Council of Europe reports on Croatian anti-money laundering measures

09/05/2008

Real estate and the construction industry are easy targets for those seeking to launder money, a Council of Europe committee warns.

By Natasa Radic for Southeast European Times in Zagreb -- 09/05/08

"Croatia will do everything necessary to adopt and implement the European legal framework, especially in anti-money laundering cases," Prime Minister Ivo Sanader said. [Getty Images]

The Council of Europe's (CoE) Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) has published its third-round evaluation report on Croatia. It evaluates the implementation of international and European standards in combating money laundering and terrorist financing.

The government received a detailed assessment, discussing each finding along with the suggested course of action in areas where progress has been inadequate.

According to CoE experts, Croatia's legal framework lacks concrete implementation measures. "There is a lack of efficiency and willingness to trace the roots of 'dirty money', and punish those trying to legalise illegally obtained money," the report says.

"Croatian authorities do not pay enough attention to money laundering, which is used for different purposes," it adds. "The grey zone of real estate and construction industry are easy targets for such operations. Though Croatian institutions delivered anti-money laundering laws ten years ago, there have been only two such trials."

Two factors -- overloaded courts and a lack of expertise – are cited as possible reasons for the long delays. Both problems "appear to be remediable through appropriate training of the judiciary and prosecutors", the authors say.

The CoE experts estimate that in 2005 Croatia lost 500,000 euros to organised crime, while economic crime in general cost the country about 170m euros.

Efforts to crack down on funding for terrorists also fall short, the experts warn. "Croatia will have to do more to tackle terrorist financing in a satisfactory manner. Financing of terrorism is only to a very limited extent provided for as an autonomous offence, and moreover, the preventive law currently addresses the prevention of terrorist financing in an insufficient way," the report says.

The Croatian media has been reporting on portions of the document, with sensational headlines describing Croatia as a "safe haven for money laundering". The government has yet to issue an official response. Prime Minister Ivo Sanader, however, says generally that Croatia "will do everything necessary to adopt and implement the European legal framework, especially in anti-money laundering cases."