Montenegro Labeled High-Risk for Money Laundering by MONEYVAL

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 country for money laundering in a recent report. This assessment, which focuses on enhanced monitoring and technical compliance, highlights the country’s vulnerability to illicit financial activities, particularly from organized crime.

According to the report, Montenegro is particularly exposed to money laundering activities associated with drug trafficking, cigarette smuggling, corruption, and financial fraud. While the report acknowledges some progress has been made in combating these issues, it emphasizes the need for further efforts to improve digital monitoring systems and strengthen criminal policies to exit the enhanced monitoring regime.

Real Estate Sector Under Scrutiny

A significant concern raised by MONEYVAL pertains to the connection between crime and the real estate sector. The report points out that the purchase of luxury properties with cash poses a serious risk for money laundering. It notes the lack of adequate oversight within Montenegro’s real estate market, which often creates opportunities for criminal activity and corruption.

Crucially, the report indicates that notaries, agents, and investors frequently fail to report suspicious transactions as required. It stresses that real estate agents are not subjected to any licensing, registration, or professional accreditation requirements that could potentially prevent criminals from participating in property transactions.

MONEYVAL specifically states, “Real estate agents do not face any barriers against money from criminal groups,” which allows for the possibility that criminal organizations could operate their own agencies and hire agents to facilitate money laundering activities.

Weaknesses in Client Verification

The report further outlines that notaries and lawyers providing services to foreign trusts are not legally obligated to inquire about the origins of funds. This lack of scrutiny enables offshore companies and fictitious transactions to serve as primary tools for money laundering by criminal groups.

MONEYVAL emphasizes the critical role of real estate agents in the laundering process, noting that they lack mechanisms to prevent criminals from owning, managing, or being involved in property transactions. As a result, the report highlights the urgent need for Montenegro to enhance the operational capacity of its monitoring systems.

For instance, while an information system for restrictive measures has been established, it remains non-operational. Currently, communication about sanctions occurs manually through the Ministry of Foreign Affairs, which can delay the process. The report advocates for improved oversight of foreign trusts and similar legal arrangements utilized by foreign entities through local lawyers or notaries.

Casinos and Gambling Industry Concerns

In addition to real estate, MONEYVAL raises alarms about the gambling sector in Montenegro, where the government formally checks the ownership of casinos but fails to vet potential close associates. The report indicates that existing checks do not prevent criminal associates from infiltrating casinos.

While Montenegro requires casino owners and directors to have no criminal convictions, this oversight does not extend to their associates, potentially allowing for infiltration by criminal elements. The report concludes that despite existing regulations, monitoring of casinos and online betting must become more aggressive, as the gambling sector is recognized as a common channel for significant money laundering activities.

In summary, the MONEYVAL report underscores Montenegro’s ongoing challenges in addressing money laundering and financing of terrorism. The findings call for stronger regulatory frameworks and enforcement measures to prevent the misuse of the real estate and gambling sectors for illicit activities.