Croatia — The Only EU Member State Put on Money-Laundering and Terrorism Financing ‘Grey List’ by FATF
“FATF actions can strongly affect how the financial probity of countries is perceived.” — The Financial Times
July 20, 2023 | Washington, DC | The Financial Action Task Force (FATF) took action on June 22, 2023 by placing Croatia—the only EU member state — on the money laundering and terrorism financing ‘Grey List’ of countries under increased monitoring by the international watchdog. Croatia’s government mired in a myriad of corruption scandals including abusing European Union (EU) taxpayer funds, has once again taken a hazardous path by playing spin-doctor to the critical report on becoming the EU block’s new hub for money laundering.
In its statement, the FATF warns countries placed on the grey list to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.
In a report on on the implications of countries being placed on the ‘grey list’ —
The Financial Times wrote, “FATF actions can strongly affect how the financial probity of countries is perceived.”
The legitimate concerns of financial probity will adversely impact Croatia.
“The addition of Croatia to the FATF “grey list” should be the stimulus needed to increase scrutiny of the illicit money and assets flowing to and —through Croatia,” said Debra LaPrevotte, retired Supervisory Special Agent, Federal Bureau of Investigation, International Corruption Unit, FBI-HQ. “Croatia remains mired in corruption and has welcomed money from Russia and other countries into their real estate sector, while providing safe haven for the yachts of Russian and Ukrainian oligarchs. Perhaps it’s time for Croatia to be the focus of asset recovery investigations in the Balkans.”
“Rather than addressing these serious concerns and strengthening the rule of law, Croatia’s politicians have allowed the Balkan country to morph into a haven for oligarchs from Eastern Europe and transnational organized crime networks,” said Natasha Srdoc, co-founder, International Leaders Summit. “National and local politicians at the county, municipal and city levels, along with their private partners in crime, reap huge profits from a booming real estate market, drawing in suspect funds from illicit gain.”
Business Insider reported that Nigeria which was placed on the FATF’s grey list in February 2023 issued the following public statement to financial institutions:
“The Central Bank of Nigeria has requested that the country’s Deposit Money Banks and other financial institutions closely monitor any dealings with organizations and individuals in and from Cameroon, Croatia, and Vietnam. Consequently, enhanced due diligence should be applied and in severe cases, counter-measures may need to be implemented to safeguard the international financial system.”
Croatia’s legacy of corruption further exposes cracks within the European Union’s commitment to address money laundering and to hold to account Croatia’s government and its parlous judicial system.
Report Issued by Council of Europe in December 2021 | Early Warning Ignored by Croatia
“Croatia must reinforce efforts and capacities to prevent and combat money laundering and terrorism financing” — Council of Europe | December 2021 Report
An earlier report by Council of Europe in December 2021 revealed serious flaws in addressing money laundering in Croatia. The warning from the Council of Europe stated:
“Croatia is therefore encouraged to prioritise identification, investigation and prosecution of ML cases in line with its risk profile, align interpretations and understanding of the ML offence by the judiciary and LEAs with the international standards, and tackle undue delays in judicial proceedings of complex criminal cases. Croatia should also improve coordination between the FIU, LEAs and prosecutors when dealing with detection of TF cases, to ensure that all potential TF activities are identified, thoroughly analysed, investigated and prosecuted.”
Croatia’s Modus Operandi | Money Laundering and Western Taxpayer Aid Crowding Out Profit-Based Private Investment from Strong Rule-of-Law Nations
An article from Euractiv on May 6, 2023, relayed the significant abuse of EU taxpayer funds to Croatia. According to Tamara Laptoš, head of the European Public Prosecutor’s Office (EPPO) in Zagreb, the EPPO’s Zagreb office launched 23 investigations in 2022, examining possible fraud totaling €320 million [EU taxpayer fuunds]. The Brussels-based media reported, “The most prominent scandal investigated by EPPO included a €1.3 million case which led to the indictment of the former government minister for EU funds, Gabrijela Žalac, and three of her associates, in December 2021.”
While the focus thus far has been on politicians connected to the national government, whistle blowers and anti-corruption crusaders have filed criminal complaints highlighting money laundering and corruption cases connected to the City of Rijeka.
USKOK — the Croatian abbreviation for the Office for the Suppression of Corruption and Organized Crime, has yet to formally open an investigation. In one specific criminal complaint submitted to USKOK which addresses a number of international money laundering cases in the City of Rijeka, USKOK’s deputy head Ms. Sajonara Culina, also operating from the City of Rijeka, rejected the complaint, after providing 8 days for delivery of supplemental materials.
Basically, USKOK can always ask for supplemental materials (which will never suffice) and provide unreasonable 8 days, in order to reject any criminal complaint — thus protecting money launderers and corrupt officials.
Nacional, Croatia’s independent weekly reported allegations of USKOK Director Vanja Marušić obstructing investigation into former regional development and EU funds minister Gabrijela Žalac.
Instead of acknowledging the existence of these serious problems, Croatia’s government continues to spin the recent news of being placed on the FATF grey list by issuing a statement that it would check all the boxes and “will fulfill all planned measures in order to continue the process of strengthening the mechanisms for preventing money laundering and terrorist financing.”
The realities on the ground reveal that Croatia’s government is mired in corruption with politicians and their family members amassing significant unexplained wealth. There is no sign of political will exhibited by the members of parliament or local officials at the city and county levels, along with the country’s interconnected judicial and law enforcement officials, to tackle corruption and money laundering.
European Commission’s 2023 EU Justice Scoreboard | Croatia Scores Lowest in the EU on Perceived Judicial Independence and Effectiveness of Investment Protection
On June 8, 2023, the European Commission released its 2023 EU Justice Scoreboard and revealed that Croatia is on the bottom of the list on the perceived judicial independence and effectiveness of investment protection.
The EU Justice Scoreboard launched 2013 is used by the European Commission to monitor justice reforms in member states.
In the 2019 Global Competitiveness Report presented by the World Economic Forum (WEF), Croatia’s judicial independence was ranked 126th out of 141 countries, rated the worst within the European Union (EU), and falling further behind non-EU member states including Russia, Ukraine and Serbia.
Croatia, a member of the EU and NATO, is going to remain a money laundering destination, as long as Croatia’s corrupt politicians deliberately block the full implementation and enforcement of EU laws in order to safeguard their positions and the significant unexplained wealth amassed.
The Balkan country, a recent club member of the European Union’s border-free Schengen Area has become an economic, financial and security threat to the West.
Western Europe’s sovereign states adhering to stricter laws, along with the European Central Bank and the European Commission, have a duty and fiduciary responsibility to hold to account Croatia’s governmental institutions for its intransigence in placing EU member states at risk.
Further Reading | Videos — Broadcast News:
Natasha Srdoc’s conversation with Inda Swanke at Voice of America (9:40 minute) — Studio Washington D.C. Security threats to the West emanate from the Balkans — governments (local and national) laundering money for organized crime and welcoming China and Russia’s state-run enterprises and suspect funds.
“American investments are blocked. As Americans, we are fleeced twice — first, by providing US taxpayer funds to build the region’s infrastructure, and then we are blocked from trading and investments.” — Natasha Srdoc, MBA, Co-Founder, International Leaders Summit
Croatia’s state-run channel HRT 4, led by editor Denis Latin and journalist Petar Vlahov interviews Natasha Srdoc on November 12, 2018. The interview from Jerusalem, Israel, addressed rampant corruption in Croatia, lack of rule of law and criminal capitalism.
