Serbia and Montenegro Strengthen Due Diligence Procedures for Financial Transactions
In an effort to combat money laundering and terrorist financing, banks in Serbia and Montenegro are increasing their efforts to conduct thorough customer due diligence measures. This move is in line with the European Union’s Fourth Anti-Money Laundering Directive (EU) 2015/849.
Compliance with EU Directive
According to the directive, member states must prohibit credit institutions and financial institutions from maintaining anonymous accounts or passbooks. Additionally, these entities are required to subject customers and beneficial owners of existing anonymous accounts or passbooks to customer due diligence measures as soon as possible, and in any event before such accounts or passbooks are used.
Customer Due Diligence Measures
The customer due diligence measures consist of:
- Identifying the customer and verifying their identity through reliable sources
- Identifying the beneficial owner and taking reasonable measures to verify their identity
- Assessing and obtaining information on the purpose and nature of the business relationship
- Conducting ongoing monitoring of the business relationship
Verification Processes
In addition, banks must verify the identity of any person purporting to act on behalf of the customer and identify and verify the identity of that person. These verification processes must take place before establishing a business relationship or carrying out a transaction.
Intermediary Banks
When an intermediary bank is involved in the vetting process, it provides reference data with a signed legal entity assertion. The vetting specialist then assesses the reliability of the reference data according to its source and may conduct fewer checks as a result.
Government Support
The Serbian and Montenegrin governments have emphasized the importance of cooperation between banks and regulatory bodies in implementing these due diligence procedures. In this regard, special agreements outlining roles and responsibilities with intermediary banks will be provided in the near future.
Benefits
By strengthening customer due diligence measures, Serbia and Montenegro are taking a significant step towards preventing the misuse of financial systems for money laundering or terrorist financing purposes. This move demonstrates their commitment to ensuring the integrity of the financial system and protecting against these types of illegal activities.