The fight against money laundering is still pending

In Montenegro, there are 4.700 companies engaged in banking, finance, gambling, accounting and auditing, real estate, construction, law and other businesses, which in October last year were required to send two employees each for training and licensing to prevent money laundering and terrorist financing.

This did not happen, however, because the Government has not yet adopted the necessary by-laws and training program.

Amendments to the Law on the Prevention of Money Laundering and Financing of Terrorism, which were adopted and entered into force in December 2023, stipulate that businessmen from certain sectors with four or more employees must hire two to carry out anti-money laundering activities, i.e. undergo training, pass a professional exam and obtain a license for that job. It is planned that the by-laws will be adopted within three months of the law entering into force, while companies had to harmonize their operations within six months of the adoption of these acts, i.e. in October last year.

The goal was for the companies to employ an authorized person and his deputy who are registered with the Financial Intelligence Unit (FIU) of the Police Directorate, which issues a certificate of passing the exam and a license.

When asked whether the Ministry of Internal Affairs (MUP) had adopted all the bylaws for the implementation of the Law, the Police Directorate did not provide a precise answer, but instead said that eight regulations had been adopted.

They and the Center for Vocational Education confirmed to "Vijesti" that the program for these trainings is not yet ready, but that they expect the trainings to last five to seven days, after which the workers will receive licenses.

"In Montenegro, there are around 4.700 legal entities that are obliged under this Law and that are obliged, each of them individually, to appoint one authorized person for the prevention of money laundering and financing. The training will provide specific guidance to employees who will receive a license of authorized persons, so that they know exactly which segment of business to pay attention to in their daily operations. The Center for Vocational Education has not yet adopted a training program for licensing, in cooperation with the Ministry of Internal Affairs. It is planned that, once the program is adopted, training will begin, which will last from five to seven working days, and in accordance with the program, all authorized persons for the prevention of money laundering will be trained, who will thus become licensed persons to perform these tasks," the Police Directorate said.

The Employers' Union (UPCG) has previously, as now, indicated that this model will create problems for the economy, namely that they believe that the measure will burden small and medium-sized enterprises. They claim that the solution is unrealistic, that companies have difficulties in implementing it, that they do not have the necessary staff, and that the solution is not sustainable...

Suspicious traffic up 40 percent

The Police Directorate, however, states that the work of preventing money laundering will not bring new responsibilities for employees and the need for additional employment, but that licensed workers will only pay greater attention to regulations in this sector. They added that there were no exams because the conditions for organizing training were not created, so educational institutions were unable to hold them.

They pointed out that the only obstacle currently is the lack of an adopted training program, while the process will ultimately have to receive the green light from the National Education Council. They added that the Financial Intelligence Unit has received 542 suspicious transaction reports since the beginning of this year, compared to 729 last year and 523 in 2023.

"The adoption of the new Law on the Prevention of Money Laundering, as well as the activities undertaken by the Prevention Department within the FIU in relation to taxpayers and supervisory authorities, resulted in an increase in reported suspicious transactions in all categories of taxpayers. Namely, during 2024, a significant increase in suspicious transactions was recorded, in the total amount of 40,72 percent. The increase in the number of suspicious transactions was recorded most significantly with commercial banks, but the parameters of investment companies, lending, and also the reporting of suspicious transactions by taxpayers who had not previously submitted suspicious transactions have increased significantly," the Police Directorate said.

They pointed out that the Ministry of Interior has so far adopted eight regulations to implement this Law, including the one on the method of submitting information to the FIU, more detailed criteria for developing guidelines for the analysis and establishment of a risk management system, the method of implementing and training for video-electronic identification of clients, the application form for issuing approval and determining compliance with the conditions for implementing identification electronically, the list of indicators for recognizing suspicious clients and transactions, the method of entering, updating, checking and accessing data from the Register of Beneficial Owners...

The economy is struggling

However, the MEF claims that from the very beginning they pointed out the problems that this Law brings in practice, and that they sent these comments to the competent institutions and clearly emphasized that the economy had to be consulted before its adoption. They claim that they are ready to actively participate in the process of changes - because a solution must be found that meets international standards and can be applied to the Montenegrin economy.

"Even after the adoption of the Law, we spoke with numerous employers from various sectors. The view is almost unanimous - that this is a measure that is excessively burdensome, especially for small and medium-sized enterprises. Business people understand the importance of combating money laundering, but they believe that the solution is legally unrealistic and that it may cause the opposite effect - non-implementation of regulations due to its inapplicability. It is evident in the field that business people have serious difficulties in starting to implement these measures, precisely because of the rigid conditions. Many companies do not have the human resources capacity to allocate two out of four employees to these jobs, which is particularly a problem in micro and small enterprises. If the Law is not amended, a large number of employees would have to take professional exams and undergo training that is both time-consuming and financially demanding. This could lead to a slowdown in business and the creation of additional costs that the economy can hardly bear...", said the MEF.

They argue that the Law has created a new administrative and financial barrier for the economy and that in practice it may lead to a reduction in the number of employees available for the company's core activities, an increase in business costs and additional legal uncertainty. They state that the model is fundamentally unsustainable because it does not take into account the structure of the domestic economy, which is predominantly made up of small and micro enterprises, and believe that it should therefore be urgently reviewed and the Law amended, in order to find a solution that balances the state's international obligations and the real capacities of the economy.

Duration and exam model still unknown

The Center for Vocational Education said that they have been submitted a proposal for an Education Program for the Prevention of Money Laundering and Financing of Terrorism, and are currently providing support to the working group so that it can be developed according to the established methodology for education programs leading to the acquisition of a second qualification.

They emphasized that after the completion of this process, the program will be submitted to the FIU for approval. They also told "Vijesti" that Article 71 of the Law stipulates that training shall be conducted by an adult education organizer who has a license issued in accordance with the regulations governing this area, and that after the training, candidates shall take a professional exam before a commission formed by the FIU.

"The duration of the education program, the requirements for enrollment, i.e. inclusion in the program, the method of assessment, learning outcomes, as well as the structure of the education program are still in the working version and will be known after the completion of the program. The education program for an authorized person for the prevention of money laundering and the financing of terrorism is a program for acquiring a second qualification. In the Law on National Professional Qualifications, other qualifications are considered qualifications acquired in connection with a special regulation. In this case, the method of acquiring a second qualification under the Education Program for an Authorized Person for the Prevention of Money Laundering and the Financing of Terrorism is regulated by the Law on the Prevention of Money Laundering," the Center said.