Financial Crime World

Serbia and Montenegro Strengthen Financial Intelligence Units Amid Money Laundering Concerns

Montenegro has recently enacted a new Act on Prevention of Money-Laundering and Financing of Terrorism, aimed at combating money laundering and terrorism financing in the region. This move comes as a response to concerns about being placed on the “grey list” by MONEYVAL.

Key Changes Under the New Law

Stricter Anti-Money Laundering (AML) Regulations for Businesses

  • Real estate lease agents and brokers, as well as those involved in vessel and aircraft services, will need to comply with AML requirements if transactions exceed EUR 10,000.
  • Construction companies dealing in office space or residential buildings must also adhere to the new regulations.

Electronic Identification of Clients

  • The law introduces the possibility of electronic identification of clients through qualified electronic signature or online video identification.
  • However, this requires approval from the Financial Intelligence Unit (FIU), which may decline if it determines that a particular business activity poses a high money-laundering risk.

Financial Intelligence Unit (FIU) Authority and Licenses

AML Officer Licensing

  • The FIU has been granted authority to license AML officers working within entities subject to the law.
  • These individuals will need to undergo training and obtain a license issued by the FIU.
  • Small businesses with fewer than five employees may appoint their general manager as an AML officer, while larger companies must have both an AML officer and deputy.

Monitoring and Recording Transactions

  • Banks and other financial institutions are now under stricter obligations to monitor and record all transactions, regardless of amount.
  • Payment service providers must collect extensive information on both the payer and payee for transactions exceeding EUR 1,000.
  • They must also identify the payee and refuse to execute transactions if the information does not match what was received from the sender’s financial institution.

Cash Transactions Prohibited

Cash transactions involving EUR 10,000 or more are prohibited under the new law.

Anti-Corruption Agency and Revenues Administration Roles

Politically Exposed Persons (PEPs) Registry

  • The Anti-Corruption Agency has been mandated to establish a registry of PEPs.
  • The registry will be accessible to anyone who undergoes electronic identification, without requiring proof of legal interest in obtaining the information.

Ultimate Beneficial Owners (UBO) Registry

  • The Revenues Administration will oversee the Registry of UBO.
  • The UBO Registry will also be accessible to anyone who undergoes electronic identification, without requiring proof of legal interest in obtaining the information.

Conclusion

The new law aims to bring Montenegro’s AML regulations in line with international standards and strengthen its financial intelligence units. While Serbia has not introduced similar legislation, experts believe that the region would benefit from harmonizing its AML regulations to improve transparency and reduce money laundering risks.