity information and information about the customer's financial history are collected. Then the accuracy of this information is checked. With these control processes, Know Your Customer procedures are fulfilled.
Customer Due Diligence (CDD) is one of the essential keys of an AML program. According to international AML regulations, a risk-based approach should be applied in an effective AML program. Businesses conduct risk assessments to their new and existing customers by applying CDD procedures. There are several methods of performing a risk assessment. There are several methods of performing a risk assessment.
Governments impose sanctions on certain individuals, institutions and governments they want to restrict. Therefore, people on the sanction list pose high risks and threats to financial institutions. With sanction screening, businesses aim to detect customers who have been sanctioned.
The second risk assessment method is Politically Exposed Person control. Politically Exposed Person poses a great risk in terms of bribery and corruption due to their capabilities and powers. PEPs are not prohibited from opening accounts with financial institutions, but companies must establish a control process for PEPs. That's why PEP screening is a must for businesses.
One of the other methods used for risk assessment is Adverse Media Screening. Every day, news from media sources about money laundering, terrorist financing, bribery, corruption, human trafficking and various other crimes are published around the world. Businesses don't want people involved in these crimes to be their customers. Therefore, they detect these people with adverse media scans and prevent possible business relationships.
Enhanced Due Diligence is the control procedures applied to high-risk customers detected in CDD processes. Before entering into business relationships with high-risk customers, companies identify all potential risks and threats with EDD procedures and create a control process appropriate to risk levels.
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Reporting of Suspicious Transactions
It is not enough to just prevent suspicious transactions. Firms are obliged to report suspicious transactions they detect to financial intelligence units. The Anti-Money Laundering Office, which we mentioned in this article, is the financial intelligence unit of Croatia. Therefore, financial institutions report any suspicious transactions detected to AMLO. AMLO examines reported suspicious transactions and initiates the audit process. Financial institutions that fail to comply with their reporting obligations in Croatia face the risk of facing heavy fines.