Five house arrests, one suspended sentence, the shutdown of two companies, one rejected charge due to the statute of limitations, two prosecutors withdrawing before the end of the trial and one acquittal decision - these are the results of the Montenegrin judiciary in the fight against money laundering in the last ten years.
These are the data that the Center for Investigative Journalism of Montenegro (CIN-CG) obtained through free access to information from the High Court in Podgorica.
In addition, in the only two cases in which the Montenegrin judiciary conducted proceedings on accusations of laundering large amounts of money, more than a decade ago, the families Kalić i Saric were acquitted, and the state paid them millions in damages.
Experts and the civil sector point out that it is not surprising that Montenegro does not have significant results in the fight against money laundering, because these are very complex procedures, for which there is no political will, no appropriate legal framework, and no personnel with sufficient knowledge to conduct investigations.
Director of the Research Center of the Network for the Affirmation of the Non-Governmental Sector (MANS) Dejan Milovac for CIN-CG emphasizes that for decades Montenegro has been a destination where money is laundered mostly without hindrance, because the rule of law does not represent a serious obstacle for organized crime:
"All that we saw from the SKY correspondence confirmed suspicions about the infiltration of organized crime in those places that were expected to be the key bearers, not only of the fight against corruption and organized crime, but above all of much-needed reforms in the justice and police sectors."
Milovac reminds us that we still do not have answers to questions related to known cases in which the former president and prime minister are suspected Milo Djukanovic, such as the "first million", "Pandora papers", and not even for the family's almost four million dollars Svetozar Marović on one of the Swiss accounts.
Professor of the Sarajevo Faculty of Criminology, Criminology and Security Studies Eldan Mujanovic for CIN-CG emphasizes that this situation is not exclusively related to the results of the work of the judiciary in Montenegro, but similar tendencies are present in the entire region:
"If our judiciary continues to strictly adhere to traditional, conservative, often restrictive interpretations, I am afraid that for a long time we will not have adequate results in the fight against this very dangerous phenomenon, which threatens not only the state, institutions and economy, but also every citizen" .
The International Monetary Fund (IMF) states that "laundered money" in the world accounts for between two and five percent of global GDP, and that this would mean that between 1,8 and 4,6 billion euros are "laundered" annually in the Western Balkans.
In the report of the European Commission (EC) for Montenegro for 2024, it is emphasized that it is necessary to increase the efficiency of the prosecution and judiciary in cases of serious and organized crime, especially money laundering.
It is emphasized that the capacities to fight against money laundering are limited and that there is a lack of cases of independent money laundering.
"Solve the problem of lengthy trials and frequent delays in cases of organized crime, ensure the application of key legal concepts such as independent money laundering and the quality of evidence by courts and prosecutors," the EC's latest report says.
The Committee of Experts of the Council of Europe for the Evaluation of Measures to Combat Money Laundering and Financing of Terrorism (Manival) warns that the number of investigations, indictments and judgments in money laundering cases is not in accordance with the risk assessments for the possibility of money laundering in Montenegro.
In the last report of the Committee from 2023, it is recommended that the competent authorities in our country process more efficiently cases of independent money laundering and money laundering through related persons, as well as money laundering of foreign proceeds of crime, and to strengthen the focus on money laundering associated with high-risk crimes (such as are drug trafficking, high-level corruption, organized crime and abuse of legal entities). Manival also calls for the application of effective, proportionate and dissuasive criminal sanctions.
"The framework needs to be strengthened in the case of high-risk non-financial sectors, especially casinos, lawyers, notaries and service providers for businesses," says the Manival report.
And while international partners warn of bad results in the fight against money laundering in Montenegro, the only convictions with symbolic sentences in the last ten years were pronounced only in cases that ended with a plea of guilty.
House arrests, probation, statute of limitations, withdrawal of the prosecutor
The specialized panel of the High Court in Podgorica has ruled nine times for the criminal offense of money laundering in these ten years.
The Criminal Code (CPC) provides for a sentence of six months to 12 years, depending on the severity of the crime and the amount of money "laundered".
The amendment to the CC from 2017 stipulates that for that criminal offense to exist, it is not necessary for there to be a conviction for the criminal offense from which the money originated. However, it is obvious that these changes have not yet produced a positive effect.
The case of alleged money laundering, in which, among others, the leader of the Movement for Change is known to the public Nebojsa Medojevic was one of the accused, as the head of a criminal organization, ended with the prosecutor dropping most of the charges, including money laundering. In the decision that became final this year, the court acquitted those for whom the prosecutor had not previously given up prosecution for money laundering. Medojević and a businessman from Bosnia and Herzegovina Momir Nikolic were accused of organizing a ten-member criminal group to launder money for the 2016 election campaign.
The charge of money laundering of a multiple returnee was also rejected Velija Hota, 2016, due to statute of limitations. Hot was accused of buying two business premises in Bar in 2004 with the money he earned from selling narcotics. In this case, the High State Prosecutor's Office in Bijelo Polje filed an indictment for the extended criminal offense of money laundering only in 2014, and a year later the High Court in that city declared itself incompetent and submitted the case to the High Court in Podgorica. In 2016, the Special Prosecutor's Office amended the indictment, and the Podgorica High Court decided that the accusation had expired in 2014.
"If, after the commission of the criminal act, the law has been amended one or more times, the law that is the most lenient for the perpetrator is applied," the explanation of the verdict reads.
By settlement with the prosecutor, Sead Ferizi, previously convicted of selling narcotics, was sentenced in 2019 to three months of house arrest and a fine of 5.000 euros, because he used the money he earned from selling cocaine to decorate his house and buy furniture. 20.000 euros were also taken from him.
In the same year, he was sentenced to five months of house arrest and to pay 3.000 euros Franc Bayer for money laundering and tax evasion. He also agreed with the prosecutor's office that his company pay a fine of 75.000 euros, and a little less than 90.000 euros to the Tax Administration.
Returnee Davor Perovic agreed in 2020 to spend six months under house arrest and pay 3.000 euros for participating in a criminal organization, money laundering and tax evasion, and his company was given a suspended sentence, that is, it will not pay a fine of 80.000 euros, if in the next three years it does not commit new criminal offense. A little over 12.000 euros obtained through tax and contribution evasion were taken from him.
For money laundering and extended criminal offense of fraud, previously convicted Tomo Čađenović was sentenced to six months of house arrest and a fine of 2021 euros by the 2.000 settlement, while his accomplice Slobodan Čađenović suspended and fined 1.000 euros for the same crimes. Although they fraudulently took a little less than 300.000 euros from different companies, according to the verdict, the prosecution and the court did not take a single cent from them.
By settlement, in the same year, Ljiljana Dragicevic was sentenced to six months of house arrest and a fine of 4.000 euros for participating in a criminal organization, money laundering through assistance and evasion of taxes and contributions. She was convicted of assisting the defendant Duško Knežević, in the proceedings for money laundering and tax evasion in the "E-komerc" case.
Two legal entities, "PM Holding" and "Paradise Properties", were punished in 2023 by shutting down, another settlement with the Special State Prosecutor's Office. Since the owner of the company died, the prosecution and the court concluded that the representatives of those companies did not know that he bought real estate with illegally obtained money from the sale of narcotics. However, this is the only example where a large number of properties were seized in Perast, Morinje, Bar, Podgorica, Herceg Novi...
Money flow research and international cooperation key
Milovac points out for CIN-CG that, unfortunately, even after the release of the mortgage from the multi-decade DPS regime, we are not witnessing significant developments:
"Part of the reforms that have been started are still captured above all by the individual interests of political parties".
He says that the prosecution does not focus enough on what can significantly weaken organized crime:
"The prosecutor's office was forced under pressure, first of all, from political elites to initiate certain procedures that may not have been fully prepared, in such a way that the focus was on investigating money flows and how the money ended up in real estate, companies, luxury cars, and the like."
Such types of procedures, he adds, require a huge amount of work and much more knowledge than we can currently see that exists, above all in the prosecution and the police.
Milovac also believes that it is naive to believe that a good part of this "capital" was not taken out of Montenegro and legalized through investments in other locations.
"MANS has so far repeatedly indicated the need for a stronger connection with the appropriate services of other countries".
Professor Mujanović also points out that the criminal offense of money laundering is quite complex, so during the investigation and the entire procedure, it requires specialized knowledge and experience of the police, the prosecution and the court, as well as very close and effective international and inter-institutional cooperation between different actors from the public and private sectors.
The issue of proving the criminal origin of money and the intention to legalize that money is particularly complex, Mujanović points out.
"Most countries even foresee criminal responsibility for negligent money laundering with milder sanctions. Our laws in this area are aligned with international standards, but their implementation in practice is still highly questionable," Mujanović says.
First of all, it is necessary to correctly understand what money laundering is, the professor emphasizes, and then adapt the judicial practice to the current money laundering trends and accept all relevant international standards:
"And which essentially lead to the 'relaxation' of evidentiary standards and the acceptance of the doctrine that the consciousness and intention of the perpetrator can be deduced from each specific case".
The police and the prosecutor's office, adds Milovac, do not even have the basic technical conditions for work when it comes to financial investigations for money laundering.
If we want results, Milovac points out, what we must have is a functional and updated register of real company owners. "Access to other databases and their mutual disconnection is still something that works in favor of creating an ideal environment for money laundering," Milovac points out.
Essential personnel reform of the Directorate for Prevention of Money Laundering and the Department for Financial Investigations of the Police Directorate is also necessary, he adds.
"Because so far we do not see that there is enough professional courage at those addresses to seriously protect the state from the influence of organized crime on the system, through money laundering," he says.
In addition, CIN-CG interlocutors add, continuous training and cooperation with experts in this field is necessary in order to establish a system that will no longer be tolerant of this type of crime.
Money laundering is also facilitated by insufficient inspection expertise
In the strategic documents, the most important sectors that are at risk of money laundering are banks, the real estate sector and the organizers of games of chance.
Several documents also talk about the high degree of danger of money laundering through notaries and lawyers. In the National Risk Assessment of Money Laundering and Financing of Terrorism, the problem of effective supervision of lawyers and notaries is highlighted.
"The high risk of money laundering is also recognized in the category of organizers of games of chance. And there is an evident inefficient legal solution in terms of supervision, and the absence of a system for reporting suspicious transactions, even though it is a segment that has an extremely high share of cash turnover, and extremely high annual turnover. It has been recognized as a special vulnerability from the Internet hosting of games of chance. Also, there are no mechanisms to prevent legally convicted persons and their associates from owning or managing casinos," the government document from 2021 points out.
In the Government's Assessment of the Danger of Serious and Organized Crime (SOCTA), it is pointed out that the so-called money launderers specifically choose countries in transition, because the state apparatus in such countries focuses on raising the economic standard, reducing poverty, while less attention is paid to strengthening the system of prevention of money laundering and terrorist financing.
A mitigating circumstance in the implementation of money laundering activities is the insufficient expertise of prosecutorial authorities, persons engaged in inspection supervision and weak international data exchange, the SOCTA document emphasizes.
A big challenge in handling money laundering cases, it is added, is international cooperation, which is weak and insufficient with some countries, especially when it comes to transactions with offshore destinations.
"This mainly refers to the countries from which the money comes and to which it goes: Hong Kong, Singapore, Marshall Islands, Mauritius and others," the document says.
It is added that money laundering through construction activities and real estate deals is still a high-risk area, as it can relatively easily absorb large amounts of capital.
It was also explained how criminal groups (OCGs) function when they want to "launder" money, so it is emphasized that on the global level, the trend is maintained for OCGs to increasingly use the services of other organizations that were founded as legal business entities, which serve as providers. for money laundering.
"Members of criminal groups most often invest money acquired through criminal activities in investment facilities, sports clubs, betting shops, casinos, real estate purchases, tourism and hospitality facilities, taxi and rentakar associations, companies engaged in the recycling of secondary raw materials, the purchase of expensive cars and the like". it says in the document.
Citizens of Eastern European countries and Turkey residing in the territory of Montenegro, it is noted in the SOCTA document, are linked to the implementation of money laundering activities through interconnected legal entities registered on the territory of Montenegro in whose ownership and management structures they participate, and which mainly operate in the fields of consulting, financial business and tax management, construction and real estate trade and motor vehicle trade.
Process money laundering independently
In the Report on the monitoring of trials in the Western Balkans from July 2021 to March 2024, prepared by the Organization for Security and Cooperation in Europe (OSCE), it is noted that the majority of monitored cases with accusations of money laundering in Montenegro are processed simultaneously with the predicate crime.
"During the consultation, the prosecutors confirmed that they are not prosecuting independent criminal acts of money laundering, because they needed to know exactly which criminal act resulted in the profit," the report explains.
However, according to relevant international standards, especially the recommendations of the Financial Action Task Force (FATF) and the Warsaw Convention, a previous or concurrent conviction for a predicate offense should not be a prerequisite for a conviction for money laundering.
"Therefore, in order to prove that the property represents the property benefit achieved by a criminal act, the prosecutors do not need to determine precisely which criminal act served as the source of the acquisition of the property," the Report concludes.
The Supreme State Prosecutor's Office for CIN-CG says that they are trying to improve the proceedings in these cases.
"It is precisely for this reason that the analysis of organizational frameworks is in the process, in order to provide a more functional organizational structure, and therefore better results in the prosecution of criminal offenses of money laundering", say the prosecution, which is headed by Milorad Marković.
They are also planning additional training for state prosecutors in this area for the coming year.
"The need for education also stems from the fact that the amendments to the Law have narrowed the jurisdiction of the Special State Prosecutor's Office, after which cases related to money laundering are under the jurisdiction of the basic state prosecutor's offices," notes the VDT.
The Supreme Court for CIN-CG states that, at the end of October this year, they created guidelines for the management of cases of serious and organized crime, in order to help judges in the preparation and management of cases.
According to the Supreme Court, the Center for Training in the Judiciary and the State Prosecutor's Office will initiate additional training for judges who act in cases prosecuted for criminal offenses of money laundering.
The High Court stated for CIN-CG that there are currently 18 trials in progress in which one of the criminal offenses for which the defendants are charged is money laundering, of which three cases are related to that criminal offense only. Recently, he is also a former high-ranking police official Dusko Koprivica arrested on suspicion of having laundered more than a million euros with his wife, son and son-in-law since 2019. These proceedings will show whether our judiciary is finally ready to tackle this serious crime or whether it will continue with the current practice.
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