Two workers in the company will apply for police licenses

Companies with more than four employees will have to have an authorized person and a deputy who will deal with the prevention of money laundering. The Assembly adopted the amendment to the law in December without consulting the economy. UPCG demands that the law be changed urgently

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The law entered into force on December 13 (illustration), Photo: Shutterstock
The law entered into force on December 13 (illustration), Photo: Shutterstock
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

Businessmen from certain industries, who have four or more employees, must hire two to carry out work to prevent money laundering, undergo training, pass a professional exam and obtain a license for that work.

This obligation was imposed by amendments to that law, adopted by the parliament in December. It will create additional costs for employers and make it difficult for small companies to do business, according to insiders.

According to the law, tasks related to the prevention of money laundering in companies are performed by an authorized person and his deputy, who must be registered with the Financial Intelligence Unit (FIU) of the Police Directorate. The FIJ issues a certificate of passing the professional exam and license.

The law applies to numerous economic areas, starting with banking, payment and financial affairs, games of chance, accounting and auditing firms, consulting firms, real estate agencies, construction and investment firms, lawyers, notaries, vehicle sales...

The fine for breaking the law is from 3.000 to 20.000 euros.

By-laws for the implementation of the law will be adopted within three months from the date of entry into force of the law, and those bound by the law must harmonize their operations within six months from the adoption of the by-laws. The law entered into force on December 13 last year.

The Union of Employers points out to "Vijesti" that the economy has not been consulted regarding this legal solution, that it will be a big business barrier for them and that the law must be changed urgently so that the economy does not enter the zone of its violation. UPCG calculates that about 15.000 workers must obtain a professional exam and license.

Business barrier for numerous businessmen: From the Government session
Business barrier for numerous businessmen: From the Government sessionphoto: Government of Montenegro

On the other hand, the Police Administration points out that the law does not affect the business operations of businesses whose obligation is to submit data on transactions of 100.000 euros and more, transactions of 10.000 euros and more if a person participates in the transaction or if the transaction is carried out from a high-risk third country or to to it (countries that are on the FATF black and gray list) and suspicious transactions regardless of the amount.

Radical examples of business disincentives

Legal consultant for business and tax law, Rade Bojović, told "Vijesti" that since 2003, when the Law on Prevention of Money Laundering was first passed, it has undergone several changes and that with each one the circle of taxpayers has expanded, and that the version of the law before the last changes was already a significant business barrier for many companies and entrepreneurs who had neither personnel nor financial capacity to fulfill their obligations. He claims that the Law is a radical example of business disincentive in Montenegro for all companies and persons to whom it applies.

"There is no doubt that in practice only a small number of taxpayers carried out the foreseen measures. The previous law was already indiscriminate and did not take into account the fact that micro and small taxpayers are unable to meet the stipulated requirements. The new law, in addition to mandatory reporting to the competent state authority, which in practice turns into double reporting because banks already do this for the same transactions, additionally worsens the position of taxpayers. In addition to the fact that micro and small taxpayers are not exempted from the application of this law according to financial criteria, an additional barrier was introduced in connection with meaningless licensing and taking a professional exam, which refers to an authorized person and his deputy in every company with more than four employees. At the same time, these persons must be employed in the company, which demotivates them in performing the tasks for which they founded the company," Bojović said, adding that the special problem is how domestic entrepreneurs will be able to adapt to such restrictive and senseless requirements.

Bojović indicates that bearing in mind the latest data on the predominant activity from Monstat, this law could cover about ten thousand business entities and occupations.

"At the same time, the regulation stipulates that everyone who performs the mentioned activities in any way and to any extent must be subject to numerous obligations. For micro and small businesses, this is not only burdensome but also unenforceable," Bojović pointed out.

Prepared proposals for amending the law

The UPCG states that the new Law on Prevention of Money Laundering and Financing of Terrorism, in this form, represents a great burden and a significant business barrier for the economy, and discourages the majority of small businesses in Montenegro, which make up about 98% of the total number of registered economic entities.

"Analyzing this legal solution, we are of the opinion that it was hastily adopted without prior consultation with the economy, which raised numerous questions and doubts, the text of which, according to the received views of the economy, must undergo changes as soon as possible, so that businessmen do not enter the zone of penal provisions . With the implementation of the Law, the circle of activities that are subject to its application has been significantly expanded, that is, the circle of those obliged to act according to the same, who are also obliged to have employees who will inform the state authorities about the transactions carried out, as well as observed irregularities. The aforementioned will affect the entry of a huge number of companies into the zone of non-compliance of their operations with this law, all because they will not be able to apply it", stated the UPC.

They state that when talking about the obligees who would be required to be licensed for the aforementioned, in their estimation it would be a number that would amount to more than 15.000 persons (responsible persons and deputies), and the question arises as to which institution can conduct education and licensing of this number of persons.

"Introduced mandatory education and licensing impose additional costs on a large number of business entities, which is especially problematic for those from micro and small enterprises, from the aspect of financial burden, but also (for such a small number of employees), determining a special person and his deputy for performing those tasks. It is important to state that all monetary transactions are handled by specialized professional services of commercial banks, so the question arises of the need for this form of reporting by the economy. The above clearly indicates that micro and small enterprises, as well as entrepreneurs, in accordance with these legal provisions, do not have enough capacity to implement them in their business", emphasized UPCG.

They further stated that since the deadline established by law for the adoption of by-laws for the implementation of this law will soon expire, they expect the relevant Ministry of Internal Affairs (MUP) to adopt regulations and other acts, which will further elaborate on this matter, and provide the economy with clear procedures for its implementation.

"Finally, in accordance with the need for urgent changes to this law, the UPCG, with the input of its members, has prepared a set of proposed changes, which will be considered at the next session of the Council for Competitiveness, as well as sent to the Social Council", said the UPCG.

There was an obligation to report before

The Police Administration states that the law does not stipulate the obligation of businessmen to submit letters and that their obligation in terms of reporting to the FIJ is exclusively electronic, through the portal that the FIJ has implemented and which has been in operation for years.

"The obligation to report existed even before the passing of the Law in December 2023. Access to the portal is possible on the basis of a qualified certificate found on the Montenegrin identity card, or on a token issued by qualified electronic trust service providers. Report processing is mostly automated.

If the FIU, based on the data, information and documentation obtained in accordance with the Law, assesses that in relation to a person, transaction, funds or other property there are grounds for suspecting that a criminal offense of money laundering or terrorist financing has been committed or that the property originates from criminal activities, the FIJ submits an analytical report and the necessary data, information and documentation to the Special State Prosecutor's Office", stated the Police Administration.

Regarding the new legal solutions, "Vijesti" also contacted the Chamber of Commerce, from which they said that they would make a statement after the necessary consultations with the economy.

A foreigner should integrate into the environment in which he does business

Bojović states that in the case of thousands of companies owned by foreigners, it is impossible to pass exams and get licensed by an authorized institution because foreigners mostly do not speak the Montenegrin language.

"This can only motivate them to shut down their business and avoid Montenegro as a business destination, which would be devastating for our country," says Bojović.

The Police Administration says that a foreigner who has decided to live and work in Montenegro is expected to integrate into the society in which he will live and do business.

"He is expected to respect the other regulations of the country in which he operates, if he is the only employee and does not know the language, it is questionable how he got to the business stage, unless the company was opened fictitiously or only for the purpose of acquiring the right to stay or to acquire the right to purchase of real estate or similar. Certainly, if he does not know the Montenegrin language or one of the languages ​​that are in use in Montenegro, in that case he can employ a person who knows one of the mentioned languages", said the Police Directorate.

The employers' union, with the input of its members, prepared a set of proposals for changes, which will be considered at the next session of the Council for Competitiveness and which will be sent to the Social Council

It can be seen that the Government and MPs did not read the law

Bojović points out that the EU directives do not ask that the application of this law stifle business, but rather perverse normative solutions that are a domestic product. "The law is a rewritten and partially deteriorated version of the same regulation in Serbia, while the regulations in the surrounding area are much more favorable. For example, the Croatian law that implemented EU regulations, because it is a member of the EU, does not contain provisions on licensing and professional exams, while additionally exempting taxpayers whose financial affairs fall into the zone of low risk of money laundering. Similar solutions are contained in the law of the same name in BiH. "I have no doubt that Montenegro has adopted a law which additionally makes it a country to be avoided by foreign investors who would invest in the previously mentioned activities, not to mention the disincentive for domestic entrepreneurs and professional occupations," emphasized Bojović.

He added that it can be seen that no one in the Government has read or paid attention to the stipulated norms, that he is not talking about MPs who vote for legal acts according to party directives.

Bojović said that the law must be amended and that the provisions on licensing must be abolished and financial and personnel limits must be prescribed, which will enable taxpayers located in the low-risk zone to be exempted from the application of this law.

"For example, someone who has a small number of employees or someone whose annual income is relatively low (say, if the company's income is less than 150.000 euros per year), should be exempted from the application of this law. Otherwise, it turns out that the so-called taxpayers without exception should become parastatal intelligence points that will report on their "suspicious" transactions or "criminal" transactions of their clients. In practice, this will not work, nor will the largest number of taxpayers do this, regardless of the prescribed draconian sanctions due to the mandatory and numerous administration", emphasized Bojović.

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