Financial Crime World

Montenegro Lacks Effective Framework to Combat Money Laundering

Despite recent progress, Montenegro’s financial intelligence unit remains plagued by inadequate supervision, poor transaction analysis, and insufficient training, making it difficult to effectively combat money laundering and terrorist financing.

Inadequate Supervision and Transaction Analysis

  • Montenegro lacks central registries for bank accounts and beneficial owners, hindering efforts to track suspicious transactions.
  • The country’s financial intelligence unit initiative receives a limited number of reports from obligors (banks, exchange offices, trust funds, etc.), which is further complicated by outdated data in state records.

Money Laundering Investigations

  • Montenegro’s track record on money laundering investigations has improved over the past three years, according to the European Commission.
  • However, financial investigations are often opened after criminal investigations have begun, and in most cases, they fail to trace financial flows behind criminal activities.
  • Montenegro’s legal framework addresses proceeds from criminal activities in line with international standards, but challenges persist in asset confiscation.
  • In 2020, the country issued 15 final confiscation orders for a total of €5.8 million in assets, including real estate. However, the lack of traceable proceeds remains an issue.

Recommendations

To combat money laundering and terrorist financing effectively, policymakers are recommended to:

  • Implement comprehensive measures, including improving the legal framework for supervision, strengthening controls on reporting entities, improving training systems, and raising the level of transaction analysis and suspicious transactions reporting.
  • Encourage collaborative efforts between government, civil society, and media to develop public awareness campaigns about the negative impact of IFFs on the economy, development, and social welfare.

Conclusion

Montenegro’s legal and operational approach to financial investigations, asset recovery, and the fight against money laundering and tobacco smuggling must be reviewed and aligned with EU and international standards. A solid track record in these areas is essential for Montenegro’s progress towards combatting IFFs.