Financial Crime World

Know Your Customer (KYC) Regulations in Serbia and Montenegro: A Compliance Guide for Financial Services Professionals

The Know Your Customer or Know Your Client (KYC) guidelines and regulations for financial services require professionals to verify the identity, suitability, and risks involved with maintaining a business relationship. In Serbia and Montenegro, these requirements are set out in the Anti-Money Laundering (AML) Law, which was first introduced in 2014.

Entities Covered by AML Law

The AML Law applies to various entities, including:

  • Central Bank of Serbia (CBCG)
  • Agency for Electronic Telecommunications and Postal Services
  • Capital Market Commission
  • Tax authority
  • Entity for inspection
  • Ministry of Commerce
  • Montenegro Bar Association
  • Notary Chamber

These entities are responsible for ensuring that financial institutions and other relevant parties comply with AML regulations.

Conducting a Typical KYC Identification Process

Conducting a typical KYC identification process involves verifying the identity of customers based on personal documents, which must be physically present. However, if the customer is not physically present, intensified actions and measures must be taken to verify their identity and classify them as high-risk. Additional measures may include:

  • Phone calls
  • Email communication

Exceptions to KYC Identification Process

As an exception, financial institutions can determine and verify the identity of customers based on a qualified electronic certificate issued by a certification body in Montenegro or a foreign equivalent. This reduces the burden on customers and enhances security.

Outsourcing Customer Due Diligence

Financial institutions are also allowed to outsource customer due diligence to third-party providers who are obliged by law to comply with AML regulations, such as:

  • Credit institutions
  • Financial institutions
  • Auditors
  • External accountants
  • Tax advisors
  • Notaries
  • Trust or company service providers
  • Estate agents
  • Other high-value goods traders

However, if outsourcing is necessary, information on KYC must only be shared with licensed entities.

Specific Third-Party Providers

In addition to these options, financial institutions can also rely on specific third parties that are required by law to comply with AML regulations, including:

  • Credit institutions
  • Financial institutions
  • Auditors
  • External accountants
  • Tax advisors
  • Notaries
  • Trust or company service providers
  • Estate agents
  • Other high-value goods traders

These entities have been explicitly designated as reliable sources for customer due diligence.

Conclusion

In conclusion, the KYC regulations in Serbia and Montenegro are designed to ensure that financial institutions and other relevant parties comply with AML requirements, which are essential for maintaining a business relationship. By understanding these guidelines and regulations, financial services professionals can better navigate the complex world of AML compliance.