FATF places Croatia on “Grey List” for money laundering & terrorism financing deficiencies

The Financial Action Task Force (FATF), an international financial crime watchdog, announced on Friday that it had added Croatia, an EU member state, to its “grey list” of countries under increased monitoring.

Croatia is now the only EU country on the list, joining the likes of the United Arab Emirates, Panama, and Mali. The decision was made due to deficiencies in Croatia’s efforts to combat money laundering and terrorism financing.

According to the FATF, when a jurisdiction is placed under increased monitoring, it signifies that the country has committed to implementing an Action Plan to swiftly address the identified strategic deficiencies within agreed timeframes. The Paris-based inter-governmental organization sets global standards for anti-money laundering and counter-terrorism financing and checks if countries adhere to them.

During one of its regular plenary meetings this week, the FATF Chairman, T Raja Kumar, informed journalists that Croatia had pledged to an action plan aimed at improving its compliance. He urged the country to implement the plan as soon as possible. As part of its action plan, Croatia will assess risks associated with the misuse of legal persons and legal arrangements, as well as the use of cash in the real estate sector, according to the FATF statement.

The FATF also emphasized in its statement that all jurisdictions should remain vigilant regarding current and emerging risks related to circumventing measures taken against the Russian Federation in order to safeguard the international financial system. Notably, the FATF had suspended Russia’s membership in February.

Following the June meeting, the FATF confirmed that no current member of the grey list had been removed. This suggests that countries on the list still have work to do to address their deficiencies in anti-money laundering and counter-terrorism financing measures.

Croatia now faces the task of swiftly implementing the necessary reforms outlined in its action plan to rectify the identified deficiencies. Failure to do so could result in further consequences and potential repercussions for the country’s financial system.