Government of the Republic of Montenegro

1. Government of the Republic of Montenegro Administration for Prevention of Money Laundering Krunić Jovanka Head of Analytics Department

2. Money Laundering (under Montenegrin Law) Means: ►Exchange or any transfer of money or other property originating from criminal offence; ►Acquisition, possession or use of money or other property proceeding from criminal offence; ►Concealment of the true nature, origin, place where the money is deposited, movement, use, ownership or rights concerning money or other property originating from criminal offence; ►Concealment of illegally acquired property and capital obtained by privatization of statecapital.

3. Terrorism Financing (under our Law) Means: • Provision or gathering, i.e. attempted provision or gathering of money or other property, direct or indirect, with the aim or knowing that it will be, entirely or partially, used to conduct a terrorist act or used by a terrorist or a terrorist organization; Inciting or assisting in the provision or gathering of funds or property.

4. Estimates Concerning Money Laundering Out of 300 billion$ 40-80 billion come from drugs US Congress Bulletin, July 1997) Out of 1 trillion $ 300-550 billion come from drugs (Interpol, Sept. 1997) 2 – 5 % of world GDP (FATF)

5. Sectors Particularly at Risk:  Banking sector  Capital market  Real estate market  Markets in valuable products (cars, yachts, art works etc.)  Insurance business  Gambling houses  Investment construction  Import-export business  Industries that may serve as cover up (tourism and hospitality)

6. Ways to Combat Money Laundering: Adoption of all international standards in this field;  Development of an internal system for combating money laundering; • Full cooperation with international actors that belong to the AML system, especially those from the region.

7. THE NATIONAL SYSTEM FOR COMBATING MONEY LAUNDERING AND TERROSRISM FINANCING consists of:  AML Administration; Reporting entities; Supervisory agencies (Central Bank, Securities Commission, Department for Games of Chance etc); Customs Administration; Tax Administration;  Police Department; National Security Agency; Prosecutors’ Office; Courts

8. Montenegrin AML Administration -Formally started operation in February 2004 -26 July, 2004 – operative beginning (start of reporting)

9. Organization and Functioning An independent administrative authority An administrative type of FIU In compliance with FATF recommendations

11. Legal Grounds Law on the Prevention of Money Laundering (Official Gazette of RM, no. 55/03), effective as of 8 October, 2003  Law on the Prevention of Money Laundering and Terrorism Financing (Official Gazette of RM, no.14/07), effective as of 21 December, 2007

12. Reporting Entities • 1) Banks and branch offices of foreign banks and other financial institutions; • 2) Savings banks and savings and loan institutions; • 3) Organizations that perform payment operations; • 4) Post offices; • 5) Investment fund managing companies and branch offices of foreign investment fund managing companies; • 6) Pension fund managing companies and branch offices of foreign pension fund managing companies ; • 7) Stock brokers and branch offices of foreign stock brokers; • 8) Insurance companies and branch offices of foreign insurance companies that provide life insurance; • 9) Organizers of traditional and special games of chances; • 10) Exchange offices; • 11) Pawn shops; • 12) Auditing companies, independent auditor and legal or physical persons that provide accounting services and tax advice; • 13) Companies that issue e-money; • 14) Charities, NGOs and other non-profit organizations.

13. 15) Other businesses, legal persons, entrepreneurs and physical persons that perform the following activities or operations: • -Selling and buying claims; • - Factoring; • -Managing property on behalf of third parties; • - Issuance of pay and credit cards and card transactions;; • -Financial leasing; • -Travel organization; • - Real estate transactions; • -Trade in motor vehicles; • -Trade in vessels and aircraft; • - Safe-deposit box services; • -Issuance of guarantees and other warranties; • - Lending and lending intermediation; • -Granting loans and intermediating in closing lending transactions; • - Intermediation orrepresentation in life insurance business; • - Organizing and conducting , trade in art works, precious metals, and stones and products made of precious metals and stones, as well as other commodities, if payment of 15,000 Eur or more is made in cash, in one or more related transactions.

14. Banks are key reporting entities under the Law on the Prevention of Money Laundering and Financing of Terrorism, because :  Money, including dirty money, mainly circulates through the banking channels.  Highly qualified staff and good equipment enable early detection of unusual transaction patterns.  Their records are complete and available; they provide for prompt reconstruction of individual transactions and can provide evidence for prosecution.

15. BANK Key role and responsibility of banks in combating money laundering, through:  Preventing dirty money from entering the system;  Preventing money laundering itself.

16. It is necessary for the bank to completely realize its role in the AML system from the aspect of:  Creating a favorable business environment;  Preserving its own business reputation.

17. Once the bank realizes and accepts its role in the AML system, it then: Treats this activity as an integral part of the overall business activity, not as an extra burden,  Does not feel the conflict between the main goal ofmaximizing income and profitandthe measures that prevent entry of dirty money, which may imply sacrifice of charges and profit.

18. Reporting Officer The position of the reporting officer is the best indicator of the bank’s attitude towards the problem of money laundering and terrorismfinancing.

19. What does the FIU Possess, Who Can Use It and How?  Database (contents) : 1.Data from regular reports of reporting entities: - Cash transactions over 15,000 euros and related transactions exceeding this amount in total, - All suspicious transactions regardless of the amount and type, - Data on persons (physical and legal persons that carried out the transactions above).

20. DATABASE (continued): 2. Data from additional reports of reporting entities: -All transactions of a specific person in a specific time period, -Transactions of all persons connected in some way with a specific person; 3. Data obtained from other state authorities; 4. Data obtained from foreign FIUs; 5. Data obtained from other sources.

21. Data collection system consists of: Database Links with databases

23. Databases Used Publicly available databases Central Register of the Commercial Court Supplementary database (courts-property) FIU DATABASE Real Estate Administration database Reporting entities’ databases Databases of other institutions -Ministry of Interior and the PoliceDepartment, -Tax Administration, -Customs Administration, -National Security Agency -Databases of foreign FIUs -Open sources /Internet, media.../

24. Links with Databases Direct access On request

25. The Procedure to Initiate and Process a Case Initiative:  By a reporting entity, Analysis of own database, By another authority, By FIU.

26. Processing:  Own database search, Search of supplementary database and public databases, Additional data on initial transaction from reporting entities, Additional data from reporting entities on the person in question, Data from other authorities: - Police, - Customs, - Tax authority Data from foreign FIUs.

27. Processing Dynamics Standard Accelerated (for temporary 72-hour blocking)- accelerating the concrete procedure General acceleration of the process –intelligence center model

28. THE PRECONDITIONS FOR EXCHANGE OF INFORMATION ►Article 58. of the Law on Prevention of Money Laundering ►Request for information/data and forwarding information/data exclusively to competent state authorities of other countries and international organizations ►Reciprocity – condition for exchange ► Information/data may be used ONLY for analysis/intelligence purposes (further use exclusively with explicit FIU consent)

29. Cooperation with other State Authorities - Ministry of Interior – 23 July, 2004, Agreement on Cooperation - Tax Administration – 5 Oct, 2004, Agreement on Cooperation - Customs Administration – 20 Oct, 2004,Agreement on Cooperation - Basic Court, Podgorica -19 July, 2005, Agreement on Cooperation - Central Bank - 13 April, 2006, Agreement on Cooperation - Securities Commission -21 June, 2006, Agreement on Cooperation

30. International Cooperation FIU Serbia - 15 April, 2004, Agreement on Cooperation FIU Albania – 3 June, 2004, Agreement on Cooperation FIU B&H - 19 April, 2005, Agreement on Cooperation FIU Macedonia – 29 Oct, 2004, Agreement on Cooperation FIC-UNMIK Kosovo - 7 Dec, 2004, Agreement on Cooperation FIU Slovenia - 28 Dec, 2004, Agreement on Cooperation FIU Croatia - 25 March, 2005, Agreement on Cooperation FIU Bulgaria - 11 April, 2006, Agreement on Cooperation FIU Portugal - 11 June, 2007, Agreement on Cooperation FIU Russi -7 Sept, 2007, Agreement on Cooperation FIU Poland – 15 Nov, 2007, Agreement on Cooperation

31. Delivery of Information under Articles 50 and 56 When the Administration determines that there are grounds to suspect money laundering When the Administration determines that there are grounds to suspect another criminal offence

32. Data Storage: -Timeframe -Security -Secrecy

33. New Law: Key Improvements Enhancing the pool of reporting entities (PEP, real owners ), Expanding the analytical approach with the reporting entities (due diligence ), Faster and more complete reporting (order for continuous account monitoring), Blocking upon international FIU requests,  Inspection by the Administration, for a specific category of reporting entities.

34. Role in the System (Clear Distinction)  Intelligence function Implementation of measures

35. TOTAL NUMBER OF CASES PROCESSED AND REFFERRED TO COMPETENT STATE AUTHORITIES- POLICE DEPT/ PROSECUTOR (Article 26, par. 1 ofAML Law – Grounds for suspecting the criminal offence of ML) 27 (2005) + 29 (2006) + 43 (2007) + 6 (2008) = 105 For other criminal offences / 13-notifications TOTAL NUMBER OF REPORTED SUSPICIOUS TRANSACTIONS (2004-2008) 857 TOTAL NUMBER OF BLOCKED TRANSACTIONS(2004-2008) 105 BLOCKED TRANSACTIONS – TOTAL AMOUNT (2005-2008) 43.300.000€

36. AML system is one of the most recent sub-systems within the integratedsecurity system (public and national)

37. Montenegro, as a developing and transition country, has fully applied the given standards in the development and operation of the AML and CFT systems.

38. THANK YOU FOR YOUR ATTENTION