On 13 December 2023, the new act that directly affects numerous sectors of business in Montenegro came into force. The aim of the act is to prevent money laundering and the financing of terrorism — and how it affects you and your company is explained in this short overview.
Whom, among others, does the new act concern?
- Banks and payment and financial institutions
- Accounting and audit firms
- Real-estate agencies
- Construction and investment firms
- Notaries and lawyers
- Companies engaged in games of chance
- Companies engaged in the vehicle trade
- Companies managing pension and investment funds
- Companies engaged in insurance or insurance brokerage
What is required of you?
Know Your Customer (KYC)
You must implement measures for the knowledge and monitoring of your clients’ business.
Cash-business restrictions
You must not receive or make cash payments above €10,000 — or above that in the case of several connected transactions.
Reporting
You are required to report to the Financial Intelligence Unit:
- Cash transactions above €15,000
- Non-cash transactions above €100,000
- Or, at the discretion of the authorised person, in the case of connected transactions
Beneficial Owner Register
You must be registered in the Beneficial Owner Register — unless you are:
- A sole trader
- Part of the public sector
- A joint-stock company whose shares are traded on a regulated securities market
Authorised person
The appointment of an authorised person for the prevention of money laundering and terrorist financing. If the company has four or more employees — also a deputy.
The authorised person and the deputy must hold a licence.
Employee training
Organisation of regular professional training of employees on recognising suspicious transactions.
Records and data protection
Keeping records and ensuring the protection of data obtained under this act.
What is prohibited?
It is prohibited to inform the client or any third party that information about them or a transaction has been passed to the Financial Intelligence Unit.
Fines
Violations of the act are punishable by fines of €3,000 to €20,000.
Reflection — a step closer to the EU, but also a challenge for business
In the author’s view, the new act is both a step closer to the EU and a certain challenge for business.
Advantages
- The act is in line with EU directives on preventing money laundering and terrorist financing — which is necessary for Montenegro’s progress toward the EU
- The implementation of international standards contributes to greater financial security and integrity — which is positive for business in the long term
Challenges
- Adaptation: the new rules require procedural and organisational changes from companies — which can involve additional costs and administrative burdens
- The cost of licensing the authorised person and the deputy
- The cost of ongoing training of employees
- The question is how much of this you can pass on to your clients
Conclusion
The act is a necessary step towards the EU, but also brings certain challenges that need to be overcome. The manner of implementation and long-term application will determine its ultimate impact on the business environment in Montenegro.
More information: Government of Montenegro — AML documentation
