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Montenegro Faces Challenges in Combating Illicit Financial Flows

Despite Improvements, Major Obstacles Remain

Podgorica, Montenegro - A recent report by the National Revenue Authority (NRA) highlights significant challenges faced by Montenegro in combating illicit financial flows (IFFs), despite improvements in money laundering investigations.

Increased Suspicious Transaction Reports, But Challenges Persist

The report notes that entities reporting suspicious transactions have increased, with obligors such as banks and exchange offices submitting 234 reports in 2020, followed by 285 reports in 2021, and 234 reports in 2022. However, the country lacks central registries for bank accounts and beneficial owners, making it difficult to track financial flows.

Mixed Results from Financial Intelligence Unit Initiatives

The report also notes that financial intelligence unit initiatives have shown mixed results, with: * 25 cases initiated in 2020 * 57 cases in 2021 * 33 cases in 2022 Foreign financial intelligence unit initiatives were more successful, with: * 115 cases initiated in 2020 * 46 cases in 2021 * 66 cases in 2022

Progress Made in Money Laundering Investigations, But More Needed

According to the European Commission, Montenegro has made progress in money laundering investigations over the past three years. However, more needs to be done. The country initiated 80 financial investigations between 2016 and 2022, with only two successfully completed.

Challenges in Asset Confiscation Remain

The report highlights challenges in asset confiscation, including: * No final court decisions on asset confiscation identified in 2021 * Temporary confiscation orders issued in some cases * Legal framework does not include the confiscation of assets of equivalent value in cases where there are no traceable proceeds

Recommendations for Policymakers

Experts have called for improvements in the legal framework for supervision, stronger controls on reporting entities, and increased training for financial investigators. The report also recommends:

1. Improving the legal framework for supervision
2. Encouraging collaborative efforts between government, civil society, and the media to raise public awareness of IFFs
3. Reviewing the legal and operational approach to financial investigations, asset recovery, and the fight against money laundering and tobacco smuggling

Quote from Senior Security Sector Expert

“The lack of central registries and outdated data in state records is a major obstacle to combating IFFs,” said a senior security sector expert. “The country needs to address these issues if it wants to make real progress in this area.”

Source: Ministry of the Interior, work reports for 2021 and 2022