Financial Crime World

Montenegro’s Financial Regulation Framework Needs Improvement

A recent evaluation of Montenegro’s anti-money laundering (AML) and combating the financing of terrorism (CFT) regime has revealed several weaknesses in the country’s financial regulation framework.

Weaknesses in Confiscation and Provisional Measures

While Montenegro’s preventive measures, such as customer identification requirements and internal control standards, are adequate on paper, there are significant gaps in its confiscation and provisional measures. The country lacks a specific provision on the financing of terrorism, making it difficult to seize money intended for terrorist activities.

Inadequate Criminal Code Provisions

The evaluation also found that the criminal code does not explicitly criminalize the financing of terrorism, although it is possible to sanction it through generic provisions on aiding and abetting. Additionally, there are no provisions for the confiscation or seizure of proceeds from crime or property used to finance terrorism.

Financial Intelligence Unit Not Established

Furthermore, Montenegro’s Financial Intelligence Unit (FIU) has yet to be established, despite its importance in coordinating AML/CFT efforts. The country’s Central Bank performs some FIU functions, but it is not a suitable substitute for a dedicated FIU.

Recommendations

To improve its AML/CFT regime, Montenegro is recommended to:

  • Establish an FIU with adequate powers and resources.
  • Include specific provisions on terrorist financing in its criminal code.
  • Develop a framework for confiscation and seizure of proceeds from crime or property used to finance terrorism.
  • Strengthen its preventive measures, including customer identification requirements and internal control standards.
  • Expand its AML/CFT regime to include other sectors, such as:
    • Money remitters
    • Accountants
    • Auditors
    • Lawyers
    • Financial institutions

Conclusion

By implementing these recommendations, Montenegro can strengthen its financial regulation framework and prevent the misuse of its financial system for illegal activities.