Anyone who carries out or wants to carry out transactions or offer services in cryptocurrencies will have to register with the Register of Crypto-Asset Service Providers. All cryptocurrency transactions worth more than 1.000 euros will be subject to special supervision, as will cash transactions of 2.000 to 100.000 euros, depending on the activity and purpose. The only exception is games of chance, where organizers will have to collect data on all players who pay 20 euros or more in one or more related transactions.
This is stated in the draft law on amendments to the Law on the Prevention of Money Laundering and Financing of Terrorism, which was adopted by the Government and sent to the Parliament for adoption. It amends or adds as many as 52 articles of the law, but the Government adopted it and sent it to the Parliament without organizing any form of public debate.
The formal proponent of the law is the Ministry of Internal Affairs.
The amendments to the law also define what "reputation" is and who can be a reputable citizen or businessman, as well as the fact that the beneficial owner (ultimately the natural person) of legal entities that carry out transactions must be known.
The amendments to the law, as stated, would enter into force on the day of publication in the "Official Gazette", while the Register of Service Providers Related to Cryptoassets will be established within nine months from the date of entry into force of the law.
The Ministry of Interior states in its explanation that the proposed amendments to the law are of great importance for improving the fight against money laundering and terrorist financing and for ensuring Montenegro's further progress in the European integration process.
"In the process of accession to the European Union, Montenegro is obliged, among other things, to close the Negotiation Chapter 4 - Free Movement of Capital, which includes the fight against money laundering and terrorist financing. Accordingly, experts from the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) of the European Commission have requested that the Law on the Prevention of Money Laundering and Financing of Terrorism (the Law) be aligned with Regulation (EU) 2023/1113 of the European Parliament and of the Council of 31 May 2023 on information accompanying transfers of funds and certain crypto-assets and amending Directive (EU) 2015/849. Also, experts from the Organization for Economic Cooperation and Development (OECD) have requested amendments to the Law to ensure the full application of the 'beneficial owner' institute," the explanatory memorandum states, among other things.
The authors of the law also say that they have aligned the new norms with EU directives, as well as the requirements of international organizations that standardize regulations and measures against tax evasion, money laundering and terrorist financing, such as MONEYVAL and FATF. They also stated that it was decided that, since the Crypto Assets Law has not been adopted, the FATF recommendations will be fulfilled through amendments to this Law.
Numerous ambiguities
The amendments impose measures to know and monitor the client's business on gambling operators for all deposits and withdrawals, even in multiple transactions, whose value exceeds 20 euros. In the previous version of the law, this limit was 2.000 euros.
Measures of "knowing and monitoring the client's business" are defined as identification, taking personal data, "obtaining a photocopy of the personal document and entering the date, time and name and surname of the person who inspected the photocopy of the document and keeping that photocopy and the collected data in accordance with this law", collecting data on the business relationship and the nature of the transaction... In the event that the transaction is carried out remotely (via information technology), the person obliged to identify must conduct video-electronic identification.
It is not explained how all this can be done at gambling operators, when due to the reduction of the transaction monitoring limit to 20 euros in one or more payments, almost all players will be covered, or how it will be applied in casinos during live table games where the cheapest chip is often more than 20 euros.
It is also not clear why the organizers would be able to collect and store personal data on so many citizens, whether betting office employees become official persons, and how they can know that someone has exceeded the 20 euro limit during a certain period by making payments of one or more euros.
"The draft law proposes amendments to the Law in the sense of obliging the organizers of games of chance to take measures to know and monitor the client's business when making deposits in the amount of 20 euros or more, when executing one or more related transactions, which so far referred to a payment or withdrawal in the amount of 2.000 euros or more. The aforementioned amendment was made because a higher risk of money laundering and terrorist financing has been identified in the gambling industry. It is also stipulated that these measures shall also be applied during each occasional transaction that represents the transfer of crypto assets in the value of 1.000 euros or more," the explanatory note to this article of the draft law states.
Although recommendations from international organizations state that cryptocurrency trade and transactions pose a particular risk for money laundering and terrorist financing, this proposal sets the limit for their monitoring at an amount 50 times higher than for games of chance.
Organizers: Unsustainable norm of "monitoring" citizens
A group of gambling organizers plans to send a letter to the parliamentary clubs requesting amendment action to eliminate the provisions on gambling, because they believe that the norm of monitoring citizens who deposit 20 euros is unsustainable, contrary to international standards and EU directives, and that such an application would lead to players moving to the gray market and losing millions in revenue for the state.
They are protesting because the proposal for these amendments was adopted without a public debate and the inclusion of representatives of gambling operators, which "introduce new obligations that are contrary to EU standards, and at the same time directly violate the freedom of entrepreneurship and the provision of services on the market."
The drafters state that this norm is contrary to Directive (EU) 2015/849, which prescribes a threshold of 2.000 euros and above for the implementation of customer due diligence measures in the field of games of chance.
"The proposed amendments, contrary to the current solution, which is in line with EU standards, take a step back for completely unclear reasons, and unjustifiably introduce a lowering of this threshold to 20 euros, without any legal and economic basis and support in comparative practice and standards. This solution not only introduces disproportionate administrative barriers, but also seriously jeopardizes the operations of organizers of games of chance, which will inevitably result in a loss of budget revenues and a definite increase in the share of the illegal market," the organizers believe.
They say that this norm is in contradiction with the proposal from the Law on Games of Chance, which is simultaneously in the parliamentary procedure.
"Such a solution would significantly increase the administrative obligations of both the organizers and the competent institution for the prevention of money laundering, and precisely because of such a low threshold and hyperproduction of information about the huge number of payments, the focus would be taken away from the quality and essence of this work and these controls," the organizers stated.
They also say that these thresholds cannot be arbitrarily changed at the national level without prior harmonisation with the directive and appropriate changes to regulations at the European Union level. The 2.000 euro limit exists not only in the EU but also in neighbouring countries.
Organizers say that these and other obligations imposed by this law will bring financial costs to them because they will have to hire more administrative staff.
The law measures who is a respectable man.
A new article has been added to the draft law that defines which natural person has a reputation. This is defined because only reputable people will be able to be registered in the Register of Crypto-Asset Service Providers, who will have to prove that reputation within the meaning of this law.
So, within the meaning of this law, a natural person has a good reputation if there are no criminal proceedings against him, or if he has not been convicted of a criminal offense for which an unconditional prison sentence of one or more years is prescribed; if he has not violated the provisions of this law as the legal representative of a legal entity or company; if he is not an associate of a person convicted of the criminal offense of money laundering and/or terrorist financing..., and even if there is suspicion of the commission of the criminal offense of money laundering or terrorist financing in relation to that person.
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