NEW LAW ON CASH FLOW PREVENTION AND TERRORISM FINANCING

On November 8, 2017, the Croatian Parliament passed a new Law on Prevention of cash flow and Financing of Terrorism, published in Narodne Novine magazine no. 108/17, which enters into force on 1 January 2018. New Law coordinates Legislation of the Republic of Croatia with the regulations of the Fourth EU Directive on the Prevention of Cash Flow (EU Directive 2015/849).

Below we bring you some of the key changes introduced by the new Law:

• The new Act did not significantly change the list of entities obliged to implement measures to prevent money laundering, and for some subjects the scope of services for which there is an obligation to implement measures to prevent money laundering has been reduced. For example, in relation to voluntary pension funds and pension insurance companies, the new Act covers only that part of the business that relates to direct disposable payments of persons in such companies and retirement pension companies. Lawyers and notaries are also obliged to enforce measures to prevent money laundering only when, inter alia, they provide services to customers in the purchase or sale of real estate, the management of property owned by the party, the opening of bank accounts and the establishment of companies on behalf of the parties. The new Act explicitly stipulates that HBOR is liable for the implementation of measures, actions and procedures for the prevention of money laundering;
• The new Act describes in more detail that, when assessing the risk of money laundering and terrorist financing, taxpayers must take into account the factors pertaining to the geographic area of the party, products / services and delivery channels;
• The obligation to undertake the depth analysis of the party has been extended to any occasional transaction involving the transfer of cash funds worth more than EUR 1,000.00
• The threshold that depends on the existence of a duty to undertake a Party's under-analysis of gambling services has been reduced to a value of HRK 15,000.00 or more;
• A legal or natural person performing a registered activity in the Republic of Croatia shall not be liable to pay or make a cash payment in the amount of 75,000.00 and above;
• Obligations to carry out measures to prevent money laundering are obliged to notify the Office for the Prevention of Money Laundering of any cash transaction worth 200,000.00 HRK or more;
• The new law extends the requirement for the implementation of deep-seated party analysis measures and also applies to parties from high-risk states as well as parties that transact shares in the donors;
• The definition of politically exposed persons has been expanded and includes natural persons who have acted or have acted on a prominent public office over the past 12 months, including, inter alia, presidents of governments and government presidents, ministers and their deputies; members of the elected legislative body, members of administrative bodies of political parties, members of central bank councils, judges of supreme or constitutional courts, members of international organizations, mayors, etc .;
• The new law provides for the establishment of a Register of Actual Owners, operating operationally by the Financial Agency (FINA);
• The maximum amount of fine for violating the provisions of the Law has been increased from HRK 750,000 to HRK 1,000,000.00.