Financial Crime World

Money Laundering in Bosnia and Herzegovina: Challenges and Recommendations

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Introduction

Bosnia and Herzegovina (BiH) is facing significant challenges in addressing the issue of money laundering. The country’s complex political and economic situation makes it an attractive destination for illicit financial flows.

Challenges in BiH

  • Underdeveloped Banking System: The banking system in BiH is still in its infancy, with inadequate regulations.
  • Excessive Number of Banks: There are too many banks for the country’s economy and size.
  • Banking Sector Issues: Significant cases of bank fraud and failures have been reported.
  • Unsupervised Financial Services: The underground economy is a significant problem, with unsupervised financial services being provided that are susceptible to money laundering.

Inadequate Draft Law

A draft parliamentary bill titled “The Draft Law on the Prevention from Money Laundering in the Federation of Bosnia and Herzegovina” was reviewed by experts. However, they found it to be inadequate, with no one involved in its drafting and everyone feeling that it was a step backward in BiH’s efforts to address money laundering.

Recommendations

  • Critical Role for Banking Agency: The Banking Agency should play a critical role in protecting the banking system from money laundering.
  • Regulatory Oversight: Regulatory oversight is necessary for non-bank financial systems, such as currency exchange houses and money remitters.
  • Effective Anti-Money Laundering Measures: Effective anti-money laundering measures are essential to prevent corruption and organized crime.
  • Coordinated Implementation Effort: A coordinated implementation effort is necessary to ensure effective implementation of the new law on money laundering.

Conclusion

The text highlights the challenges faced by BiH in addressing money laundering and recommends a more effective approach to preventing this type of financial crime. By implementing these recommendations, BiH can take significant steps towards reducing the risk of money laundering and promoting a safer and more stable financial environment.