Montenegro Identified as High-Risk for Money Laundering by MONEYVAL

A recent report by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, known as MONEYVAL, has classified Montenegro as a high-risk jurisdiction for money laundering. The findings, which highlight ongoing vulnerabilities, underscore significant concerns regarding the country’s real estate sector.

The report indicates that Montenegro remains particularly exposed to money laundering activities stemming from organized crime, specifically drug trafficking, cigarette smuggling, corruption, and various financial frauds. While the document acknowledges some progress in combating these issues, it emphasizes the need for further advancements in digital oversight systems and the strengthening of criminal policies to move beyond enhanced monitoring.

Real Estate Sector Under Scrutiny

A critical area of concern is the connection between organized crime and the real estate market. According to MONEYVAL, the ability to purchase luxury properties with cash poses a significant risk. The report notes that Montenegro’s real estate market is inadequately regulated, creating opportunities for criminal activities and corruption.

Notaries, agents, and investors frequently fail to report suspicious transactions as required. The report warns that criminals exploit real estate agents, lawyers, and notaries when acquiring properties, a situation that the government has not effectively addressed.

“Real estate agents are not subject to any licensing, registration, or professional accreditation requirements,” the report states, which could prevent criminals from participating in these transactions. It further explains that notaries and legal representatives are not obligated to inquire about the sources of funds when dealing with foreign trusts.

Offshore companies and fictitious transactions have been identified as primary tools for money laundering by criminal groups, compounding the issues within Montenegro’s financial landscape.

Insufficient Regulatory Framework

MONEYVAL’s report emphasizes the role of real estate agents in laundering illicit funds. Their lack of regulatory oversight means there are no barriers to prevent criminals from owning or managing real estate operations. This raises alarm over the potential for criminal organizations to establish their own agencies and real estate agents.

Despite the establishment of an information system for restrictive measures, the report notes that it is not yet operational. Currently, communications regarding sanctions occur manually through the Ministry of Foreign Affairs, which may hinder timely responses.

The report also points out that the monitoring of trusts remains inadequately structured. Montenegro has yet to implement robust oversight for foreign trusts and similar legal arrangements, which can be exploited by international entities receiving services from local lawyers or notaries. Penalties for institutions that fail to adhere to client verification rules and beneficial ownership identification are not deemed strong enough.

The findings extend to the gambling sector, where the report indicates that casinos and gaming establishments are at risk. Although the state formally checks the backgrounds of owners, it does not investigate individuals closely associated with them.

“Checks do not effectively prevent associates of criminals from infiltrating casinos,” the document states, highlighting the need for a more aggressive regulatory approach in this area. The existing rules require that casino owners and directors have no criminal convictions, yet this does not target potential infiltrators.

As Montenegro remains under enhanced scrutiny, the report urges immediate improvements in the operational capacity of its regulatory systems. With substantial risks identified in both the real estate and gambling sectors, the findings serve as a crucial call to action for the Montenegrin government to enhance its frameworks for combating money laundering and related crimes.