INTERPRETATION OF KEY PARAMETERS IN RISK ASSESSMENT

Abstract

Risk assessment is a complex process that focuses on the fundamental aspects of money laundering, specifically in relation to concealing the true nature, source, or ownership of income derived from criminal activities. By establishing policies, controls, and procedures for effective risk reduction and  management, obligors create the fundamental components of due diligence by applying criteria based on risk factors and variables. Risk acceptability, identified as well as risk propensity, serve as reference points for assessment. Additionally, the methods and techniques of money laundering and terrorist financing, categorized by each group of obligated parties, provide a benchmark for establishing inherent and residual risk. The analysis  of the National Risk Assessment of the Republic of Croatia, conducted in 2016 and 2020, incorporates all the mentioned criteria. It highlights the intensity of various predicate acts, the frequency of suspicious transaction reports across different sectors, and the challenges in developing a coherent and effective risk assessment system. The objective of the analysis is to compare the Republic of Croatia with other countries in the region in order to identify common points and factors that contribute to the differences in their systems concerning vulnerability points, to research segments dealing with newly emerging threats, as well as to create recent money laundering modalities that countries are facing in these efforts.