Financial Crime World

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Montenegro’s Fight Against Money Laundering and Terrorism Financing: A Mixed Bag

In its latest evaluation, Montenegro has been commended for taking significant steps to enhance its legal and regulatory framework against money laundering (ML) and terrorism financing (TF). However, despite these efforts, the country still faces several challenges in effectively combating these threats.

Understanding of ML/TF Risks

Montenegro’s competent authorities have demonstrated a good understanding of the main ML risks, but some areas lack depth, including:

  • The use of cash and informal economy
  • Abuse of legal persons
  • High-level corruption
  • The Citizenship by Investment Scheme

Sectorial vulnerabilities within sectors other than banking and insurance have also not been extensively analyzed.

Montenegro has adopted a new Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) law in July 2021, enhanced the Financial Intelligence Unit’s (FIU) capabilities, and implemented an adequate risk-based supervisory framework for banks and other financial institutions. However, several major deficiencies remain, including:

  • Targeted TF/financial sanctions
  • Regulation and supervision of financial institutions and designated non-financial businesses and professions
  • Measures applied to virtual asset service providers
  • Transparency of legal persons
  • Cash couriers
  • Statistics
  • Sanctions for failing to comply with AML/CFT requirements

Financial Intelligence and ML Investigations

The FIU accesses a wide variety of sources of financial intelligence and other relevant information when conducting criminal and financial investigations. However, financial intelligence is not sufficiently used to identify and investigate ML, largely due to:

  • An overemphasis on evidencing the underlying predicate crime
  • A lack of prioritization of the ML offence by law enforcement agencies

Investigation and Prosecution of ML

Montenegro’s prosecutorial and police authorities have sufficient powers to identify and investigate ML, but this has taken place in a limited number of cases, mostly related to domestic predicate offences. The absence of a clear policy, criteria, and coordination mechanism applicable to different branches of prosecution and police hinders the effective investigation of ML.

Commitment to Addressing ML/TF

Montenegro’s commitment to addressing ML/TF is questioned by the presence of pending actions and exemptions that are not supported or consistent with the results of National Risk Assessments. Domestic cooperation amongst competent authorities has been demonstrated to a certain extent, but more needs to be done to ensure effective implementation of AML/CFT measures.

Overall, Montenegro’s efforts to combat ML/TF are commendable, but the country still faces significant challenges in effectively addressing these threats. To overcome these challenges, it is essential that the government and relevant authorities prioritize the investigation and prosecution of ML, enhance cooperation amongst competent authorities, and ensure that AML/CFT measures are adequately implemented and enforced.