FATF Status

Croatia is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 21 February 2025

In June 2023, Croatia made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime. At its February 2025 Plenary, the FATF made the initial determination that Croatia has substantially completed its action plan and warrants an on-site assessment to verify that the implementation of AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future.

Croatia has made the following key reforms including: (1) completing the national risk assessment, including assessing the ML/TF risk associated with the misuse of legal persons and legal arrangements and the use of cash in the real estate sector; (2) increasing FIU human resources and improving analytical capabilities; (3) continuing to improve LEA detection, investigation and prosecution of different types of ML, including ML involving foreign predicate offences and the misuse of legal persons; (4) demonstrating a sustained increase in the application of provisional measures in securing direct/indirect proceeds, as well as foreign proceeds subject to confiscation; (5) demonstrating the ability to systematically detect and where relevant investigate TF in line with its risk profile; (6) establishing a national framework for the implementation of UN TFS measures and providing guidance and conducting outreach and training to reporting entities; and (7) identifying the subset of NPOs most vulnerable to TF abuse and providing targeted outreach to NPOs and to the donor community on potential vulnerabilities of NPOs to TF abuse.

Compliance with FATF Recommendations

The last Follow up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Croatia was undertaken in 2024. According to that Evaluation, Croatia was deemed Compliant for 7 and Largely Compliant for 29 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 1 of the Effectiveness ratings.

Croatia has established a robust legal framework to combat corruption, including laws that allow for asset seizure and penalties for various corrupt practices. The country is actively implementing an Anti-Corruption Strategy for 2021-2030, which aims to enhance awareness and citizen involvement in fighting corruption. Despite these efforts, challenges remain, particularly in sectors like healthcare and construction, where corruption is perceived as a barrier to foreign investment.

Croatia's economy has shown resilience, growing by 2.8 percent in 2023, making it one of the strongest in the EU, with tourism contributing significantly to GDP. The country adopted the euro on January 1, 2023, enhancing economic stability and attracting foreign investment, particularly in sectors like IT and clean energy. Despite challenges such as inflation and labor shortages, the government is implementing reforms and utilizing EU funding to stimulate growth and improve the business environment.

Croatia's investment climate has been positively influenced by its recent EU membership and adoption of the euro, which enhances economic stability and trade opportunities. The country is attractive to foreign investors due to its strategic location, well-developed infrastructure, and favorable credit ratings, with promising sectors including tourism, telecommunications, and clean energy. However, challenges such as bureaucratic barriers, judicial inefficiencies, and a need for regulatory transparency remain, although the government is actively working to improve the business environment.