Six Montenegrin banks suspected of failing to comply with money laundering law

Six Montenegrin banks suspected of failing to comply with money laundering law
By Dents Koseva in Sofia, Clare Nuttall October 30, 2015

Checks are being carried out at six Montenegrin banks suspected of failing to adhere to legislation on the prevention of money laundering and terrorist financing.

The Montenegrin government has improved its anti-money laundering legislation recently, but more progress is still needed in implementing the law. The high level of cash transactions and Podgorica’s decision to use the euro rather than introducing its own currency despite not being a member of the eurozone, have both increased the country’s vulnerability to money laundering, according to a 2013 US State Department report.

The Administration for the Prevention of Money Laundering and Terrorist Financing (APMLTF) told bne IntelliNews on October 30 that it is in the process of verifying the implementation of the relevant provisions at six of Montenegro’s 14 commercial banks.

The process has been launched “due to suspicion that certain banks failed to apply provisions of the law [on the prevention of money laundering and terrorist financing] that refer to the obligation of the reporting entities to deliver to the APMLTF the reports on suspicious transactions,” the APMLTF said in an emailed statement.

The APMLTF, a unit of the Montenegrin ministry of finance, said it does not have the power to investigate, but it is authorised to collect, processes and analyse data, which it then passes on to other state bodies - namely the police and the state prosecutor’s office. It also has the power to request information from foreign financial intelligence units, reporting entities and other public authorities in Montenegro, the spokesperson said.

According to local media reports, in several cases the six banks have not taken the steps required under the law, which indicates a lack of quality in their day to day work as well as showing they sometimes fail to implement the money laundering legislation.

The banks targeted by APMLTF have not been named.

However, a 2014 investigation published by the Organized Crime and Corruption Reporting Project (OCCRP) revealed links between convicted cocaine smuggler Darko Saric and the First Bank of Montenegro, which is controlled by the family of Prime Minister Milo Djukanovic.

One of the report's authors, Dejan Milovac of MANS, a Montenegrin NGO focussed on fighting corruption, told bne IntelliNews that there are public concerns that large amounts of money have also been laundered through construction businesses.

Both the European Commission and the Council of Europe’s anti-money laundering committee, MONEYVAL, have criticised Montenegro’s record on tackling money laundering.

“The legal framework on anti-money laundering and terrorism financing needs to be aligned with European and international standards,” says the latest EC progress report for Montenegro published on October 21. The number of suspicious transactions reported and investigated continues to be very low, it adds, pointing out the high staff turnover at APMLTF, and the need for an urgent overhaul of its IT system.

Meanwhile, a MONEYVAL report published in June says that legislation is largely line with the Vienna Convention against Illicit Traffic in Narcotic Drugs and Pyschotropic Substances and the Palermo Convention on Transnational Organized Crime. However, it adds that "there were only very few instances where property was seized and confiscated in money laundering cases."