Montenegro has a new Act on Prevention of Money-Laundering and Financing of Terrorism (“AML Act“). The new legislation came as a last-minute measure to exclude Montenegro from the MONEYVAL’s „grey list“. It also introduces certain changes that address new technologies and are relevant for the businesses.
Extension of the AML Act to new types of businesses
The new AML Act extends its application to the following entities:
- real estate lease agents and brokers, when the value of a lease is EUR 10.000 or more;
- persons/entities engaged in any services in relation to the vessels and aircrafts, if the transaction value is EUR 10.000 or more;
- persons/entities engaged in the business of office space or residential buildings construction.
Electronic identification of clients
The most significant novelty is the possibility of electronic identification of clients through qualified electronic signature or online video identification, if the client presents an electronic identification document.
Entities performing any form of electronic identification of clients must hold an approval issued by the Financial Intelligence Unit (“FIU”), which is a special division of the Police Department in charge of AML matters. FIN can decline to grant such approval if it determines, at its sole discretion, that a particular business activity conducted by the applicant entails a high level of money-laundering risk. This limitation may affect online gambling platforms that have so far used electronic identification relying on the lack of explicit prohibition.
Furthermore, online video identification of clients is possible only with the involvement of the human factor. Accordingly, video identification performed solely by a digital solution is not allowed. The Montenegrin AML Act specifically prescribes that an entity subject to the AML Act can identify clients by using online video identification only if the identification exercise is conducted by an employee of that entity who has completed special training for electronic identification.
Compulsory licencing of AML officers
Persons working as AML officers within the entities subject to the AML Act will have to undergo training and obtain a license issued by FIU. For the entities employing more than four people, this means that both AML Office and his deputy have to undergo the training process and apply for the AML Officer licence. Entities employing four people or less do not have to appoint a special AML officer, so it is sufficient if the general manager holds the licenses issued by FIU. AML Act prescribes for a six-month period during which all entities subject to the law are required to align with the requirements. However, alignment with the AML Act new requirements will not be possible until further implementing bylaws are enacted by the Ministry of Internal Affairs, which is supposed to occur until 11 March 2024.
Stricter obligations regarding payment transactions
Banks and other financial institutions are now under stricter obligations to monitor and keep record of all transactions, regardless of the amount of the funds being transferred. Payer’s payment service provider is under an obligation to collect extensive information on both the payer and the payee. Additionally, with respect to payments amounting to EUR 1.000 or more, effected in a single or in several related payment transactions, the payee’s payment service provider is under the obligation to identify the payee, confirm all information on the payee obtained from the sender’s financial institution, and refuse to execute the transaction if the information on the payee does not correspond to the information received from the payor.
Limitation on cash transactions
Cash transactions involving EUR 10.000 or a higher amount are prohibited.
Registry of Politically Exposed Persons („PEP“)
Instead of the list of PEP published on the website of the Anti-Corruption Agency, the new AML Act now mandates establishment of PEP Registry to be maintained by the Anti-Corruption Agency. There is also an extended list of criteria for identification of PEPs.
Registry of Ultimate Beneficial Owners (“UBO”)
All entities subject to the AML Act are obliged to determine ultimate beneficial owner of the client Supervision over the UBO Registry is now entrusted to the Revenues Administration. The UBO Registry will be accessible to anyone, subject to electronic identification, without the need to prove legal interest in obtaining the required information.
