Money laundering

2005

Fight against money laundering is dealt with in wider strategies developed by the Republics to fight against corruption and organised crime. The relevant legislation on fight against money laundering is in force in Montenegro since March 2005. Under this legislation, attorneys at law and currency exchange offices are obliged to report suspicious transactions. Banks cannot invoke financial secrecy to prevent the reporting of suspicious transactions.[1]

According to the available statistics on cases initiated and processed, the enforcement of the anti-money laundering legislation needs serious improvement, in particular in the context of the perceived scale of the problem of corruption, organised crime, the large informal economy and the high level of cash transactions.[2]

2006

However, the Directorate against Money Laundering has not yet developed guidelines on what should be considered as a suspicious transaction and there is no proper monitoring of financial transactions beyond the banking system (especially in relation to real estate and inward investment).[3]

The Law on the Prevention of Money Laundering (hereinafter the LPML) was adopted in October 2003. It contains a list of institutions that are obliged to transmit any transaction exceeding 15,000 Euros and connected transactions, as well as suspicious transaction reports to the Administration for the Prevention of Money Laundering (the Montenegrin Financial Intelligence Unit). [4]

In February 2005, the law on changes and amendments to the law on the prevention of money laundering was adopted, which is entitled “Law on the prevention of money laundering and terrorism financing”.[5]

The GET was told that it was not easy to hire appropriately skilled professional personnel for the FIU. This was one of the reasons why it was necessary for the FIU to set up an internal training programme.[6]

Therefore, the GET recommends to keep under careful review all reporting institutions, enhance training to increase awareness of suspicious transactions reporting and monitor progress in this area, particularly for those obliged entities that have not as yet reported any suspicious transaction to the relevant authority.[7]

2007

There is not yet any proper monitoring of financial transactions beyond the banking system, especially in relation to real estate and inward investment. Urgent action is needed. Montenegro needs to step up its efforts to replace cash transactions by electronic transactions in order to ensure proper controls on suspicious transactions.[8]

2008

The law on Prevention of Money Laundering and Financing of Terrorism was adopted in November 2007 and a draft law on Prevention of Conflict of Interest in Performing Public Functions was recently transmitted to the Council of Europe for opinion.[9]

2005

Fight against money laundering is dealt with in wider strategies developed by the Republics to fight against corruption and organised crime.[10]

In Serbia the new law on Money laundering, covering a broader range of laundering activities, including a more exhaustive list of obligors and regulations on data processing under the official secrecy rules with the view to alignment with EU standards has not yet been adopted. [11]

According to the available statistics on cases initiated and processed, the enforcement of the anti-money laundering legislation needs serious improvement, in particular in the context of the perceived scale of the problem of corruption, organised crime, the large informal economy and the high level of cash transactions.[12]

The new Code[13] includes the definition of new crimes, such as genocide, terrorism, corruption, command responsibility in the case of war crimes, as well as crimes committed in connection with money-laundering.[14]

2006

Insufficient cooperation between all competent agencies is a serious obstacle to effectively preventing and fighting money laundering.[15]

Furthermore, a Working group for drafting the Law on Ratification of the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing Terrorism, and drafting the Law on the prevention of the terrorist financing, has also been set up as well as a Working group for drafting the National Anti-Money Laundering and Counter Terrorist Financing Strategy.[16]

Therefore, the GET recommends to keep under careful review the range of reporting institutions, pursue enhanced training initiatives to increase awareness of suspicious transaction reporting and monitor progress. The GET also recommends that guidelines be issued containing money laundering indicators, for all obliged entities.[17]

2007

Little progress can be reported in the area of money laundering. There has been limited implementation of the new legislative framework.[18]

However, the Laws on prevention of financing terrorism and on a national strategy for prevention of money laundering and financing terrorism, which are intended to align with the Council directive on prevention of the use of financial systems for the purpose of money laundering and financing terrorism, have not been adopted.[19]

There is no independent body in place to manage seized assets. Attorneys, law firms and other legal entities involved in asset management have not fully complied with their legal obligations as regards reporting transactions and have not been forced to do so. The Serbian administration for the prevention of money laundering has only become fully operational since the appointment of its new director in September 2007. Preparations for combating money laundering are at an early stage. Money laundering remains a serious problem in Serbia.[20]

2008

In particular, GRECO is pleased to note that guidelines containing money laundering indicators have been issued for a number of reporting institutions; it further encourages the APML[21] to continue developing such guidelines in order to ensure that all obliged entities are covered, in line with the recommendation.

Further, GRECO notes that there is no evidence from the information supplied by the authorities that a monitoring mechanism has been developed to assess whether all obliged entities are effectively reporting suspicious transactions, as provided by law.[22]

2005

A new Law on the Prevention of Money Laundering was adopted in July 2004 and entered into force in December 2004. It represents a further, but still incomplete, step towards alignment with the relevant EU rules, including the Financial Action Task Force standards. For example, although the fight against corruption is high on the political agenda, government transactions have been exempted from the anti-money laundering legislation. Furthermore, sanctions on infringements on the Law on Prevention of Money Laundering need to be dissuasive. It is also noted that anonymous accounts and anonymous pass books seem to be allowed.[23]

However, the enforcement record in terms of convictions, seizures and freezing of assets remains limited at this stage and, as a whole, the enforcement of the anti-money laundering defences is in its initial phase. [24]

However, further action is needed, also taking into account that the effectiveness of anti-money laundering defences is adversely affected by corruption organised crime, informal economy and high level of cash transactions. [25]

Efforts to improve money laundering legislation and Bosnia and Herzegovina’s enforcement record need to continue. [26]

As regards money laundering, the adoption of new legislation and the establishment of the necessary structures have been positive steps. Proper implementation and enforcement of this legislation should now be ensured.[27]

2006

No new legislation against money laundering has been adopted. While current legislation represents a step towards alignment with the relevant EU rules, including the Financial Action Task Force standards, further improvements are necessary.[28]

Bosnia and Herzegovina’s preparations in the area of money laundering have been initiated but they are still at an early stage of implementation. [29]

The GET was informed by several interlocutors that fictitious/phantom companies were a significant contributing factor to the facilitation of money laundering and corruption at all levels in BiH.[30]

The GET learned from the SIPA-FIU[31] that there were very few suspicious transaction reports filed by accountants, lawyers and auditors.[32]

Therefore the GET recommends that the authorities seek agreement with the professional bodies of lawyers, notaries, accountants and auditors on guidelines to be issued to encourage and assist the professionals concerned to understand better and meet their reporting obligations under the law. [33]

2007

Efforts need to continue. Since money-laundering is regulated by the Entities’ criminal codes, criminal sanctions for money laundering are not applied in the same way throughout Bosnia and Herzegovina. The Law on the confiscation of illegally acquired property has not been adopted. This is hampering enforcement of anti-money laundering measures. As regards preventive measures, supervision of non-banking financial institutions and intermediaries remains limited.[34]

2005

Kosovo has made progress in putting in place the basic framework for the fight against money laundering and must now also focus on enforcing these rules and curbing the high level of money laundering.[35]

Further alignment with international standards remains necessary. Moreover, anti – money laundering legislation still needs to be effectively implemented. It is noted that the effectiveness of anti-money laundering defences is seriously hampered by corruption, organised crime, the large informal economy and the high level of cash transactions. [36]

Profits made by Kosovan organised crime groups are invested and laundered in Kosovo through legitimate businesses that often belong to the heads of the biggest drug trafficking groups. [37]

Some progress has been made in establishing the legal framework to combat money laundering while implementing mechanisms still need to be much improved.[38]

2006

The Financial Information Centre (FIC) has revised the anti-money laundering regulations with input from the Central Banking Authority of Kosovo (CBAK) (formerly Banking and Payment Authority of Kosovo – BPK) The CBAK has revised its onsite examination procedures and has refined its implementing rules regarding financial institutions. It has also seconded a senior supervision staff member to the FIC to obtain training and experience.[39]

Overall, limited progress has been made in this area.[40]

2007

The administrative capacity of the KPS[41] department for organised crime for dealing with money laundering is still weak. The wide range of actors dealing with money laundering and the lack of a clear distribution of competencies are hindering investigations and prosecution of money laundering offences. Communication between the KPS economic crimes and corruption investigation section and the regional units dealing with financial crime is poor and there is no common database.[42]

Investigations for money laundering involving high-level politicians are not always finalised.[43]

Overall, some but uneven progress can be reported in combating money laundering. Efforts in this respect need to be stepped up and backed with political determination.[44]

2005

Effective enforcement of legislation in this area is also frustrated both by corruption, by organised crime and by the large informal economy with its high level of cash transactions. It is important to have a properly enforced cash control mechanism in place. Albania’s success in dealing with money laundering is thus clearly linked to progress on the broader issues of corruption, organised crime and economic development. Albania should examine ways to facilitate the transfer of remittances from abroad, which could also help to gradually reduce the level of cash circulating in the country and thus limit scope for money laundering.[45]

During the last three years, no cases on money laundering connected with corruption have been tried.[46]

There are no specific guidelines for the FIU[47] or the reporting entities on the detection of corruption. Their contribution, as well as that of persons bound by anti- money laundering obligations, appears therefore to be very limited in the fight against corruption. The GET recommends the establishment of guidelines on detection of corruption to include typologies of operations that might involve corruption for persons and institutions with a duty to report suspicious transactions in the area of money laundering.[48]

2006

There has been limited progress in the fight against money laundering. The Government has approved a draft law criminalising the handling of stolen goods, an improvement to the legal framework for fighting money laundering. The General Prosecutor has established a task force against economic crime and corruption at Tirana Prosecution Office.[49]

Albania’ economy is still largely cash-based and thus particularly vulnerable to money laundering. Capacity to implement money laundering legislation remains weak. The FIU still lacks a functional IT system for the reporting of financial transactions. No steps have been taken to increase the operational independence of the FIU from the Ministry of Finance. Cooperation between the FIU, the police and the prosecutor’s office remains poor. To date there has not been a single prosecution for non-reporting. Further amendments are required to bring money laundering legislation into line with European standards, the forty 1990 recommendations of the Financial Action Task Force on misuse of the financial system and its nine 2001 special recommendations on terrorist financing. [50]

The task-force on economic crime and corruption is not yet fully operational due to insufficient numbers of qualified staff, and the lack of a clear functional separation between verification and investigation units. [51]

No change has yet been made to the current high threshold for making a transaction reportable on a mandatory basis. There has been very little progress in enforcing cash-control mechanisms, with enforcement limited to airport notice boards. The level of reporting and sequestration is very low and does not reflect the level of cash entering or leaving the country. Preparations in the area of the fight against money laundering are at an early stage.[52]

2007

The Law on money laundering is being revised but is not yet in line with the acquis and the Financial Action Task Force and Council of Europe Moneyval recommendations. The current high threshold for making a transaction reportable on a mandatory basis has not yet been changed. [53]

The Ministries of the Interior and of Finance, the General Prosecution Office and the State Intelligence Service have set up a joint unit to investigate and prosecute financial crime, replacing the task force on economic crime and corruption at the Tirana prosecution office. [54]

Staff recruitment and launching of operations at the new Joint Investigative Unit for Economic Crime and Corruption have been delayed. [55]

There has been no progress on enforcing cash-control mechanisms. The level of reporting and sequestration remains very low and does not reflect the level of cash entering or leaving the country. No sanctions have yet been applied for non-reporting. The ratio of reports of suspicious transactions to investigations, prosecutions and convictions is low. Preparations in the fight against money laundering are at an early stage.[56]

To date no concrete measures have been reported with a view to establishing guidelines on detection of corruption for persons and institutions with a duty to report suspicious transactions in the area of money laundering.[57]

2005

Overall, primary legislation remains to be further amended in order to achieve alignment with the directives, including the Financial Action Task Force, by broadening the scope of activities requiring client identification and reporting and by requiring due diligence in non-face-to-face transactions. As another example the requirements with regard to lawyers, notaries, accountants/auditors and tax advisors appear more limited than in the EU Directives. The enforcement of the anti-money laundering defences needs to be reinforced vigourously. For instance the supervision and monitoring of reporting entities remain insufficient, the resources and powers of the Financial Intelligence Unit, supervisors and law enforcement bodies need to be adequate. The fight against money laundering is seriously hampered by corruption. The enforcement record, in terms of convictions, confiscations, seizures and asset freezes remains limited.[58]

USKOK’s powers have been extended with regard to accessing banking data and requesting control of financial operations and temporary seizure of money, securities and other documentation. In addition, the legal framework for cooperation between USKOK, the police, the Ministry of Finance Taxation Department and the Anti-Money Laundering Office has been more clearly defined.[59]

In general, there is a need for a more pro-active stance in the investigation and prosecution of organised crime, including money laundering and corruption.[60]

The GET commends the recent amendment to the Law on the Prevention of Money Laundering, which extends the categories of entities with an obligation to report any unusual or suspicious transaction.[61]

The GET welcomed the regulatory framework that requires private auditors and accountants to prevent and report instances of money laundering they come across; however, it took the view that this requirement needs to be backed up by the provision of adequate training in order to become effective in practice. In this connection, the GET was informed that, in 2005, the Anti Money Laundering Department received eight STRs[62] from private auditors and accountants; none of the STRs concerned corruption-related offences. Therefore, the GET recommends that the Croatian authorities encourage the private accountants’ and auditors’ representative bodies to issue guidelines and organise training on the detection and reporting of corruption.[63]

2006

Monitoring and supervision of reporting entities remains inadequate, especially outside the banking sector, and the enforcement record (including convictions, confiscations, seizures and asset freezing) is still weak. Improving anti-money laundering legislation, ensuring effective implementation, strengthening the FIU[64] and improving inter-agency cooperation are all short term partnership priorities which remain to be fulfilled.[65]

Legislation in the area of fight against money laundering needs further alignment and administrative and enforcement capacity should be strengthened. Increased efforts will be needed to meet the requirements of this chapter. [66]

In general, there is a need for a more pro-active stance in the investigation and prosecution of organised crime, including money laundering and corruption.[67]

Croatian penal law provides for the principle offences of fraud, corruption and money laundering.[68]

2007

There has been no progress on further legislative alignment with the AML[69] directives as well as the standards of the Financial Action Task Force. Institutional capacity needs to be strengthened. Monitoring and supervision of reporting entities remains inadequate, especially outside the banking sector, and the enforcement record (including convictions, confiscations, seizures and asset freezing) is still weak. Moreover, further efforts are required in improving anti-money laundering legislation, ensuring effective implementation, strengthening the FIU and improving inter-agency cooperation.[70]

GRECO takes note of the guidance and training provided to the State auditors. It stresses, however, that the information supplied by authorities does not make any reference to the core aim of the recommendation, i.e. the provision of guidance and training to private accountants and auditors with a view to encouraging the reporting of corruption instances by these categories of professionals.[71]

2005

The enforcement record of the country’s anti-money laundering defences is a cause for concern, in particular since the effectiveness of anti-money laundering defences is seriously hampered by corruption and the high level of cash transactions.

Awareness of the fight against money laundering among reporting institutions as well as feedback to reporting entities seem limited. Most reports of suspicious transactions are submitted by banks, while other entities subject to the Law hardly report. Whether reporting entities meet their obligations, such as to identify and verify clients, to report, and to train members of staff, is difficult to ascertain as supervision of non-banking institutions is still under development. Infringements of obligations under the Law can be sanctioned, but it is not clear whether these sanctions are dissuasive.[72]

So far there have been no prosecutions, convictions, confiscations or seizures in the area of money laundering while the number of investigations remains very low. This seems to be due, in particular, to problems with proving the predicate offences, lack of know-how, lack of resources, lack of experience and corruption. Furthermore, the possibilities to freeze, seize and confiscate need further improvement. [73]

The country has made progress on the establishment of anti-money laundering defences. However, legislation needs further alignment with international standards and enforcement of the legislation remains very weak.[74]

Corruption is incriminated indirectly through the definition of a number of crimes sanctioned in the Criminal Code (such as passive and active bribery, unlawful intermediation and abuse of official position and public authority). Money laundering is also incriminated as a specific offence.[75]

Prior conviction for the underlying offences is needed, which hampers the prosecution of money laundering and no successful case for money laundering has been registered. Urgent measures need to be taken to ensure effective implementation of the legislation.[76]

No systematic statistics were provided on the number of money laundering investigations, prosecutions and convictions in relation to the predicate offence of corruption.[77]

The GET was also pleased to note that financial institutions as well as certain types of professionals, such as accountants and lawyers are obliged to prevent and report instances of money laundering they come across. The GET was concerned in this respect that these obligations should be accompanied by relevant training in order to become efficient and observes that the authorities should offer training for legal professions in respect of reporting money laundering including where corruption could be a predicate offence.[78]

2006

Preparations in this area are moderately advanced, but further legislative alignment is necessary and the enforcement capacity needs to be strengthened, in particular by raising awareness among reporting institutions and by further establishing a credible enforcement record on the part of the relevant institutions.[79]

As regards money-laundering, the legislative and institutional framework still needs to be reinforced. Overall, further efforts are needed to align the legislation with the acquis and to effectively implement and enforce it.[80]

Further progress is needed in the implementation of the rules regarding anti-money laundering.[81]

2007

Progress can be reported in the area of money laundering. [82]

The Directorate for the prevention of money laundering has established good cooperation with the reporting institutions, primarily the banks, and with other bodies involved in prevention of money laundering.[83]

There is adequate administrative capacity to implement the capital movements and payment systems legislation, but not the anti-money laundering legislation. [84]

2004

However, there are still problems with institutions regarding the reporting obligation (especially the banking sector) and the FIA[85] receives little or no feedback from the Prosecutor’s Office on cases referred to the prosecution.[86]

The fact that there have never been convictions for money laundering in Bulgaria is a matter of serious concern. [87]

Secondly, in April 2003, the reporting regime was extended by the Law on the Measures against Money Laundering which now obliges legal consultants and real estate agents to report offences, imposes reporting by their supervisory bodies, clearer identification of clients and an enhanced regime for submitting evidence of crime both to the prosecutors office and to the relevant services of the Ministry of the Interior. [88]

2005

In the area of money laundering, Bulgarian legislation is generally in line with the acquis, except for the outstanding alignment with the revised recommendations of the Financial Action Task Force on money laundering and terrorist financing. Bulgaria must also pay particular attention to the effective implementation of legislation in this field. This includes further improving capacity building in this area, improving supervision on reporting entities, more effective cooperation between relevant entities and in particular ensuring effective enforcement and prosecution in this area.[89]

However, results in terms of prosecutions for money laundering are still non-existent due to the fact that the predicate offence needs to be proven in order to obtain conviction. The rather passive attitude of the investigative and prosecutorial bodies also explains the non-existent conviction rate, although for the first time 7 indictments can be reported. Furthermore, the effectiveness of anti- money laundering defences is seriously hampered by corruption, organised crime and the large informal economy.[90]

Furthermore, the tax authorities are obliged to implement measures aimed at the prevention and detection of actions related to money laundering, pursuant to the aforementioned LMML (Article 3, par. 2). The GET noted that the legal obligation of tax officials to report suspicions of criminal offences to the relevant law enforcement bodies or to the state prosecutor’s office, enables them to contribute to combating corruption in an effective and co-ordinated manner. Indeed, in line with that obligation, many cases were reported by the tax authorities to the police and state prosecutor’s office.[91]

As far as the reporting obligation under the anti money-laundering legislation is concerned, according to statistics available to the GET, neither certified accountants nor specialised auditing enterprises were among those who reported suspicious transactions over the past few years. The GET received information from auditors representing private companies indicating cases of intimidation by clients when illegal practices were disclosed during audits. [92]

The GET realised that there was a lack of understanding among certain categories of professionals with reporting obligations under the LMML[93] and a need for training in reporting suspicions of money laundering, including where corruption is a predicate offence. Consequently, the GET recommends that measures be taken to raise awareness among professionals about their reporting obligations in respect of the laundering of proceeds of corruption and to improve conditions with a view to enabling certified accountants to effectively comply with this obligation.[94]

2006

Effective implementation of legislation remains very limited. Awareness of reporting obligations amongst reporting entities, suspicious transaction reporting (STRs) and supervision of reporting entities need to be improved, particularly outside the financial sector.[95]

The essential shortcoming in this area remains mainly the absence of tangible results in terms of enforcement and prosecution of cases of money laundering. [96]

Progress in the field of money laundering has remained limited in terms of effective implementation and enforcement. Increased efforts and swift action are now needed in the field of the prevention of money laundering in order to overcome the shortcomings by accession. This concerns in particular the areas of awareness and suspicious transaction reporting by reporting entities, and the supervision of reporting entities. [97]

Finally, the effectiveness of the fight against money laundering continues to be seriously hampered by corruption, organised crime and the informal economy.[98]

In the area of money laundering, Bulgarian legislation is now largely in line with the acquis. However, implementation of legislation is limited to date and so far no successful prosecutions for money laundering can be reported.[99]

Effective implementation of legislation remains rather limited, with an absence of tangible results in terms of enforcement and prosecution. Awareness campaigns for all entities susceptible to risk of money laundering need to be carried out and their (supervisory) capacity needs to be increased. The effectiveness of the fight against money laundering continues to be seriously hampered by corruption and organised crime.[100]

Bulgaria needs to demonstrate that it can achieve tangible results in terms of enforcement and prosecution of cases of money laundering.[101]

2004

The National Office for the Prevention and Control of Money Laundering has strengthened its administrative capacity but still has to improve its compliance with its legal obligation to train representatives of the reporting institutions.[102]

2005

The money laundering directives establish money laundering as a criminal offence. They require financial institutions to identify and know their customers, keep appropriate records and report any suspicions of money laundering. The directives also address the activities of auditors, external accountants, notaries and lawyers, casinos, real estate agents and certain dealers in high-value items involving large cash transactions. Adequate enforcement capacity is required.[103]

Finally, it is also noticed that the effectiveness of anti-money laundering defences is seriously hampered by corruption, by organised crime and by the large informal economy. [104]

Increased efforts are needed in the area of money laundering, where alignment to the Financial Action Task Force standards has still to be completed and enforcement needs substantial improvement. [105]

Where money laundering is concerned, Article 3 of Law No. 656/2002 requires the tax authorities to declare any suspicions they may have of illegal activities to the National Office for Preventing and Combating Money-Laundering Operations (NOPCMLO). At the time of the GET’s visit Article 3.8 of this Law did, however, exempt the public authorities (including the Treasury) and their transactions from this declaration requirement.[106]

The GET observes that the authorities should explore, in dialogue with the private auditors’ and accountants’ representative bodies, potential measures that could be taken to improve the situation in relation to reports of suspicious acts to the competent authorities.[107]

2006

The effectiveness of anti-money laundering defences is hampered by problems with law enforcement.[108]

However, the results are still limited in terms of effective implementation and enforcement, in particular in the areas of awareness, reporting of suspicious transactions and supervision activities.[109]

However, the effectiveness of the fight against money laundering continues to be hampered by corruption, organised crime and the informal economy.[110]

However, further efforts are still required to arrive at a more satisfactory level of enforcement and implementation of the legal framework, particularly in respect of the awareness of reporting entities outside the financial sector and supervision of these reporting entities. There remains a need for additional staff in the National Office for the Prevention and Control of Money Laundering, especially financial analysts, to increase the National Office’s operational capacity.[111]