The paper presents the most important regulatory measures and acts for the prevention of money laundering and terrorist financing. Among the more significant are the „United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances“ and the „Directive of the European Parliament and the Council on prevention for using the financial system for money laundering and terrorist financing“. As far as the Republic of Croatia is concerned, the most important legal act dealing with the prevention of money laundering and terrorist financing is the "Law on Prevention of Money Laundering and Financing of Terrorism" Institutional organizations dealing with the prevention of money laundering and terrorist financing form the basis for functioning of the regulatory framework. Among the world's most important organizations are the Financial Action Task Force, the European Anti-Fraud Office, MONEYVAL and the Egmont Group. In Croatia the most important are: The Croatian Money Laundering Prevention Office, the Croatian National Bank and the Croatian Financial Services Supervisory Agency stand out as the most important ones. Constant work is being done to advance regulations and laws to prevent money laundering and terrorist financing. Thus, under the new regulation of 2018, the aim is to strengthen the supervision of financial institutions in the European Union and propose a stronger role for the European Banking Supervisory Authority. Money laundering and terrorist financing is an international problem that requires modern means of prevention. The importance of international cooperation and the harmonization of international standards have been recognized in order to prevent money laundering and terrorist financing more effectively. Offshore zones play a big role in money laundering due to their liberal laws, low or zero taxation, poor oversight and easy way to open offshore accounts. In the 21st century, more regulation and better control of offshore zones are increasingly being done. But all that is not enough and they continue to be the main money laundering tool in the world. Banks, as institutions through which money is constantly transferred, carry a high risk of money laundering. That is why the role of the banking system in controlling money laundering and terrorist financing is crucial. They must be familiar with all the regulations and laws of the countries with which they do business, also make report on a timely basis. One of the most commonly used ways for preventing money laundering at banks is the compliance function.