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Know Your Customer (KYC) Regulations in Serbia and Montenegro
Serbia and Montenegro have implemented strict regulations to combat money laundering and terrorist financing through the implementation of Know Your Customer (KYC) guidelines. The Anti-Money Laundering (AML) Law, introduced in 2001, outlines the requirements for financial institutions to verify the identity, suitability, and risks associated with maintaining a business relationship.
Implementation and Enforcement
The AML Directorate, National Bank of Serbia (NBS), Securities Commission (SEC), tax authority, and other regulatory bodies are responsible for implementing and enforcing these regulations. If irregularities or suspicious activities are detected during supervision, these entities must inform the AML Directorate about the measures taken and any established irregularities.
Customer Due Diligence
For customer due diligence, financial institutions in Serbia and Montenegro typically conduct a KYC identification process by verifying the client’s personal documents and physical presence. In cases where the client is not physically present, intensified actions and measures are required to identify and monitor the party, which may include:
- Phone calls
- Email communication
- Video identification
As an exception, financial institutions may determine and verify the identity of a client based on a qualified electronic certificate issued by a certification body in Serbia or a foreign certificate deemed equivalent. Video identification without physical presence is also allowed for entities supervised by the NBS, such as:
- Banks
- Insurance companies
- Factoring companies
- Accounting companies
Outsourcing KYC Activities
Financial institutions are permitted to outsource KYC activities to other obliged entities or foreign entities engaged in the same business, but only on the basis of an outsourcing agreement and notification to the competent regulator. However, outsourcing to third parties not obliged by law to comply with AML regulations is not allowed.
Eligible Entities for Outsourcing
Licensed entities such as:
- Banks
- Payment institutions
- Factoring companies
- Public post operators
are eligible for outsourced KYC activities. Credit institutions, financial institutions, auditors, external accountants, tax advisors, notaries, insurance representatives, investment fund management companies, broker-dealer companies, electronic money institutions, and licensed entities from third countries complying with AML requirements are also considered reliable third parties.
Purpose of Regulations
These regulations aim to ensure that financial institutions in Serbia and Montenegro maintain a high level of transparency and integrity in their business operations.