"Grey list" avoided, numerous challenges follow

Increased supervision, extremely uncertain investments by foreign investors, higher commissions on transfers and an attack on the banking and trade sector are just some of the consequences that could befall Montenegro if it were to be on the "grey list" of the Financial Action Task Force (FATF). .

This is what interviewees from this security sector told "Vijesta", who were asked by the editors what would happen if the country was on the list of countries that do not apply, or only slightly apply, measures to prevent money laundering and terrorist financing.

The status of Montenegro on the "gray list" in recent days depended on the report of the Committee of Experts of the Council of Europe (CoE) for the assessment of the prevention of money laundering and financing of terrorism (MANIVAL), which was considered from December 11 to 15.

At the plenary session in Strasbourg, MANIVAL reached conclusions according to which Montenegro will not be on that list. This happened also due to the adoption of amendments to the Criminal Code (CC) and the Law on Prevention of Money Laundering and Financing of Terrorism, but also, as the Prime Minister told "Vijesta" earlier Milojko Spajic, announcements of adoption of other measures. He then explained that because of this, the lowest rating ("low level of effectiveness") in the MANIVAL report was raised to the middle ("moderate level").

MANIVAL is an associate member of the FATF and includes two members of that group.

The rating is positive, the risks are high

The Acting Assistant Director for the Financial Intelligence Sector confirmed to "Vijesta" that the negotiations were successful and that Montenegro was avoided among the countries where the risk of money laundering and terrorist financing was officially determined. Aleksandar Radovic, who was in Stazbur the previous days.

He clarified that in the opposite country, supervision would be increased, that is, a mentor would be assigned who would monitor the situation, give recommendations and specific tasks regarding the suppression of money laundering and terrorism.

"The consequences of being placed on the 'grey list' would be extremely negative for Montenegro, and it would be 'hit' harder than some other larger countries, both economically and in terms of reputation," said Radović.

Arriving on the list, claims Radović, would make investments by foreign investors uncertain, because it would mean that Montenegro is recognized as a country in which there is a risk of money laundering or terrorist financing, so commissions on transfers would be higher because they come from a country on the list. .

Radović added that the current status of the report implies that the recommendations from it should be fulfilled, and MANIVAL should report on this.

"The main task is yet to come in the coming period, with the aim of fulfilling as many recommendations as possible and improving the situation in our country, in order to be evaluated with better grades in most areas. In that case, the system will be more stable and there will be a higher level of legal and economic security," he said.

The former minister without portfolio and deputy president of the National Commission for the Fight against corruption Zoran Miljanic.

He pointed out that this would make efforts to attract foreign investments pointless and that he hopes that the country will be farther away from that list.

When it comes to specific recommendations, Miljanić believes that it is necessary for the state to hire competent staff because financial investigations are one of the weaknesses of security institutions. He also stated that it is difficult to hire experts if adequate salaries are not provided, especially since they can currently earn them in banking and other institutions.

"I believe that hiring experts for financial investigations would significantly contribute to the efficiency of the police and the judiciary, and that we will not all end up in situations where due to 'loopholes' in the regulations and investigations, we return confiscated property to drug lords convicted in other countries (Šarić and Kalić) and even give them the state pays compensations for disputes and for confiscation of property, as it was the case before," emphasized Miljanić.

He pointed out that the executive power and parliament were extremely efficient in recent days in adopting the Law on Prevention of Money Laundering and Financing of Terrorism and amendments to the CC, and that the delay in that process is probably a consequence of the change of government in such a short period of time. He reminded that the Draft Law began to be prepared in 42, continued in 43 and adopted in 44 by the Government of Milojko Spajić.

What does the report look like?

Radović clarified that MANIVAL assesses a five-year period, in this case from 2017 to 2022, while the current year was used for scanning, assessment of the situation, dialogue with the authorities and negotiations. He added that the evaluators had a dialogue with various holders of public authority and the private sector, and that the evaluation process lasts 18 months.

As he said, the report has two parts, one for a cross-section of the regulatory framework for 40 FATF recommendations and an assessment of the degree to which Montenegro is aligned, and the other for 11 areas in which efficiency is assessed.

"The greatest attention, apart from state bodies, is on the prosecution and the judiciary. At the prosecutor's office for prosecution for the criminal offense of money laundering, and at the judiciary for judging criminal offenses of money laundering," said Radović.

He added that during the evaluation, three versions of the report are made, after which the third version is submitted to other countries to give their evaluation. He emphasized that it was those countries that expressed their support for Montenegro and that they are partially responsible for this result.

Radović pointed out that after the comments received, MANIVAL and the state renegotiated and nominated five areas. He clarified that in those five areas there were disagreements about the assessment.

"Out of five ratings for individual areas, three remained unchanged, we raised one at the working group and the other at the plenary session."

Radović emphasized that it was a success because the evaluations that followed the third version did not favor Montenegro. As he explained, if the position of the countries had remained the same, the country would have been classified in the "pool" for the International Country Risk Guide (ICRG), that is, monitoring of the situation and in the final classification of the country on the "grey list".

Serbia: Standards met and unfounded attacks

In recent years, little can be read about Serbia in the reports of international organizations. However, the Financial Action Task Force against Money Laundering and Terrorist Financing (FATF) reports are an exception.

The last such report available on the FATF website from November 2021 states that out of 40 recommendations of this organization, Serbia "to a considerable extent" fulfilled 34 of them.

This report only noted the continuation of a good trend that began in 2019, when Serbia was removed from the "gray list" of countries with strategic deficiencies in the field of combating money laundering and terrorist financing.

Serbia entered the list in February 2018 after it was assessed as a risk for money laundering and terrorist financing, joining countries such as North Korea, Ethiopia, Ghana, Syria, Iran, Sri Lanka, Pakistan, Trinidad and Tobago, Tunisia, Yemen.

This was a strong message to the authorities, who in the following year and a half did everything to get them removed from the list.

As the then Minister of Justice of Serbia said at the FATF assembly in July 2019 Nela Kuburovic, Serbia adopted 12 new laws in the previous year, including the Law on Prevention of Money Laundering and Financing of Terrorism, but also adopted more than 60 regulations, guidelines and other documents.

"New institutions were formed, such as the Administration for Games of Chance, but the structure of existing institutions was also changed," Kuburović pointed out on that occasion.

The reason why authorities took the FATF gray list seriously is that being on it sends very bad messages to potential investors.

However, although Serbia is trying to fulfill the set criteria of the FATF, this does not mean that in the recent past there were no controversies regarding the application of regulations concerning the fight against money laundering.

Namely, in July 2020, the media published the list that the Directorate for the Prevention of Money Laundering sent to banks in order to check them. On the list of the Administration, there were the media KRIK, CINS, BIRN, the then director of CINS Branko Chechen, director of Nova S Slobodan Georgiev.

The list included the magazine Nova ekonomija, the Novi Sad School of Journalism, as well as the Association of Journalists of Serbia and the Independent Association of Journalists of Serbia.

When it comes to non-governmental organizations, the list included the Center for Research, Transparency and Accountability (CRTA), the Center for the Rule of Law of Lawyers Ivan Ninić, Bureau of Social Research (BIRODI), Vojvodina Civic Center, Belgrade Center for Security Policy (BCBP) and others.

There was also a name on the list Vuk Jeremic, the president of the opposition People's Party.

What all these organizations and individuals had in common was that they all, at some point, publicly criticized government officials.

The representatives of the Administration tried to justify the existence of the list by claiming that the laws apply to everyone, but the criticism that it is an abuse of rights prevailed. Thus, six months later, United Nations (UN) human rights experts expressed concern that authorities in Serbia are using surveillance powers designed to target terrorist financing to obtain information from banks and information about financial transactions of more than 50 non-governmental organizations, media associations and others. non-profit organizations.

"We are afraid that such use of the Serbian law on prevention of money laundering and financing of terrorism interferes and limits the freedom of expression of associations and people who belong to these groups, as well as their right to participate in the management of public affairs", according to a statement published on the website of the High Commissioner UN Human Rights.

In the opinion of UN experts, the "broad and arbitrary use of the Law on Prevention of Money Laundering and Financing of Terrorism", which targets civil society organizations, the media and individuals, is not in accordance with Serbia's obligations under international law.

"Unjustified use of this law risks intimidation of civil society actors and human rights defenders, limiting their work and stifling any criticism of the Government," the statement said.

At the time, representatives of the European Union and the US Embassy in Serbia also expressed concern about this move by the Administration. Finally, the FATF itself stated in the 2021 report regarding this case that their recommendations should not, knowingly or unknowingly, be used to threaten the legitimate activities of the civil sector.

BiH will avoid the "grey list"

In October 2020, the Council of Europe's committee of experts in the field of prevention of money laundering and financing of terrorist activities, MONEYVAL, included Bosnia and Herzegovina in the list of countries that enjoy the full confidence of the committee, on the basis of which Bosnia and Herzegovina is exempted from the obligation to report for a period of two years.

Nezir Pivic, the head of the MONEYVAL Delegation in the previous convocation of the BiH Council of Ministers, points out that the real effect of gaining the status of full confidence of the MONEYVAL committee in the daily life of citizens, businessmen and the financial sector in BiH is reflected in the short time of processing and executing all types of monetary transactions abroad.

"It is especially important for companies that deal with exports, but also for the economy and economy in general, in the dynamic multipolar world of the global market," says Pivić.

He adds that comparative experience shows that the economic and financial sectors of countries that are on the "grey list" of the MONEYVAL committee have negative experiences due to the difficulty of making transactions and the general slowness of payment transactions. Cumulatively, Pivić points out, such a situation leaves lasting and severe consequences on the economy, and it is necessary to take all measures and actions to prevent it.

"As the head of the BiH Delegation to the MONEYVAL committee, I managed the process of fulfilling obligations from strategic documents, which, among other things, included coordination between all levels of government in BiH for the purpose of adopting the necessary legal regulations. From experience, I can say that it is a process that is full of challenges and obstacles, but the final result of which means much better business conditions for our businessmen, the financial sector, and consequently a better standard of living for our citizens," Pivić points out.

Although in recent days there has been talk of returning Bosnia and Herzegovina to this list, because the authorities have not adopted the necessary laws or implemented reforms, the Council of Ministers of Bosnia and Herzegovina adopted at a telephone session last week the Draft Law on the Prevention of Money Laundering and Financing of Terrorist Activities, which is harmonized with the relevant directives and regulations EU in this area.

The law will be sent to the Parliamentary Assembly of Bosnia and Herzegovina for consideration under a shortened procedure, and will enter into force after its adoption in two houses, the House of Representatives and the House of Peoples.

Pivić emphasizes that from this position and in these circumstances, it will be very challenging to maintain the status of full confidence.

"In terms of which obligations have not been fulfilled, first of all, the failure to adopt the new Law on Prevention of Money Laundering and Financing of Terrorist Activities stands out. This legal regulation belongs to the group of essential legal regulations for the state and the authorities were obliged to show the level of seriousness and commitment to the reform processes. However, this was unfortunately not done. There are also a number of other legal regulations that are not aligned with the required standards", notes Pivić.

He warns that the possible loss of trust of the MONEYVAL committee could have serious consequences for the economic and financial sector.

"We are in danger of losing all the benefits that we have gained with the status. However, I will retain a positive dose of optimism that in the best interest of citizens, businessmen and the state, the authorities will remember to do their job and ensure that Bosnia and Herzegovina does not end up on the gray list", says Pivić.

Although we were previously on the "grey list", an economic expert Igor Gavran points out that this experience does not mean that the consequences would be completely equal.

"There is a possibility, given that it would be a return in some way, that it would be even more difficult to get out of that status, because then as a 'returnee' we would be even more suspect in our failures," warns Gavran.

The BiH Council of Ministers points out that by adopting this law marked "EI", BiH wants to improve capacities for a more effective fight against money laundering and terrorist financing for the benefit of the business community and citizens of BiH. It is stated that the new law will harmonize the system of prevention of money laundering and financing of terrorism in BiH with FATF and MONEYVAL standards from the last round of evaluation.

Let us remind you that in February, the BiH Council of Ministers adopted a new Rulebook on the implementation of the Law on Prevention of Money Laundering and Financing of Terrorist Activities.