Supervision in the Area of Prevention of Money Laundering and Terrorist Financing


The Central Bank of Montenegro has a key role in combatting money laundering and terrorist financing, considering that, under its legal powers, it is the regulator and the supervisor of numerous key reporting entities in Montenegro.


The Central Bank of Montenegro policy in this area reflects a clear commitment to continuous enhancement of the system for the prevention of money laundering and terrorist financing. Through the development and improvement of the risk-based approach to supervision, and the assessment of risk management by the reporting entities subject to supervision, the Central Bank strives to achieve the highest standards. The CBCG is focused on continuous supervision of reporting entities, system monitoring and consistent application of the National Risk Assessment of Money Laundering and Terrorist Financing, as the most important strategic document in this area. In addition, the CBCG carries out the education of reporting entities and supervises the implementation of obligations under the Law on the Prevention of Money Laundering and Terrorist Financing, with a special commitment to cooperation with national and international institutions, and improvement of the framework and implementation of international standards.

The Central Bank of Montenegro’s regulatory function involves drafting and participating in the drafting of relevant laws and enabling regulations, which aim, inter alia, to reduce the risk of money laundering and terrorist financing through the institutions under the Central Bank’s supervision.


In addition, this CBCG’s function is reflected in the following:


  • Giving recommendations for improving the system for the prevention of money laundering and terrorist financing at the national level;
  • Cooperation with the Police Administration - Department for Financial Intelligence Affairs (Financial Intelligence Unit) and other institutions in Montenegro involved in countering money laundering and terrorist financing;
  • Cooperation with international institutions in the aim of prevention of money laundering and terrorist financing, and active participation in the work of international bodies and organisations involved in the prevention of money laundering and terrorist financing, and primarily in the work of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism – MONEYVAL. MONEYVAL is a supervisory body of the Council of Europe, responsible for assessing compliance with international standards in the area of the prevention of money laundering and terrorist financing;
  • Active participation in the drafting of the National Risk Assessment, as the most strategically important act in the system for the prevention of money laundering and terrorist financing;
  • Maintaining regular contacts with reporting entities obliged to implement the Law that are under its supervision;
  • Organisation of trainings for the Central Bank of Montenegro employees in the area of the prevention of money laundering and terrorist financing.

Pursuant to the Law on the Prevention of Money Laundering and Terrorist Financing [(OGM 110/2023), hereinafter: the Law], the Central Bank of Montenegro is responsible for supervising the operations of credit institutions and branches of foreign credit institutions, as well as entities performing purchase of receivables, financial leasing, safe custody services, factoring, issuing guarantees or other sureties, granting loans and credit mediation, foreign exchange operations, and payment institutions and electronic money institutions  in accordance with the law governing the provision of payment services and the issuance of electronic money– pursuant to Article 131 paragraph 1 of the aforementioned law.


The Central Bank of Montenegro commences its supervisory role by issuing licences to entities under its competence, as well as to their top management. The CBCG monitors and supervises compliance of reporting entities with regulations and internal acts, assesses the adequacy of the system for the prevention of money laundering and terrorist financing implemented by the reporting entities in order to prevent the abuse of the system for these purposes. In case of irregularities, the Central Bank of Montenegro undertakes measures in accordance with its legal powers and submits requests for the initiation of misdemeanour proceedings or imposes other appropriate measures in accordance with the laws within the remit of the Central Bank of Montenegro (written warning, agreement, administrative decision, warning...).

Reporting entities/ institutions subject to the Central Bank of Montenegro’s supervision in the area of the prevention of money laundering and terrorist financing are the following:


  • Credit institutions: banks and branches of foreign banks;
  • Financial service providers: leasing companies, factoring companies, companies for purchase of receivables, micro-credit financial institutions, and credit guarantee funds;
  • Payment institutions;
  • Electronic money institutions.


Supervision is performed:


  • Off-site: on the basis of data, information and reports that these institutions are required to submit to the Central Bank of Montenegro, and 
  • On-site: by examining the business books and other documentation of the supervised institutions, as well as all parties to the transaction under supervision.  


The Central Bank of Montenegro proposes measures in case of identified non-compliances and imposes other obligations on the institutions under supervision if they operate contrary to regulations, or fail to adequately manage the risks they are exposed to in their operations.


The CBCG, in accordance with the Law, submits requests for the initiation of misdemeanour proceedings against the supervised reporting entities before the Misdemeanour Court in Podgorica.


The Law on the Prevention of Money Laundering and Terrorist Financing governs measures and actions undertaken by the reporting entities specified in the Law for the purpose of detecting and preventing money laundering and terrorist financing, as well as affairs, powers and the manner of work of the organisational unit of the state administration authority that performs the activities related to the prevention of money laundering and terrorist financing (Financial Intelligence Unit) and other issues significant for the prevention of money laundering and terrorist financing.

On-site Examination


On-site examination is conducted on the premises of the reporting entity, and it is carried out by examining documentation, information and data required for off-site examination.


This process includes checking the functioning of the system for the prevention of money laundering and terrorist financing, reviewing internal acts related to compliance with regulations, reviewing reports for internal purposes and for the purposes of the Financial Intelligence Unit, checking procedures for establishing business relations with clients, monitoring their operations and transactions (with special attention to clients, products, services, distribution channels and geographical areas that indicate a higher risk), reviewing records of any unusual and suspicious clients and transactions, checking information systems for money laundering and terrorist financing risk management, checking internal control systems and other data and information necessary for the implementation of supervision.


The verification of data and information is carried out by applying the selected sample methods and through direct examination of business books and records of the reporting entity. On-site examination should ensure that the reporting entity complies with the Law and other regulations and has in place the systems that ensure continuous compliance and identify any weaknesses in the system of compliance with regulations in the subject area. The primary task of on-site examination is to determine and assess the levels of inherent risks of money laundering and terrorist financing, as well as to assess whether the reporting entities have in place adequate systems for managing such risks.



Off-site Examination


Off-site examination implies the assessment of the money laundering and terrorist financing risk management on the basis of data, information and documentation, without visiting the institution being examined. This includes analysing and determining the level of risk in the reporting entity by applying a risk-based approach, checking the functioning of the entire system for the prevention of money laundering and terrorist financing, reviewing statutory internal acts, examining all reports that the reporting entity prepares in this area for internal purposes and for the purposes of the Financial Intelligence Unit, verifying documentation and examining the accounts of the reporting entity’s clients across various categories (e.g. new clients, largest by turnover, politically exposed persons, clients from high-risk countries), verifying the internal control mechanisms established by the reporting entity for risk management in this area, as well as all other data and information that the examiners find necessary for conducting the examination.

Money Laundering


Money laundering, according to the Law on Prevention of Money Laundering and Terrorist Financing, is considered particularly as:


  1. conversion or transfer of money or other property, knowing that such money or other property are derived from criminal activity or from an act of participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or assisting any person involved in the commission of such an activity to evade the legal consequences of that person's action;
  2. concealment or disguise of the true nature, source, location, movement, disposition or ownership of money or other property, rights related to money or other property, knowing that such money or other property are derived from criminal activity or from an act of participation in that activity;
  3. the acquisition, possession or use of money or other property, knowing, at the time of receipt, that such money or other property were derived from criminal activity or from an act of participation in that activity;
  4. participation in, association to commit, attempt to commit and aiding, abetting, facilitating and counselling the commission of any of the actions from Items 1, 2 and 3 of this paragraph.


Abovementioned activities shall also be considered as money laundering when the person who performed such activities was obliged or could have known that the money or other property derived from criminal activities.


Furthermore, aforementioned activities shall also be considered as money laundering in case when the money or other property that are the subject of money laundering were generated on the territory of another country, if the activities by which they were generated would constitute a criminal activity in Montenegro as well.



Terrorist Financing


In the context of the Law on the Prevention of Money Laundering and Terrorist Financing, the following shall, in particular, be considered as terrorist financing:


  1. providing, making available or collecting funds or property, in any way, directly or indirectly, with the intention of using them or if it is known that they will be used in full or in part for the execution of a terrorist act, or an attempt of providing, making available or collecting funds or property, in any way, directly or indirectly, with the intention or with the knowledge that they may be used, in full or in part:
    • for preparing or committing terrorist act in the context of the Law on the Prevention of Money Laundering and Terrorist Financing;
    • for financing organizations whose aim is to commit the acts from indent 1 of this item or members of those organizations or individuals whose aim is to commit such acts, or
    • by terrorists or by terrorist organizations for any purpose;

  2. encouraging or assisting in providing or collecting the funds or property from item 1.

Central Bank of Montenegro’s Risk-Based Approach to AML/CFT 


Risk-Based Approach (RBA) is an international supervision standard in the area of prevention of money laundering and terrorist financing. This approach implies the intensity and breadth of the scope of supervision based on the identification, assessment and understanding of the type and extent of risks to which the reporting entities are exposed. This approach is a method by which the intensity and scope of the AML/CFT supervision is based on the assessment of the type and scope of risks to which the reporting entities are exposed - that is, the greater the risk, the more significant and demanding the measures that must be taken in order to mitigate it, which implies more intensive and stricter supervision by the CBCG.


The main purpose of the RBA is to assess and monitor the risk of money laundering and terrorist financing, as well as to assess the threats that the determined level of risk may pose to a specific reporting entity, and ultimately to define the possible impact on the entire financial system.


Risk-based examinations help the CBCG to make more efficient use of its resources and to ensure that the examination focuses on reporting entities with the highest levels of risk, and on specific segments of reporting entities’ operations, where a higher level of risk has been determined.


Access to accurate, timely and impartial information on the risks of money laundering and terrorist financing is a prerequisite for an effective RBA. 


Risk assessment by the CBCG serves as an instrument for the identification of reporting entities with the highest risk, in order to determine the deficiencies in the system of combating money laundering and terrorist financing, with a view to achieving the greatest possible efficiency.


The key stages in the risk assessment process are the following: 

  • Determining the significant activities undertaken by the reporting entities (previous reports, overview of the situation, compliance with action plans, etc.);
  • Assessment of the inherent risks of money laundering and terrorist financing related to the reporting entity’s clients, products, services, transactions and distribution channels; 
  • Assessment of the design of appropriate risk management and internal control systems for each of these reporting entity’s activities; 
  • Assessment of the adequacy of the supervision of the board and senior management over its operations, including AML/CFT; 
  • Determining the total risk assessment for the reporting entity.


Risk-based approach focuses on prioritising and defining examination cycles, providing information about which reporting entity and which sectors are most important in terms of risk levels and prioritisation. This does not mean that other reporting entities will not be subject to examination, but that they will be defined as subject to regular examinations within the multi-year and annual examination plans.


The Directorate for Supervision of AML/CFT compliance is organised as two offices: Office for On-Site Supervision and Office for Off-Site Supervision. In order to strengthen technical capacities, the Directorate has developed a Module for calculating the risk of reporting entities, as well as a comprehensive questionnaire for reporting entities (which serves as the basis for the function of the Risk Calculation Module), for the purpose of which it performs risk assessment at least once a year, with the aim of determining priorities and adequate allocation of resources. The Directorate has additionally developed a segment of off-site examination, with frequent thematic examinations and examinations based on identified incidents in specific segments of the reporting entities’ operations.


Access to accurate, timely and impartial information on the risks of money laundering and terrorist financing is a prerequisite for an effective RBA.

If the CBCG identifies irregularities in the application of the provisions of the Law on the Prevention of Money Laundering and Terrorist Financing during the conduct of business activities of specific reporting entities, it may submit to the competent authority a request to initiate misdemeanour proceedings, for non-compliance for which penalties are prescribed by law, or issue misdemeanour orders during the examination.


Where credit institutions fail to manage the risk of money laundering and terrorist financing, that is, where they act contrary to the regulations, the CBCG may also impose measures on the basis of other relevant laws within its competence.


The CBCG may take one of the following measures against a credit institution:

  • Send a written warning; 
  • Conclude a written agreement by which the credit institution will undertake to eliminate the identified irregularities within a specific period; 
  • Render an administrative decision imposing one or more measures as prescribed in the Law;  
  • Withdraw a licence.


Regarding other categories of reporting entities, measures are imposed in the manner prescribed by separate laws. 


The CBCG monitors the deadlines related to the implementation of the ordered measures, and if ultimately, upon the deadline expiry, the CBCG assesses that it is necessary to carry out an on-site target examination in connection with the verification of the fulfilment of the supervisory measures, it carries out such examination, after which it adopts a conclusion on the removal of irregularities or imposes a stricter measure on the reporting entity.


The aim of the implementation of measures and penalty provisions against the reporting entities in which irregularities have been identified is to remove them as soon as possible and to establish a system that complies with the provisions of the Law on the Prevention of Money Laundering and Terrorist Financing. In this regard, within the overall system for the prevention of money laundering and terrorist financing at the state level, the financial sector under the competence of the CBCG is of particular importance, and the implementation of appropriate and effective penalty measures is of utmost significance. Within the framework of intensive cooperation with the Financial Intelligence Unit, the CBCG regularly informs the unit about all the irregularities identified and the measures taken.

The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism – MONEYVAL is a permanent monitoring body of the Council of Europe entrusted with the task of assessing compliance with the principal international standards to counter money laundering and the financing of terrorism and the effectiveness of their implementation, as well as with the task of making recommendations to national authorities in respect of necessary improvements to their systems. Through a dynamic process of mutual evaluations, peer review and regular follow-up of its reports, MONEYVAL aims to improve the capacities of national authorities to fight money laundering and the financing of terrorism more effectively.


MONEYVAL (formerly PC-R-EV) was established in 1997 and its functioning was regulated by the general provisions of Resolution Res(2005)47 on committees and subordinate bodies, their terms of reference and working methods. At their meeting on 13 October 2010, the Committee of Ministers adopted the Resolution CM/Res(2010)12 on the Statute of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL). The statute elevates MONEYVAL as from 1 January 2011 to an independent monitoring mechanism within the Council of Europe answerable directly to the Committee of Ministers. MONEYVAL Statute was further amended in 2013 by the Resolution CM/Res(2013)13, and in 2017 by the Resolution CM/Res(2017) 19. 


Mutual Evaluation Report of Montenegro was adopted at the regular session, as at 14 December 2023.

NRA is a strategic analysis that includes the entire system and it represents an analysis by the relevant institutions of all segments which have the obligation to assess individual risks within their competence. The assessment of residual and inherent risks, the assessment of threats and vulnerabilities that exist in the system, as well as the assessment of control and corrective mechanisms constitute important elements of this analysis- ultimately providing the overall risk assessment.


The action plan contains activities requiring the relevant institutions from the system to take measures aimed at reducing the identified risk and eliminating any inconsistencies in the system.


NRA 2020

Sanctions lists: 

          UNSC

          EU