►►EExchange or any transfer of money or other property xchange or any transfer of money or other property originating from criminal offenceoriginating from criminal offence;;

►► Concealment of illegally acquired property and capital Concealment of illegally acquired property and capital obtained by privatization of stateobtained by privatization of state capital.capital.

►► AAcquisition, possession or use of money or other property cquisition, possession or use of money or other property proceeding from criminal offenceproceeding from criminal offence ;;

►► Concealment of the true nature, origin, place where the Concealment of the true nature, origin, place where the money is deposited, movement, use, ownership or rights money is deposited, movement, use, ownership or rights concerning money or other property originating from criminal concerning money or other property originating from criminal offenceoffence;;

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.

Out of 300 billion$ 40-80 billion come Out of 300 billion$ 40-80 billion come from drugsfrom drugs

US Congress Bulletin, July 1997)

Out of 1 trillOut of 1 trilliion $ 300-550 billion on $ 300-550 billion come from drugscome from drugs

(Interpol, Sept. 1997)

2 2 –– 5 5 % % of worldof world GDP GDP(FATF)

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)

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.

THE THE NANATTIONALIONAL SYSTEM FOR COMBATING SYSTEM FOR COMBATING MONEY LAUNDERING AND TERROSRISM MONEY LAUNDERING AND TERROSRISM

FINANCING consists ofFINANCING consists of::

AML AdministrationAML Administration;; Reporting entitiesReporting entities;; Supervisory agenciesSupervisory agencies (Central (Central Bank, Bank, Securities Commission, Department for Securities Commission, Department for Games of Chance etcGames of Chance etc);); Customs AdministrationCustoms Administration;; Tax AdministrationTax Administration;; PolicPolice Departmente Department;; National Security AgencyNational Security Agency;; Prosecutors’ OfficeProsecutors’ Office;; CourtsCourts

Montenegrin AML Administration

-- FFormally started operation in Formally started operation in Februarebruaryy 2004 2004

-- 2626 July, July, 2004 – operativ2004 – operative beginninge beginning ((start of reportingstart of reporting))

Organization and Functioning

• An independent administrative authorityAn independent administrative authority• An An administrativadministrative type of FIUe type of FIU• In compliance with In compliance with FATFFATF recommendationsrecommendations

DIRECTOR

Analytics DeptSuspicious

Transactions Dept

International and National

Cooperation Dept

Reporting Entity Control Dept

IT and Data Reception

Dept

Authorized Officer for Managing

Misdemeanor Procedure III

DEPUTYADVISOR

Independent Advisor I

Senior Advisor I

Senior Advisor II

Senior Advisor III

Senior Advisor III

Independent Advisor I

Senior Advisor I

Senior Advisor I

Senior Advisor II

Senior Advisor III

Independent Advisor I

Senior Advisor I

Senior Advisor I

Senior Advisor III

Chief Iinspector

Inspector I

Inspector III

Inspector III

Independent Advisor I

Senior Advisor III

Senior Advisor III

Employee VI

Employee VI

General Affairs, Finance and PR

office

Independent Employee II I

Senior Employee I

Senior Employee I

Employee VI

Employee VI

Employee IV

Employee VI

Legal GroundsLegal Grounds

Law on the Prevention of Money LaunderingLaw on the Prevention of Money Laundering ( (Official Official Gazette of RM, no. Gazette of RM, no. 55/03), 55/03), effective as of effective as of 8 8 October, October, 20032003

Law on the Prevention of Money Laundering and Law on the Prevention of Money Laundering and

Terrorism Financing Terrorism Financing ((Official Gazette of RM, noOfficial Gazette of RM, no.14/07),.14/07), effective as ofeffective as of 21 21 December, December, 20072007

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.

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 or representation 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.

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.

Key role and responsibility of banks in combating money laundering,

through :

Preventing dirty money from entering the system;

Preventing money laundering itself.

BANK

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.

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 of maximizing income and profit and the measures that prevent entry of dirty money, which may imply sacrifice of charges and profit.

Reporting Officer

The position of the reporting officer is the best indicator of the bank’s attitude

towards the problem of money laundering and terrorism financing.

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).

 

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.

Data collection system consists of:

Database

Links with databases

DatabaseServer

BazaPodataka

WebServer

Radna Stanica

LokalnaDnevna Arhiva

EksternaNedjeljna Arhiva

Sigurni LAN

Banka 1 Banka 2 Banka 3

Sigurna lokacijaizvan USPN

lokaliteta

Uprava carina Pošta

Advokatska kanc.Vladina Org.

Arhitektura racunarske mrežeUprave za sprjecavanje pranja novca

ServerBaze

Podataka

Radna Stanica

DemilitarizovanaZona

1

2

Lokalni LANRacunari opšte namjene

USPN

Broker

Firewall

Supplementary databaseSupplementary database ((courtscourts--propertyproperty))

Reporting entities’Reporting entities’databasesdatabases

Databases of other institutions

Real EstateReal Estate AdministrationAdministration

databasedatabase

Central Central Register of the Register of the

Commercial CourtCommercial Court

Publicly available Publicly available databasesdatabases

-Ministry of Interior and the Police Department,-Tax Administration,-Customs Administration,-National Security Agency -Databases of foreign FIUs -Open sources /Internet, media.../

FIU DATABASE

Links with Links with DatabasesDatabases

Direct access

On request

The Procedure to Initiate and Process a Case

Initiative:

By a reporting entity, Analysis of own database, By another authority, By FIU.

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.

Processing Dynamics

Standard

Accelerated (for temporary 72-hour blocking)- accelerating the concrete procedure

General acceleration of the process –intelligence center model

► Article 58. 8. of the Law on Prevention of of the Law on Prevention of Money LaunderingMoney Laundering► Request for iRequest for informanformationtion//data and forwarding data and forwarding informationinformation//data exclusively to competent data exclusively to competent state authorities of other countries and state authorities of other countries and international organizationsinternational organizations► ReciprocitReciprocityy – – condition for exchangecondition for exchange► InformaInformationtion//data may be used ONLY for data may be used ONLY for analysisanalysis//intelligence purposesintelligence purposes ( (further use further use exclusively with explicit FIU consentexclusively with explicit FIU consent))

Cooperation with other State Authorities

- Ministry of Interior – 23 July, 200423 July, 2004, Agreement on , Agreement on Cooperation Cooperation

- Tax Administration – 5 Oct, 2004,5 Oct, 2004, Agreement on Agreement on CooperationCooperation

- Customs Administration – 20 Oct, 2004,20 Oct, 2004, Agreement on Agreement on CooperationCooperation

- Basic Court, Podgorica -1919 July, July, 20052005, , Agreement on Agreement on CooperationCooperation

- Central Bank - 1313 April, April, 20062006, , Agreement on Agreement on CooperationCooperation

- Securities Commission -2121 June, 200 June, 20066, , Agreement on Agreement on CooperationCooperation

International Cooperation

FIU Serbia - 15 April, 2004, 15 April, 2004, Agreement on CooperationAgreement on CooperationFIU Albania – 3 June, 2004, 3 June, 2004, Agreement on CooperationAgreement on CooperationFIU B&H - 1919 April, April, 20052005, , Agreement on CooperationAgreement on CooperationFIU Macedonia – 29 Oct, 2004, 29 Oct, 2004, Agreement on CooperationAgreement on CooperationFIC-UNMIK Kosovo - 7 Dec, 2004, 7 Dec, 2004, Agreement on CooperationAgreement on CooperationFIU Slovenia - 28 Dec, 2004, 28 Dec, 2004, Agreement on CooperationAgreement on CooperationFIU Croatia - 2525 March, 2 March, 2005005, , Agreement on CooperationAgreement on CooperationFIU Bulgaria - 1111 April, April, 20062006, Agreement on CooperationAgreement on CooperationFIU Portugal - 1111 June, June, 20072007, , Agreement on CooperationAgreement on CooperationFIU Russi - 77 Sept, Sept, 20072007, , Agreement on CooperationAgreement on CooperationFIU Poland – 1515 Nov, Nov, 20072007, , Agreement on CooperationAgreement on Cooperation

Delivery of Information under Articles 50 and 56

• When the Administration determines When the Administration determines that there are grounds to suspect that there are grounds to suspect money launderingmoney laundering

• When the Administration determines When the Administration determines that there are grounds to suspect that there are grounds to suspect another criminal offenceanother criminal offence

Data Storage:

-        Timeframe-         Security-         Secrecy

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.

Role in the SystemRole in the System

((Clear DistinctionClear Distinction))

Intelligence function Intelligence function

Implementation of Implementation of measuresmeasures

TOTAL NUMBER OF CASES PROCESSED AND REFFERRED TO COMPETENT STATE AUTHORITIES- POLICE DEPT/ PROSECUTOR (Article 26, par. 1 of AML Law – Grounds for suspecting the criminal

offence of ML)

27 (2005) + 29 (2006) + 43 (2007) + 6 (2008) = 105For 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€

AML system is one of the AML system is one of the most recent sub-systems most recent sub-systems

within the within the integraintegratedted security security ssyystemstem

((public and public and nanattional)ional)

Montenegro, as a developing and transition country, has fully applied the given standards in the

development and operation of the AML and CFT

systems.

THANK YOU FOR THANK YOU FOR YOUR YOUR

ATTENTIONATTENTION