Montenegro Remains High-Risk for Money Laundering, Says MONEYVAL

Montenegro has been identified as a high-risk state for money laundering, according to a report from the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, known as MONEYVAL. The comprehensive evaluation highlights the country’s vulnerability, particularly concerning organized crime activities, including drug trafficking, cigarette smuggling, corruption, and financial fraud.

The MONEYVAL report indicates that while Montenegro has made some progress in combating money laundering and terrorist financing, significant work remains. The country must enhance its digital oversight systems and strengthen its penal policies to move out of the enhanced monitoring regime.

Real Estate Sector Exposed to Criminal Activity

A critical concern raised in the MONEYVAL document is the connection between organized crime and the real estate sector. The report notes that the purchase of luxury properties with cash poses a serious money laundering risk. Montenegro’s real estate market is described as poorly regulated, often providing opportunities for criminal activities and corruption.

The report states that notaries, agents, and investors frequently fail to report suspicious transactions as required. Furthermore, it emphasizes that criminals exploit real estate agents, lawyers, and notaries when acquiring property, with the state failing to implement necessary preventive measures.

Real estate agents currently operate without any licensing, registration, or accreditation requirements. This lack of oversight allows criminals or their associates to engage in property transactions without facing barriers.

MONEYVAL also points out that notaries and legal representatives providing services to foreign trusts are not mandated to comply with anti-money laundering (AML) and counter-terrorism financing (CTF) obligations. This gap means that there are no legal requirements for these professionals to inquire about the origins of funds used in transactions.

Insufficient Regulatory Framework and Oversight

The report identifies offshore companies and fictitious transactions as primary tools used by criminal organizations for money laundering. Real estate agents play a crucial role in this process, yet they are not subject to any regulatory scrutiny that could prevent illicit financial activities.

MONEYVAL emphasizes the urgent need for Montenegro to improve its operational systems. Although an information system for restrictive measures has been established, it is not yet operational. Currently, communication regarding sanctions occurs manually through the Ministry of Foreign Affairs, which can hinder response times.

The oversight of foreign trusts and similar legal arrangements remains inadequate, allowing potential misuse by foreign nationals serviced by domestic lawyers or notaries. The report further notes that penalties for institutions failing to comply with client verification and ownership transparency rules are still considered insufficient.

Attention is also drawn to the gambling sector, where casinos are formally checked for ownership but not for individuals closely linked to these operations. The report warns that existing checks do not prevent associates of criminals from infiltrating casinos. Although Montenegro requires that casino owners and directors do not have criminal records, this does not fully address the risk of infiltration by criminal associates.

Overall, the MONEYVAL report concludes that the gambling sector is recognized as a significant risk for money laundering. While regulations exist, the oversight of casinos and online betting must be more rigorous, as they serve as classic channels for extensive money laundering activities.

Montenegro’s ongoing status under enhanced monitoring highlights the urgent need for comprehensive reforms to tackle these pervasive issues.