Montenegro’s Efforts to Combat Money Laundering Face Challenges
Introduction
Despite improvements in recent years, Montenegro still faces significant challenges in combating money laundering and other illicit financial flows (IFFs). The country initiated 80 financial investigations between 2016 and 2022, but only two were successfully completed.
Financial Investigations
The Ministry of the Interior’s work reports for 2021 and 2022 reveal that entities reporting suspicious transactions have increased over the past three years. Obligors such as banks, exchange offices, and trust funds reported:
- 234 cases in 2020
- 285 cases in 2021
- 234 cases in 2022
However, Montenegro lacks central registries for bank accounts and beneficial owners, making it difficult to track financial transactions effectively. Additionally, outdated data in state records hinders financial intelligence efforts.
Challenges in Asset Confiscation
Asset confiscation is another area where Montenegro faces challenges. While the country’s legal framework addresses proceeds from criminal activities in line with international standards, it lacks provisions for confiscating assets of equivalent value when the original proceeds cannot be traced. The special state prosecutor’s office has temporarily seized property during ongoing court proceedings, but this often results in financial losses for citizens who pay damages from the budget due to improper maintenance or lost profits from the temporarily confiscated property.
Role of Civil Society Organizations
Civil society organizations (CSOs) play a crucial role in preventing IFFs. However, Montenegro’s national counter-terrorism financing framework does not address their involvement. The country needs to strengthen its legal framework for transparency and freedom of information to allow CSOs to effectively monitor government and security institutions.
Recommendations
To combat IFFs more effectively, policymakers are recommended to implement comprehensive measures, including:
- Improving the legal framework for supervision and strengthening controls on reporting entities.
- Implementing training systems to enhance transaction analysis and suspicious transactions reporting.
- Encouraging collaborative efforts between the government, civil society, and the media to develop campaigns raising public awareness of the negative impact of IFFs.
- Reviewing the legal and operational approach to financial investigations, asset recovery, and the fight against money laundering and tobacco smuggling, aligning these efforts with EU and international standards.
By implementing these measures, Montenegro can strengthen its framework for combating IFFs and improve its overall effectiveness in preventing money laundering and other illicit activities.