Financial Crime World

Montenegro’s Fight Against Money Laundering and Financial Crimes: Progress and Challenges

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Introduction

In recent years, Montenegro has made progress in combating money laundering and financial crimes, but the country still faces significant challenges in addressing these issues.

Progress Made

According to data from the Ministry of the Interior, the number of entities reporting suspicious transactions increased by 15% between 2020 and 2021. The national financial intelligence unit initiative also saw an increase, with 57 reports submitted in 2021 compared to 25 in 2020.

Challenges

Despite this progress, Montenegro still lacks central registries for bank accounts and beneficial owners, which hinders its ability to effectively track and prevent financial crimes. Additionally, outdated data in state records further complicates efforts to combat money laundering and terrorist financing.

Investigations and Asset Confiscation

The country’s track record on money laundering investigations has improved over the past three years, with 80 financial investigations initiated between 2016 and 2022. However, only two of these investigations were successfully completed, highlighting the need for more effective and timely action.

In most cases, financial investigations are opened after the criminal investigation, which is too late to effectively trace financial flows behind criminal activities. Experts have called for financial investigations to be conducted in parallel with criminal investigations into organized or serious crime.

Montenegro’s legal framework addresses proceeds from criminal activities in line with international standards, but faces challenges in asset confiscation. While some permanent confiscations were achieved between 2016 and 2021, no final court decisions on asset confiscation were identified in 2021. The country still does not have a system for confiscating assets of equivalent value when the proceeds of crime cannot be traced.

Role of Civil Society

Non-profit organizations play a crucial role in preventing illicit financial flows (IFFs), but Montenegro’s civil society organizations lack capacity and understanding of IFFs, making it difficult for them to effectively monitor government and security institutions.

Recommendations

To improve its approach to combating IFFs, Montenegro is recommended to:

  • Improve the legal framework for supervision and strengthen controls on reporting entities
  • Enhance training systems and raise the level of transaction analysis and suspicious transactions reporting
  • Encourage collaborative efforts between government, civil society, and media to raise public awareness of the negative impact of IFFs
  • Review the legal and operational approach to financial investigations, asset recovery, and the fight against money laundering and tobacco smuggling

Conclusion

By implementing these measures, Montenegro can significantly improve its framework for combating IFFs and ensure a safer and more stable financial environment.