Montenegro does not yet have a legislative framework in place to establish a financial police force, although for a decade its formation has been announced as crucial in the fight against financial fraud, tax evasion and fraud, corruption and economic crime.
The Tax Administration, which is supposed to be the future financial police, told "Vijesti" that while they are waiting for the creation of the legal basis for the formation of the financial police, they have established a Sector for the Determination and Collection of Unreported Income of Individuals.
The amendment to the Rulebook on Internal Organization and Systematization of the Tax Administration, which enabled the formation of this Sector, entered into force on March 26 of this year.
They follow rich people from failed companies
"The staffing of the newly formed sector is underway, as well as the creation of technical conditions for work. The aforementioned sector consists of three departments in which between 10 and 15 employees will be engaged. The sector will deal with identifying and resolving issues such as hidden or unreported sources of income, wealthy individuals who manage companies that report losses or reduce income, discrepancies between reported income and observed lifestyle, cases of unexplained enrichment and asset accumulation,... and the like," the Tax Administration told "Vijesti".
In March last year, the Prime Minister Milojko Spajic announced that, with the support of the Italian “Guardia di Finanza”, he will work on the creation of a Montenegrin financial police. After a meeting with representatives of this Italian institution, led by General Vito GiordanoSpajić then said that the Government has a very ambitious goal in the fight against crime and that the support of the best, such as the "Guardia di Finanza", is necessary on this path.
Learning from experiences in Italy
Even then, it was not announced when it would be formed. The Tax Administration now has cooperation with the “Guardia di Finanza”, whose experience and working methods it wants to adopt.
"The Tax Administration has requested assistance from the Italian Guardia di Finanza through the General Secretariat of the Government regarding the methodology for lifestyle assessment and indirect income assessment, risk profiling of individuals with large assets and complex ownership structures, field investigation techniques within the framework of economic and financial supervision, tools and analytical framework for detecting undeclared income and unjust enrichment, models of cooperation with financial institutions and other data sources for asset verification," the institution was informed to "Vijesti".
The Tax Administration is strengthening cooperation with banks in order to obtain key data for the work of the new sector and the future financial police.
"Last year, the Tax Administration signed a Memorandum of Cooperation with the Association of Banks, and through data exchange, it has the ability to monitor income through payments to commercial banks and, by comparing this data with submitted tax returns, identify non-filers. Three commercial banks are already in various stages of testing the data exchange system, and it is expected that all banks will be in the system by the end of the year," the Tax Administration said.
When asked when the formation of the financial police will be made official, representatives of this institution could not be specific.
"After establishing the legislative framework, defining institutional procedures, legal powers and mechanisms for inter-institutional cooperation, we can expect the formation of a financial police modeled after the Italian one," said the Tax Administration.
PP announced in 2014 as a salvation from crime
The financial or tax police has been announced since November 2014, when the Government announced that it was moving towards its formation and that its main task would be to combat economic crime, corruption and the shadow economy. Then, the following year, the Law on Tax Administration was amended and the Rulebook on the Internal Organization and Systematization of the Tax Administration was adopted, to which a separate Tax Police sector was added.
The Government announced at the time that the Financial Police would be a highly professional body, and that, together with the police department for combating economic crime and the Special Prosecutor's Office, it would be a strong force in the fight against corrupt practices in the economy, detecting criminal offenses against payment transactions and business operations.
"The Tax Police Sector will carry out tasks related to: combating tax evasion, the shadow economy, coordinating activities with other authorities to combat money laundering, organized crime, corrupt practices in the economy, detecting criminal offenses against payment transactions and economic operations, as well as other criminal offenses in the field of tax and economic crime," it was written nine years ago in the Government Information.
Formation, then extinction in 20 days
In March 2016, he was appointed its head. Miodrag Martinović until then an employee of the Ministry of Internal Affairs. Before the election of Martinović, the then Minister of Finance Radoje Žugić elected two other candidates, who had given up on the position before the election.
Four candidates passed the tests for the position of head of the tax police at that time. Djordje Ivanovic, Vladan Delic, Miodrag Martinovic and Gina RadenovićŽugić first chose Ivanović, who then dropped out, and after him Delić, who also dropped out.
Third on the list was Martinović, who, according to "Vijesti", accepted the position, but he was only appointed after Žugić was ordered to do so by the Administrative Inspection.
About 20 days after Martinović's appointment, Žugić proposed abolishing the Tax Police.
Despite these expectations, nothing happened. No one was hired in the new sector, no bylaws were drafted on jurisdiction and powers, and Martinović was its only employee without clear powers. At the end of 2018, the Tax Police was formally deleted from the systematization.
The Tax Police was announced again in November 2019 when the then Director of the Tax Administration met with representatives of the Italian Guardia di Finanza. Miomir Mugoš, however, nothing concrete happened.
Even after the democratic changes in 2020, the formation of the financial police as the main tool in the fight against financial crime was repeatedly announced, but this has not yet happened.
Last year's Fiscal Strategy announced that it would be modeled after the Italian one
The formation of the Financial Police was also announced in last year's Government Fiscal Strategy for the period from 2024 to 2027. Although the first of three years of that period has already expired, the prerequisites for its establishment have not yet been met.
"In order to create a more favorable business environment through the prevention of illegal business and the suppression of corruption, the Ministry of Finance will propose a legal solution that will create formal prerequisites for the formation of the financial police. In order to utilize the expertise that Italy has in this area, communication has already been established and a series of meetings have been held with the relevant state institutions of the 'Guardia di Finanza' of the Republic of Italy, at which it was noted that there is room for cooperation, through the training of future financial police personnel by the 'Guardia di Finanza', given that this Italian special police has a school for specialization in the field of combating financial fraud. Given the current decentralization of institutions that exercise control in this area, the Government of Montenegro believes that by forming the financial police, this body could fight both corruption at the highest level and all types of financial fraud much more easily," it is written in the fiscal strategy from a year ago.
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