ANTI MONEY LAUNDERING AND TERRORIST FINANCING

17 February 2015

  1. About money laundering
  2. About terrorist financing
  3. Prevention of money laundering and terrorist financing
  4. Legislative framework for the prevention of money laundering and terrorist financing in the Republic of Croatia
  5. The role of the CNB in the prevention of money laundering and terrorist financing in the Republic of Croatia
  6. About the PMLTF Committee
  7. International institutions and groups engaged in the combat of money laundering and terrorist financing and their documents

 

 

I ABOUT MONEY LAUNDERING

The term money laundering implies a range of activities in banking, monetary or other economic operations whose purpose is to conceal the actual source of money, or assets or rights acquired by means of money obtained in an unlawful manner. An important characteristic of money laundering is that it is always preceded by some unlawful activity. In general, the term money laundering implies every activity aimed at concealing unlawfully obtained income in such a way as to present such income as lawful proceeds.

The Council of Europe first used this term in 1980 in its Recommendation No. R (80) 10 on Measures Against the Transfer and the Safekeeping of Funds of Criminal Origin and in the USA the term was first officially used in a 1982 court ruling against Colombian cocaine mafia.

The first piece of legislation on money laundering (The Money Laundering Control Act) was enacted in 1986 in the US Federal State of Washington. This act envisaged severe sanctions against persons who failed to report duly monetary transactions in excess of USD 10,000 or who failed to meet the obligation to keep receipts on business transactions involving amounts in excess of USD 3,000

 

II ABOUT TERRORIST FINANCING

The term terrorism, in its broadest sense, implies any use of violence for the purpose of achieving political goals. The risk of terrorist financing lies in the danger that the financial system will be used for terrorist financing, i.e. that some legal relationship, transaction or product will be used directly or indirectly for terrorist financing.

Unlike money laundering which is always preceded by an unlawful activity, terrorism may be financed from the proceeds of legal activities (humanitarian organisations, various associations, donations). This makes detection of terrorist financing very difficult, even more so if we bear in mind the fact that transaction amounts involved in terrorist financing often tend to be smaller than the amounts that under law have to be reported to the anti-money laundering office. As the measures taken to prevent money laundering are not sufficient in the fight against terrorist financing, they have to be supplemented by special measures prescribed by competent international bodies.

Below listed are links to persons and entities associated with terrorism who are under some type of sanction:

 

III PREVENTION OF MONEY LAUNDERING AND TERRORIST FINANCING

The responsibility for the prevention of money laundering and terrorist financing in the Republic of Croatia does not lie with one institution but with a system which provides a legal definition of the roles of the participants, their interaction and cooperation and which consists of:

  1. prevention bodies – obligated persons (banks, housing savings banks, exchange offices, insurance undertakings, brokers, lawyers, public notaries, tax advisors, etc.) and the Office for Money Laundering Prevention as the central analytics service;
  2. supervisory bodies – the Financial Inspectorate, the Tax Administration, the CNB, the Croatian Financial Services Supervisory Agency;
  3. criminal prosecution authorities – the police, the state attorney's office and the judiciary.

 

IV LEGISLATIVE FRAMEWORK FOR THE PREVENTION OF MONEY LAUNDERING AND TERRORIST FINANCING IN THE REPUBLIC OF CROATIA

GUIDELINES OF SUPERVISORY AUTHORITIES

 

V THE ROLE OF THE CNB IN THE PREVENTION OF MONEY LAUNDERING AND TERRORIST FINANCING IN THE REPUBLIC OF CROATIA

Competences and responsibilities of the CNB

The CNB cooperates with other domestic and international bodies in the area of prevention of money laundering and terrorist financing.

The Croatian National Bank cooperates with domestic bodies based on the following agreements:

The Croatian National Bank cooperates with institutions abroad on the basis of the following memoranda of understanding and cooperation:

 

VI   ABOUT THE PMLTF COMMITTEE

The Committee of the Croatian National Bank for the Prevention of Money Laundering and Terrorist Financing (hereinafter: the Committee) was established in March 2007. The role of the Committee is to formulate and coordinate procedures and activities of the CNB in carrying out legislative tasks within the jurisdiction of the CNB in the field of prevention of money laundering and terrorist financing and to define its views on individual topics in that area. The Committee decides on requests for data and information submitted by other bodies, monitors the implementation of mutually assumed rights and obligations, including the exchange of information and data based on agreements entered into with other bodies, prepares and proposes entering into agreements on cooperation with other bodies, issues proposals for the drafting and adoption of subordinate legislation to competent expert services and participates in the drafting of legislation on the prevention of money laundering and terrorist financing. In co-operation with the Croatian Chamber of Economy and the Croatian Banking Association, the Committee participates in organising trainings for obligated persons under the CNB’s supervision.

The members of the Committee include representatives of several organisational units, who are also the members of the IIWG and IDWGST. The Committee acts as an internal consultative body, which reports to the Governor on a regular basis.

In its work, the Committee cooperates with:

One of the tasks of the Committee is to provide interpretation of the implementation of guidelines issued by the CNB. Questions on this topic can be forwarded to the Committee at the following e-mail address: odbor-SPNFT@hnb.hr

Committee Activities

 

VII INTERNATIONAL INSTITUTIONS AND GROUPS ENGAGED IN THE COMBAT OF MONEY LAUNDERING AND TERRORIST FINANCING AND THEIR DOCUMENTS

  1. United Nations
  2.  

  3. European Union (EU)
  4.  

  5. Financial Action Task Force (FATF)
  6. The FATF is an intergovernmental body established in Paris in 1989 at the meeting of G-7 countries whose task is to monitor the implementation of measures for the prevention of money laundering and terrorist financing. The FATF mandate includes the introduction of standards for combating money laundering, terrorist financing, proliferation of mass destruction weapons, assessing compliance with the FATF standards, identifying threats to the integrity of the international financial system and responding to them through studying high risk jurisdictions and typologies.

    34 jurisdictions and 2 regional authorities are members of the FATF

    The recommendations issued by the FATF represent the standards for combating money laundering and terrorist financing:

    FATF regional bodies:

     

  7. CODEXTER (Committee of Experts on Terrorism)
    The CODEXTER, established in 2003, is the Committee of Experts on Terrorism of the Council of Europe. One of the main tasks of the CODEXTER is to prepare reviews of legislation and institutional counter-terrorism plans of the members of the Council of Europe. These are reports on counter-terrorism measures implemented by each of the countries through national regulations.
  8.  

  9. Egmont Group
    Egmont Group was established in 1995 with a task of strengthening and facilitating international cooperation between financial intelligence units (FIUs) throughout the world. Its membership numbers currently stand at 132 members and are steadily increasing.
  10.  

  11. International Association of Insurance Supervisors (IAIS)
    Established in 1994, the International Association of Insurance Supervisors (IAIS) represents insurance regulators and supervisors of some 190 jurisdictions throughout the world. The IAIS issues global insurance principles, standards and guidance, provides training and support on issues related to insurance supervision and organises meetings and seminars for insurance supervisors.
  12.  

  13. Basel Committee on Banking Supervision
    The Basel Committee, established within the Bank for International Settlements (BIS) by the Group of Ten countries in 1974, meets regularly four times a year. Today the Committee's members come from the central banks of Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States.
  14.  

  15. The Wolfsberg Group
    The Wolfsberg Group is an association of eleven leading global banks: ABN AMRO, Banco Santanader, Bank of Tokyo-Mitsubishi-UFJ, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Soci้t้ G้n้rale and UBS. The Wolfsberg Group came together in 2000 in Switzerland with the aim of developing and promoting banking services industry standards, and related products. The Group issued the Wolfsberg Anti-Money Laundering Principles for Private Banking in 2000 (revised in 2002 and 2012), subsequently accepted as banking industry standards.
  16.  

  17. International Money Laundering Information Network (IMoLIN)
    IMoLIN is an international organisation established in 1998 by the United Nations on behalf of a partnership of international organisations involved in the prevention of money laundering and financing of terrorism. IMoLIN collects information on national money laundering and financing of terrorism laws and identifies areas for improvement in these laws and international co-operation.