SEE-Obs
SEE-Obs Hotspots IFFs in the Western Balkans North Macedonia

North Macedonia

Download full report
TOTAL population (2021)

2.07 million

corruption index 2023

42 / 100

CRIMINALITY SCORE

5.03

total area

25.7 km2

GDP total (2022)

US$13.56 billion

FREEDOM OF THE PRESS (2023)

74.35 / 100

RESILIENCE SCORE

5.29

GDP per capita (2022)

US$6 591.5

More about the Organized Crime Index

Introduction

Based on trade mispricing and misinvoicing, illicit financial flows (IFFs) leaving North Macedonia are estimated at 5.72% of GDP; illicit inflows are estimated at 1.62% of GDP. Although North Macedonia ranked lowest (i.e. best) for its criminality level and strongest for resilience among the five Western Balkans countries rated in the 2023 Global Organized Crime Index, it has a number of high-scoring criminal markets, such as financial crime, human smuggling, and the trade in cannabis, heroin and synthetic drugs.

The 2020 GI-TOC report on IFFs in Albania, Kosovo and North Macedonia identified several issues that enable and drive IFFs in the country, among which are: the country's role as a transit route for people and goods moving between Asia and Western Europe; high levels of corruption and abuse of power; as well as significant risks of trade-based money laundering. It is also reported that money channelled out of North Macedonia usually ends up in accounts in tax havens and secrecy jurisdictions with low taxes and no obligation to disclose the ownership. Construction, tourism-related services, casinos and organized gambling, and agriculture are the sectors most associated with the informal economy and tax evasion, and are sectors highly exposed to money-laundering in North Macedonia.

According to the International Monetary Fund, the informal economy accounts for 37.6% of the total economy of the country. This ranks North Macedonia fourth in the south-eastern European region. One of the biggest problems in detecting money laundering is cash transactions.

The Mutual Evaluation Report of North Macedonia in 2023 was conducted by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism. It highlighted that despite the progress made, many challenges remain: out of 11 immediate outcomes, one was rated as substantial and 10 were rated as moderately effective. The Mutual Evaluation Report was published in May 2023.

Key challenges

  • IFFs are not yet officially fully defined in North Macedonia.
  • The country’s own last national assessment put the risk of money laundering at a medium level.
  • The data indicates that abuse of official position, drug trafficking, tax evasion and migrant smuggling are high-threat areas.
  • There is a lack of policy coherence in tackling IFFs and lack of coordination within and between institutions.
  • Financial and especially non-financial institutions suffer from a knowledge gap on IFFs and the dangers they pose.
  • Parallel financial investigations are not systematically pursued and rarely follow the money of unidentified origin to identify its potential criminal source and are mostly only conducted in relation to predicate offences.
  • The lack of comprehensive statistics is an overarching issue in the country.

Role of civil society

The role of civil society in the fight against IFFs is important becaue it contributes to increasing awareness, conducting studies and uncovering cases. Investigative journalism plays an important role in preventing and combating IFFs. For example, the Balkan Investigative Reporting Network is a network of non-governmental organisations promoting freedom of speech, human rights and democratic values in Southern and Eastern Europe, including North Macedonia. Through high-quality reporting and by creating a pool of skilled journalists, the main aim of this organization is to examine key processes, and to investigate corruption, money laundering and IFFs, steer debates and provide the public with impartial and reliable information.

On a national level, the Investigative Reporting Lab and PRIZMA were established in a bid to increase the influence of investigative reporting on society and help citizens understand how corruption affects their lives. They aim to rebuild trust in institutions by improving trust in media and increase pressure on the public prosecutor’s office, which struggles with low capacity to deal with IFFs and continues to have a low number of open investigations.

Investigative journalism, supported by organisations such as these shine the spotlight on financial malpractice, promoting transparency, accountability and public understanding of corruption and IFFs. Collaborative initiatives and an interdisciplinary approach strengthen the media's role in building trust and bringing about positive social change. This innovative and interdisciplinary approach involves reporters’ cooperation with academics, technology experts, marketing experts, bloggers and civil society activists.

Immediate Outcome 1

Understanding the risk

North Macedonian authorities generally have a good understanding of the country’s money laundering and terrorist financing risk. However, they have limited understanding regarding IFFs more generally, which is also the result of a lack of definition and adoption of a specific strategy to combat IFFs. A National Risk Assessment (NRA) has been complemented with further sectoral and thematic risk assessments. According to the national assessment, which focused on the period 2016 to 2018, the risk of money laundering in North Macedonia is medium. However, the authorities should enhance their understanding of the risks, particularly through further assessments of the areas that do not benefit from sector-specific risk assessment, such as legal entities. The figure below shows the threat level of money laundering from predicate criminal offences.

The authorities have a good understanding of IFF risk through tax evasion, which is declining, and the perpetrators of this crime are managers and owners of legal entities. At the same time, VAT fraud is pervasive, through the preparation of fictitious invoices in the absence of a genuine debt-creditor relationship between legal entities. Tax evasion persists through the sale of traded goods for cash without preparation of appropriate documentation or payment into corporate accounts.

Although the informal economy accounts for more than 30% of GDP, the extent to which it influences money laundering activities in the country was insufficiently analyzed, according to the 2020 NRA. The latest labour force survey by the International Labour Organization estimated that 13.8% of the overall country’s employment is based in the informal economy, with agriculture and construction being the sectors most exposed.

There are shortcomings in compliance and efficiency in relation to the identified risks, which are to be remedied through enhanced measures, as legislation does not explicitly link such measures with the cases in which a higher risk is identified.

Level of threat of money laundering from predicate criminal offences, as indicated in the 2020 National Risk Assessment

Predicate criminal offences

Threat level

Abuse of official position and authorization

Tax evasion

Smuggling of migrants

Unauthorized drug trade

Damage or privilege of creditors

Fraud

Burglary

Devastation of forests

Low

Medium

High

Extortion

Usury

Embezzlement in service

Smuggling pursuant

Robbery

Low

Medium

High

Concealment

Purposeful creation of bankruptcy

Counterfeiting securities

Abuse of a public call procedure, procedure for awarding public procurement agreement or public–private partnership

Human trafficking

Low

Medium

High

Source: Ministry of Finance, Financial Intelligence Office
Immediate Outcome 2

International cooperation

IFFs often have an international dimension and require effective international cooperation mechanisms to identify illicit proceeds and provide evidence for successful financial investigations. A combination of informal bilateral cooperation with financial investigation units and other investigative authorities, as well as the formal mechanisms for international cooperation between countries, are key to the success of financial investigations. However, the North Macedonian authorities indicated poor efficiency in the exchange of information within the informal cooperation between the financial intelligence units. According to the authorities, some of the financial intelligence units of the various countries do not forward quality information or are late with responses.

North Macedonia provides a wide range of mutual legal assistance to counterparts. The legal framework for this collaboration was established by the Law on International Cooperation in Criminal Matters, as well as United Nations and Council of Europe conventions, treaties, ad hoc agreements and bilateral arrangements. The justice ministry is the central authority in North Macedonia for receiving and distributing incoming mutual legal assistance and extradition requests. The government has not established clear policy objectives for the justice ministry, prosecutors, law enforcement agencies and the judiciary on how to effectively manage, track and provide mutual legal assistance and extradition.

Although the country’s legal framework allows for the establishment of joint investigation teams with partner countries, North Macedonia has tended to participate in rather than initiate them. One example is a joint investigation team with the Bulgarian Prosecutor's Office to investigate smuggling and computer fraud, facilitating the exchange of evidence between the two countries. Taking into account the small number of investigations, indictments and convictions, this points towards a general lack of vision for the systematic establishment of international cooperation when investigating money laundering and IFFs.

North Macedonia has implemented several programmes to strengthen its capabilities against IFFs. The global programme Combating Illicit Financial Flows, financed by Germany and Norway, takes a holistic approach, including prevention, financial investigation and asset recovery. As part of this initiative, the country has improved law enforcement cooperation, acquired cash-detection dogs and worked with partners to establish beneficial ownership registries to strengthen compliance with international standards.

Formal and informal channels of international cooperation

Institution

Channel of international cooperation

Financial intelligence office

Egmont Group of Financial Intelligence Units

Interior ministry

Europol, INTERPOL, Southeast European Law Enforcement Center, Camden Asset Recovery Inter-agency Network, memoranda of understanding

Justice ministry

EUROJUST, International Legal Assistance

Customs administration

Customs Enforcement Network, Southeast European Law Enforcement Center, protocols, memoranda of understanding, agreements

Financial police

INTERPOL, Europol

Immediate Outcome 3

Supervision

Supervisory authorities play a critical role in ensuring compliance with anti-money laundering and counter-terrorism financing (AML/CFT) obligations by regulated entities. They follow a risk-based approach, in line with international best practice, and intensify supervision for high-risk sectors and issues. In 2021, there were 5 148 entities responsible for the prevention of money laundering and terrorist financing. Supervisory risk assessment is based on operational and strategic analysis. Despite adoption of legislation based on international standards, risk assessments and other measures related to AML/CFT, supervision in the context of IFFs seems to be missing.

According to the AML/CFT Act, supervisory bodies are responsible for monitoring the application of the measures and activities defined in the Act. The financial intelligence office (FIO), either independently or in cooperation with designated bodies, supervises the application of these measures in obliged entities.

There appears to be a lack of control and supervision of the non-governmental organization sector. While the Public Revenue Office exercises control over non-profit organizations for tax purposes only, there is no specific AML/CFT supervision of non-governmental organizations in the context of anti-money laundering or reducing IFF vulnerabilities. Interviews conducted for this project also indicated the role of unlicensed exchange offices, which is a reflection of the lack of capacity of the State Exchange Inspectorate. While the non-profit sector is not mandated to comply with AML/CFT legislation, it can contribute by participating in projects that enhance technical and human capacity. Such projects include the development of instructions, guidelines and indicators for the identification of suspicious transactions. Notable examples include projects by non-profit organizations such as KONEKT and Democracy Lab Macedonia, which have successfully worked with obliged entities to raise awareness of IFFs.

Virtual Asset Service Providers are obliged entities according to the new AML/CFT law. However, the weak technical and personnel capacity are identified as shortcomings for the effective implementation of supervision over them. There is a general lack of risk understanding, mitigation, implementation of preventive measures and formal internal control across this sector.

The national bank, regulated by the Law on the National Bank, acts as a licensing authority for various financial institutions, including banks, savings banks, exchange offices, remittance services and others involved in payment services.

Sectoral risk assessment

Institution

Sectoral risk assessment

Securities Exchange Commission

Updated sectoral risk assessment

National Bank

Adoption of sectoral risk assessment of banks, savings houses, fast money transfer providers and exchange offices

Enforcement of horizontal analysis of the terrorist financing and proliferation risk in all banks in North Macedonia

Amendment of the on-site supervisory procedure where findings from the NRA became focal points of supervisory activities

Public Revenue Office

Risk assessment – real estate

Risk assessment – pawn shops

Supervisory authorities and obliged/supervised entities

Supervisory authorities

Supervised authority

Supervised authority

Supervised authority

Supervised authority

Supervised authority

National Bank

Banks

Savings houses

Exchange offices

Providers of money remittances

Other financial institutions that provide payment services

Insurance Supervisory Authority

Insurance companies

Insurance brokerage companies

Companies for insurance representation

Insurance brokers

Insurance agents

Securities and exchange commission

Brokerage companies

Banks that hold a licence to work with securities

Persons rendering investment advisory services

Companies for management of open, closed and private investment funds

—

Agency for Supervision of Fully Funded Pension

Companies that manage voluntary pension funds

—

—

—

—

Public Revenue Office

Organizers of games of chance

The legal entities and natural persons that provide the following services: intermediation in trade with immovables

Tax advising companies

Legal entities that accept movable and immovable items as a pledge

—

Postal Agency

Post companies

—

—

—

—

Notary Commision

Notaries

—

—

—

—

Lawyers’ Commission

Lawyers and lawyers’ companies

—

—

—

—

Source: AML/CFT Law (Oficial Gazzette No. 151/22)
Immediate Outcome 4

Prevention

The risk understanding of the majority of designated non-financial businesses and professions (besides casinos, lawyers and notaries) and some financial institutions, such as capital market institutions, and money and value transfer services providers, appears to be formalistic and focused on compliance with legal obligations rather than holistic risk prevention. Financial institutions have a good understanding of their AML/CFT obligations, which is not the case for certain smaller casinos, in contrast to large casinos, which have designated personnel to deal with compliance with anti-money-laundering regulations.

Most financial institutions carry out adequate ongoing monitoring based on the risk profile of their customers and generally use analysis and cross-checking of different data sources. However, foreign exchange offices lack effective measures to identify related transactions, which can be misused to circumvent customer due diligence. Designated non-financial businesses and professions use less robust systems and rely on periodic manual checks, which are generally commensurate with their risks and the nature and complexity of their business.

Obligated entities, in particular financial institutions, conduct customer due diligence in accordance with the requirements of AML/CFT law. Enhanced due diligence is required for all high-risk customers (e.g. non-face-to-face business relationships, politically exposed persons, correspondent accounts, customers and/or transactions with high-risk countries and non-profit organizations). If the customer due diligence leads to the conclusion that a suspicious transaction report should be filed, an encrypted file is sent to the FIO. However, from the FIO’s annual reports, the overall number of suspicious transaction reports is incommensurate to the risk, context, and size of the country, including the fact that entire sectors, such as investment firms or exchange offices, have filed no suspicious transaction reports between 2017 and 2021.

The internal audit department is required by law to conduct annual audits of the AML/CFT process, and to monitor the level of compliance and the results of implementation.

Obligated entities

No

Type of obligated entity

1

Banks

2

Savings houses

3

Exchange offices

4

Money remitance services

5

Subagents of money remitance services

6

Insurance companies

7

Brokerage houses

8

Companies for management of open and closed investment funds

9

Companies for the management of private investment funds and private funds

10

Investment consulting companies

11

Mandatory and voluntary pension fund management companies

12

Post Office of North Macedonia

13

Other financial companies

14

Providers of financial leasing

15

Real estate agencies

16

Auditors

17

Accountants

18

Lawyers and lawyers’ companies

19

Notaries

20

Casinos

21

Organizers of games of chance

22

Organizers of games of chance in a slot machine club

23

Organizers of electronic games of chance

24

Organizers of online games of chance

25

Organizers of games of chance – lottery games of chance

26

Pawn houses

27

Legal entities mediating micropayments

28

Central Securities Depository

29

Virtual asset service providers

Total

5 184

Source: Financial Intelligence Office, Annual Report for 2021
Immediate Outcome 5

Private sector

The national authorities have not prepared a risk assessment for legal persons to assess which types of legal persons are at risk of driving and enabling IFFs. A beneficial ownership register has been set up and operational since 27 January 2021 and is 92.5% complete. A total of 71 371 natural persons are registered as beneficial owners. Taxpayers and investigating authorities have direct electronic access to these databases. The register is not completed entirely, as some non-profit organizations (NPOs) and companies are inactive and in the process of being deregistered. If companies have not registered the real owners, banks will not enable the realization of a business relationship with such companies.

One way, in which interviewees described the private sector facilitating IFFs is through sophisticated VAT refund schemes involving several legal entities. Perpetrators also use the expertise of accountants, legal advisers and customs/tax experts, which may lead to new financial fraud schemes. Tax evasion involves non-compliance with tax laws through the use of falsified documentation and misrepresentation of data. This crime often involves long-term links between private legal entities and criminal activities, indicating a strong link between tax evasion and money laundering. The perpetrators aim to divert funds that would otherwise be due to the fiscus into expanding businesses or foreign investments, using methods such as cooperation with foreign partners and the use of banking havens. The 2020 NRA supports these findings.

The Serious and Organised Crime Threat Assessment of 2019 examines the misuse of legal entities for tax evasion, drug trafficking and money laundering. It highlights the potential misuse of legal entities in drug trafficking and international cooperation between organized crime groups. These groups adapt to criminal needs by using legal entities for financial activities and recruitment. They transport drugs through legal entities and legitimize profits through real estate and construction investments.

Immediate Outcome 6

Financial intelligence

In the absence of a specific register for institutions responsible for mitigating IFFs, data from national money laundering and terrorist financing risk assessments are used, focusing on responsible institutions within the national AML system. The financial intelligence unit (FIU) prepares reports based on financial analysis, which are submitted to the competent authorities. These institutions are reported to have sufficient technical and human resource capacity. A major challenge, however, is the monitoring of IFFs conducted through online platforms such as PayPal, Payoneer and blockchain transactions, as well as cash circulating within the informal economy and the hawala system.

Cooperation between competent authorities is governed by national laws and memorandums of understanding. Communication and coordination mechanisms among these authorities, both at the policy and operational levels, are supported by the National Strategy for Enhancing Financial Investigation Capabilities, adopted by the government in September 2021. An interoperability platform facilitates the digital exchange of data between government systems, regardless of technological differences but the platform is not fully functional and the fast and timely exchange of information and data between the stakeholders remains yet to be achieved.

In order to overcome this shortcoming, at the operational level, the Ministry of the Interior has established the National Coordination Centre for Combating Organised and Serious Crime (NCC) by government decree. The NCC facilitates the exchange of data and information between several entities, including the customs administration, the financial police, the public revenue office, the FIO and the Basic Prosecutor's Office for Organised Crime and Corruption. The NCC, which has been operational since 2018, follows standard procedures by linking, unifying, processing and analyzing data to identify potential links between individuals, companies and vehicles. This enables real-time information sharing and coordinated joint efforts between institutions.

FIU disseminations suggest that law enforcement agencies and prosecution authorities use this intelligence only to a limited extent to develop evidence, launch investigations and trace criminal proceeds in relation to money laundering/terrorist financing and underlying predicate offences.

Statistics on money laundering and terrorism financing reports

Year

Suspicous transaction reports received

315

Reports submitted

81

Notification submitted

243

Spontanious information submited

42

Ad Acta

38

Prosecution (based on FIU disseminated cases)

4

Total number of money laundering convictions

13

Year

Suspicous transaction reports received

292

Reports submitted

25

Notification submitted

102

Spontanious information submited

49

Ad Acta

17

Prosecution (based on FIU disseminated cases)

1

Total number of money laundering convictions

3

Year

Suspicous transaction reports received

293

Reports submitted

41

Notification submitted

111

Spontanious information submited

38

Ad Acta

22

Prosecution (based on FIU disseminated cases)

1

Total number of money laundering convictions

5

Year

Suspicous transaction reports received

194

Reports submitted

32

Notification submitted

123

Spontanious information submited

42

Ad Acta

9

Prosecution (based on FIU disseminated cases)

1

Total number of money laundering convictions

2

Year

Suspicous transaction reports received

232

Reports submitted

30

Notification submitted

111

Spontanious information submited

30

Ad Acta

11

Prosecution (based on FIU disseminated cases)

2

Total number of money laundering convictions

10

Year

2017

2018

2019

2020

2021

Suspicous transaction reports received

232

194

293

292

315

Reports submitted

30

32

41

25

81

Notification submitted

111

123

111

102

243

Spontanious information submited

30

42

38

49

42

Ad Acta

11

9

22

17

38

Prosecution (based on FIU disseminated cases)

2

1

1

1

4

Total number of money laundering convictions

10

2

5

3

13

Source: Financial Intelligence Office, Annual Reports, 2017–2021
Immediate Outcome 7

Investigations

The Strategy for Strengthening Financial Investigation and Asset Recovery Capacities aims to strengthen national institutions and coordinate efforts to monitor money flows and detect hidden and illicitly acquired assets. The judicial police, the interior ministry, the financial police, the customs administration and the financial investigation department, together with the FIO, conduct pre-investigation and investigation activities. Law enforcement agencies are aware of the need to carry out parallel financial investigations, but these are not systematically pursued. They use an interoperability system for database access and i2 software for networking and data analysis. Various indicators are used to prioritize cases during the pre-investigation phase.

From 2017 to 2021, there were 31 convictions in cases related to money laundering and the proceeds of crime under Article 273 of the Criminal Code, which shows that complex money laundering schemes investigations and prosecutions are rare. These convictions involved 33 individuals, including those who had concealed their own proceeds, concealed proceeds of another crime, or concealed foreign proceeds of crime. The authorities have expressed weakness in monitoring virtual transactions, which is reflected in reduced capacity to conduct investigations related with crypto transactions. The public prosecutor’s office only deals with a small number of open investigations, which indicates limited awareness and trust.

Considering the small number of financial investigations, charges and verdicts, a more thorough assessment should also be carried out on the consequences of integrity issues in the judiciary and prosecution authority, and their impact on the effectiveness of overall efforts in combating IFFs.

Competent state authorities responsible for reducing IFFs

No

National government authority

Others

1

Financial Intelligence Office

Obliged entities

(Financial and non-financial companies)

2

Interior ministry

Non-profit organizations

3

Public Revenue Office

Media

4

Financial Police

Journalists and investigative journalists

5

Customs Administration

Academia

6

National Bank

—

7

Public Prosecutor’s Office

—

8

Foreign affairs ministry

—

9

Justice ministry

—

10

Finance ministry

—

11

Securitites and exchnage commission

—

12

Central Register

—

Immediate Outcome 8

Confiscation

The policy objective of confiscating criminal proceeds and equivalent property values is a central focus of the North Macedonian National Strategy against Money Laundering and Terrorist Financing (2021–2024). Strategic objective 11 emphasizes the need to confiscate unlawfully acquired income and assets. This objective is further elaborated in the Strategy for Strengthening Financial Investigation and Property Confiscation Capacities, adopted in May 2021.

The Criminal Code allows for the confiscation of property derived from crime, proceeds of crime and instrumentalities used in criminal activities. Equivalent value confiscation applies to certain types of property subject to confiscation, including proceeds of crime and laundered property. Some technical deficiencies as well as the limitation in application of temporary freezing measures during the pre-investigative stage of criminal proceedings present a risk that assets identified may not be available to competent authorities, once a final confiscation decision is made.

The customs administration has regulations on undeclared cross-border currency movements. The application of cross-border cash controls resulted in some amounts of cash restrained. These actions were rarely followed by investigations into potential money laundering offences that could lead to ultimate confiscation of the proceeds. False or non-declaration of cash is still considered a misdemeanor rather than a criminal offence and triggers administrative procedures that mostly ends up in imposing fines and confiscation of the restrained assets over the statutory threshold.

The Agency for Management of Seized and Confiscated Property, established in 2009, oversees the management and use of temporarily confiscated and seized assets based on enforceable decisions in criminal, administrative and misdemeanor proceedings. However, the agency does not have the technical or personnel capacity to manage frozen, seized and confiscated virtual assets.

Confiscation can be based on non-conviction or conviction for a related offence. The European Commission’s 2022 Progress Report notes a limited use of criminal asset confiscation, with only four cases in 2021. Despite the existing legal provisions, there is room for improvement in the use of asset confiscation as a strategic priority to combat IFFs in North Macedonia.

Confiscated, falsely declared, undeclared and undisclosed cross-border movements of currency and bearer negotiable instruments.

Year

MKD

EUROS

US$

CHF

GBP

2017–2021

—

713 160

56 840

69 060

22 760

Source: Customs Administration, Annual Reports, 2017–2021

Conviction-based confiscation by related offence

Year

Property confiscated

Property recovered

2017

€5 000 and MKD1 003 067

—

2018

MKD75 695 588

€47 321 EUR

2019

MKD313 223

—

2020

€62 585 and other assets

—

2021

€181 658 and MKD86 955 354

—

Source: Public Prosecutor’s Office of the Republic of NorthMacedonia, Annual Reports, 2017–2021
Immediate Outcome 10

Non-profit organizations
in the prevention of IFFs

In 2021, North Macedonia conducted a terrorist financing risk assessment for NPOs in accordance with Financial Action Task Force (FATF) standards and recommendations. This assessment aimed to ensure compliance with FATF Recommendations 1 and 8 by implementing a risk-based approach to protect vulnerable NPOs. The full report is publicly available on the FIO website. The assessment was carried out by a working group comprising representatives of government agencies responsible for NPOs, civil society organizations and other relevant bodies in a public–private partnership.

The analysis followed the FATF methodology and used data from various sources, including central registries, statistical offices, intelligence services, financial institutions and non-profit organizations. The study found that the risk of terrorist financing through most NPOs in North Macedonia is low, and no proven cases of terrorist financing through NPOs were identified.

Three types of NPO threats have been identified for the purposes of terrorist financing:

  • Abuse of NPOs for promotion of religious radicalism
  • Abuse of NPOs for recruiting persons
  • Abuse of NPOs for logistical support.

Certain types of NPOs, particularly those involved in social/humanitarian, cultural/educational and religious activities, were identified as having a low to medium inherent risk of terrorist financing. Approximately 87% of NPOs meet the FATF NPO definition and are classified as low risk, while the remaining 13% are classified as low to medium risk. Overall, the inherent risk of terrorist financing within this subset of NPOs is assessed as low to medium.

Recommendations
for policymakers

  • Develop an overarching strategy for tackling IFFs and clarify the role of the various competent institutions in combatting them, in order to overcome strategic inertia and jurisdictional confusion among domestic institutions.
  • Strengthen the capacity of supervisory institutions.
  • Improve sharing of information and conduct strategic analyses of IFFs to detect distribution channels, origins and final destinations.
  • Standard operating procedures for competent authorities should be revised to include detailed guidelines on how to trace, identify and seize IFFs.
  • To fully comply with EU Directive (2018/1673) on combating money laundering by criminal law, investigative, prosecutorial and judicial authorities should adopt policy guidelines emphasizing the importance of proceeding in money laundering cases without waiting for a conviction for the predicate offence.
  • These guidelines should also include minimum evidential requirements for the prosecution of stand-alone and third-party laundering in the absence of a conviction for the predicate offence, and good practices in gathering evidence relevant for the conversion, transfer and social reuse of illicit proceeds.
  • Customs authorities should ensure that cash seizures resulting from cross-border controls are followed by appropriate financial investigations.
  • Increase public awareness of the risks posed by IFFs, including through a media campaign.
  • Develop awareness of the self-protective measures to be implemented by civil society, including through developing additional tools and resource materials (manuals, workshops, online self-assessments), with a particular focus on those sectors identified as being at risk.
  • Sectoral support for adopting the self-regulatory mechanisms for the smaller organizations and those NPOs identified as vulnerable.
  • Greater engagement with civil society in the fight to reduce IFFs is needed. Investigative journalism has proven its pivotal role in North Macedonia, as evidenced by several open investigations by the Public Prosecutor’s Office. Government should show greater commitment to promoting media interest in reporting on IFFs.
  • Prepare manuals for investigative journalists to conduct investigations of IFFs.
  • Register new non-profit organizations and investigative journalism ventures whose activity seeks to identify and combat IFFs.
  • Organize an annual national conference with a dialogue on IFFs among NPOs and the media with a view to widening the circle of stakeholders.

Country profiles

Albania

 Read more

Kosovo

 Read more

Bosnia and Herzegovina

 Read more

Montenegro

 Read more

Serbia

 Read more