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24/04/2020

The Central Bank of Montenegro (CBCG) proposes to all payers to be more prudent in implementing measures against money laundering and terrorist financing. This proposal aims at protecting the financial market’s integrity, which is a joint effort of the EU in combating money laundering and terrorist financing, and at continual compliance with the recommendations of the European Banking Authority (EBA). The CBCG reminds credit and other financial institutions that it is still essential to develop and maintain effective systems and controls to ensure preventing the financial system’s misuse for money laundering or terrorist financing.

At a time when the world is facing problems caused by the COVID-19 pandemic, one can recognize the intent of those engaged in illegal activities to abuse the situation and systems, especially the financial ones. Accordingly, pay additional attention to identifying and managing the risk of money laundering and terrorist financing to reduce it.

Existing information on the increased cybercrime and frauds related to COVID-19 targeted at vulnerable individuals and companies and fraudulent fundraising companies point to the need for increased caution. As crime is highly adaptable, new money laundering techniques and channels are expected to emerge.

For these reasons, the CBCG calls on all financial institutions to:

• be cautious about identifying money laundering and terrorist financing techniques that may alter as a result of the economic downturn and, where necessary, update their estimates of money laundering and terrorist financing risk accordingly;

• continue to take customer due diligence measures, including the controlling of transactions and monitoring the sources of funds that clients operate with, and pay due attention to unusual or suspicious patterns in clients’ behaviour and financial flows. Notably, credit and other financial institutions should take risk-affecting measures to determine the legitimate origin of unexpected cash flows, whereby these flows originate from clients in sectors known to have suffered from the economic crisis and COVID-19 mitigation measures. Examples of such clients include retail sector companies with heavy use of cash, companies involved in international trade, and any type of companies in sectors facing an economic downturn, which have maintained a similar financial flows volume in the absence of real economic activity;

• continue to report suspicious transactions promptly to the competent Department for Prevention of Money Laundering and Terrorism Financing of Montenegro’s Police Directorate.