Croatia Introduces New Money Laundering and Terrorism Prevention Act

In order to place the Fourth Anti-Money Laundering Directive (AMLD4) into the legal system, the Croatian Parliament passed the Money Laundering and Terrorist Financing Prevention Act on October 27, 2017.

One main component of this act is the addition of the Beneficial Owner Register to the already existing Money Laundering and Terrorist Financing Prevention Act.  The Beneficial Owner Register will function as an electronic database which stores all “beneficial owners of legal entities.”  Further, the Register is only accessible by officials in the Anti-Money Laundering Office (AML office), certain authorized individuals in state bodies, such as the Ministry of Finance and the State Attorney’s Office, and authorized individuals who handle money laundering and terrorism financing in terms of customer due diligence.

Although information from the Register will not be accessible to the public, in certain cases limited access may be granted through an application submitted to the AML Office.  However, there must be a justifiable reason as to why the access should be granted.  Information which can impact the owner’s legal standing, or is in connection with possible criminal acts committed by the owner are taken into account when granting access due to the fear of putting the owner at risk of possible violence, fraud, extortion, kidnapping and so on.  

This AML Act also requires that all legal entities in Croatia keep information of beneficial owners and ownership structures current and updated.  The Financial Agency (FINA) alongside the Register will be able to obtain information through registers in which the entities were established.

In addition, this AML Act also strengthens prevention and detection of money laundering and terrorism financing by utilizing Know-Your-Customer (KYC) standards when conducting customer due diligence, and notification to the AML Office of any suspicious transactions or risks.  These extra measures will  be taken before and after every transaction and is the obligation of the Croatian National Bank, the Financial Inspectorate, the Croatian Financial Services Supervisory Agency and the Tax Administration.

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