Money laundering is every activity aimed at concealing unlawfully obtained income in such a way as to present such income as lawful proceeds. Terrorism is any use of violence for the purpose of achieving political goals, often financed from the proceeds of legal activities. The UN, EU or OFAC lists name persons and entities associated with terrorism that are under some type of sanction. The responsibility for the prevention of money laundering and terrorist financing in the Republic of Croatia lies with prevention bodies, supervisory bodies and criminal prosecution authorities.
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 term 'terrorism', in its broadest sense, implies any use of violence for the purpose of achieving political goals. Terrorist financing shall mean the provision or collection of, as well as an attempt to provide or collect, legal or illegal funds by any means, directly or indirectly, with the intention that they be used or in the knowledge that they are to be used, in full or in part, by a terrorist or a terrorist organization for any purpose including the commission of a terrorist criminal offence, or by persons financing the terrorism. 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.
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 small. 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.
Persons and entities associated with terrorism who are under some type of sanction are included in the sanction list of the UN (UN consolidated list), in the lists of persons under sanctions of the European Union (Consolidated List of Persons, Groups and Entities Subject to EU financial sanctions) and on the OFAC list, the US government agency that administers and enforces financial and trade sanctions, with the goal of preserving the national security and foreign policy objectives (OFAC Specially Designated Nationals List).
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 several bodies. Prevention bodies are persons obligated to implement measures and actions prescribed by law, which include banks, housing savings banks, exchange offices, insurance undertakings, brokers, lawyers, public notaries, tax advisors and others, as well as the Anti-Money Laundering Office (AMLO) as the central analytic service. Supervisory bodies include the Financial Inspectorate, the Tax Administration, the CNB, the Croatian Financial Services Supervisory Agency, while criminal prosecution authorities include the police, the state attorney's office and the judiciary.