As Poslovni Dnevnik writes on the 3rd of November, 2020, the Financial Inspectorate of the Republic of Croatia has issued a decision by which the otherwise popular Zagrebacka banka was found guilty and fined an eye-watering amount.
The guilty verdict comes as a result of the supervision of the Croatian National Bank which established that in the period from the 1st of January 2017 to the 8th of November 2019, Zagrebacka banka failed to implement all of the necessary measures, actions and procedures as prescribed by the Law on Prevention of Money Laundering and Terrorist Financing (ZSPNFT). As a result of the finding, a single fine in the amount of 33,000,000 kuna was published on the CNB’s website. However, as Poslovni Dnevnik/Ana Blaskovic reports, the bank has earned a discount on that huge fine, and will now pay ”only” 22 million kuna.
According to the Misdemeanor Law, if the bank pays the fine within a month, which it will do, Zagrebacka banka will ultimately only pay the aforementioned ”discounted” amount of 22 million kuna.
The decision of the Financial Inspectorate was made and became final on October the 30th, 2020. This fine is the highest misdemeanor ever imposed on a credit institution in all of Croatia, not only in the field of the prevention of money laundering and terrorist financing, but also in all areas for which the misdemeanor liability of credit institutions can be prescribed. In this case, the Croatian National Bank, as the supervisory body and authorised prosecutor, complied with the obligations under the Misdemeanor Law, informed Zagrebacka banka of its right to come to an agreement, which Zagrebacka banka used, admitted guilt and agreed to accept the aforementioned large fine.
Zagrebacka banka: We have implemented all of the due regulatory measures
”Zagrebacka banka has resolutely implemented all of the due regulatory measures in close cooperation with the competent authorities and remains strongly committed to the continuous strengthening of the system and its processes. The entire set of measures (75) identified by the bank, and ordered by the CNB in its decision, was fully implemented three months before the deadline set by the CNB,” Zagrebacka banka stated.
The Croatian National Bank has identified a total of 11 violations related to violations of the Law on the Prevention of Money Laundering and Terrorist Financing, in the following areas:
Risk assessment of an individual business relationship
Identifying and tracking suspicious, complex and unusual transactions
Reporting suspicious transactions to the Office for the Prevention of Money Laundering
Implementation of measures of enhanced in-depth analysis of all parties
A system of internal controls to reduce and effectively manage the risk of money laundering and terrorist financing.
The aforementioned violations established by the CNB upon the supervision of Zagrebacka banka were committed in the period from the 1st of January 2017 to the 8th of November 2019, and relate to the following omissions:
It did not implement measures of enhanced in-depth party analysis for 72 clients
It did not analyse the background and purpose of 1,126 transactions that were identified as complex and unusual and didn’t have an obvious economic or visible legal purpose
For 2,028 transactions made by parties, the lists of indicators weren’t used as guidelines in determining the grounds for suspicion of money laundering or terrorist financing
It failed to report 1,122 suspicious transactions to the Office for the Prevention of Money Laundering
It hasn’t established an effective system of internal controls to reduce and effectively manage the risk of money laundering and terrorist financing.
The number, type and duration of identified illegalities indicated structural shortcomings in the implementation of prescribed measures, actions and procedures to prevent money laundering and terrorist financing. Such conduct is particularly unacceptable given the position held by Zagrebacka banka in the financial system of the Republic of Croatia as the largest credit institution.
The amount of the fine imposed is proportional to the determined number and severity of the committed offenses.
After the completion of the CNB’s supervision, Zagrebacka banka reorganised its operations and increased its capacity to detect and prevent money laundering and terrorist financing, and proceeded to implement supervisory measures based on the decision of the Croatian National Bank. Zagrebacka banka demonstrated an appropriate degree of readiness to address all of the identified weaknesses within the anti-money laundering and anti-terrorist financing system. Among other things, Zagrebacka banka has committed itself to implementing 75 measures to increase the efficiency and effectiveness of its anti-money laundering and anti-terrorist financing system. In the meantime, Zagrebacka banka informed the CNB that it had implemented all of the measures it undertook.
This case emphasises that the implementation of measures to prevent money laundering and terrorist financing by banks remains an important priority of the CNB and that it is more than determined to take all of the measures to ensure that banks comply with regulations in the field of the prevention of money laundering and terrorist financing. The Croatian National Bank expects banks to have effective and efficient anti-money laundering and anti-terrorist financing systems that should be proportionate to their size, type, scope and the complexity of their operations.
In accordance with the law, the CNB informed the Office for the Prevention of Money Laundering in detail about their decision, as well as all competent state institutions.
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