Alignment Of The Croatian AML Act To The 4th EU Directive

Author:Ms Silvia Cancedda and David Jakovljevic
Profession:Eurofast Global Ltd

The first Croatian Anti-money laundering Act was adopted in 1997 and with it, Croatia implemented international standards and sets out strong grounds for the prevention and fighting of money laundering and terrorism. In 2008, effective as of January 1, 2009, the Croatian Parliament passed a new AML Act, aligning thus to the acquis communautaire. The Directive 2005/60/EC on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing was integrated into the local legislation, and nine years later - following the Directive (EU) 2015/849 - yet another AML Act was passed to reflect these changes. The Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing is also called the 4th EU AML Directive and it has been entirely integrated into the Croatian legislation.

The most recent and valid Croatian AML Act is the Act on the prevention of money laundering and terrorist financing, adopted on November 3, 2017 and effective as of January 1, 2018 (NN 108/2017). Compared to the old act from 2008, it sets out clearer definitions, introduces more rigorous measures but on the other hand, it also makes room for exceptions on subjects or operations that created an unnecessary administrative burden to businesses and professions.

Below is an overview of some of the most important changes:

Risk assessment and due diligence require a more demanding approach - details are elaborated in the Ordinance on risk assessment procedure against money laundering and terrorist financing and measures on simplified and extended client due diligence, from June 2018 (NN 59/2018); The cash transaction threshold has been lowered from 105,000 HRK to 75,000 HRK and the obligation to monitor and report such transactions extends to all legal or physical persons with registered business involved in cash transactions; A Politically Exposed Person now includes any physical person who is currently holding, or has held in past 12 months, a prominent public function in a member state or third country, including his/her close family members and persons known as close associates of the politically exposed person; Lawyers and notaries are now subject to the AML Act only if involved in financial transactions or real estate transactions or if providing...

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