With Croatia’s expected entry into the Eurozone and the transition from Kuna to Euro, an interesting topic emerged during the recent conference 'Croatia on the Path to Euro' organized by the European Commission and Lider. According to data from the Croatian National Bank from July, 38.2 billion Kuna is outside the banking system, from which it can be assumed that part of this amount is hidden in socks, mattresses, safes, picture frames, bags buried in the garden, books, or women's handbags, although it is unclear what portion.
For comparison, on the last day of August, there were 47.3 billion Kuna in circulation (including the mentioned 38.2 billion), while the total liquid assets (M4 – the broader definition of the money supply by the Croatian National Bank) in July amounted to 390.1 billion Kuna. Since the introduction of the Euro as the only currency in Croatia will require all cash in Kuna to be exchanged for Euros at some point (possibly for another currency, but that is not important in this case), it is clear that no one will be able to simply walk into a bank or exchange office with a bag of Kuna and exchange them for Euros without too many questions.
Why? Because there is a Law on the Prevention of Money Laundering and Terrorism Financing (affectionately known as ZOSPN or ZSPNFT) from 2017, which will likely apply when conversions to Euro begin (in its current or amended form), aimed at detecting suspicious transactions and individuals, where anyone can actually be deemed suspicious. If you sweat too much, look at the floor, fidget, or are generally nervous when exchanging your hard-earned, stolen, or evaded cash for another currency, there is every possibility that the bank will scrutinize you more closely.
