0.62 million
corruption index 202345 / 100
CRIMINALITY SCORE5.9
total area13.8 km2
US$6.1 billion
FREEDOM OF THE PRESS (2023)74.28 / 100
RESILIENCE SCORE4.75
GDP per capita (2022)US$9 893.5
More about the Organized Crime Index
Montenegro ranks second highest for criminality in the Western Balkans, just behind Serbia, with a score of 5.90 on the Global Organized Crime Index 2023, above the regional average of 5.60. Montenegro has a low resilience score of 4.75, the second lowest in the region. Financial crimes are one of the most challenging criminal markets in the country, with a score of 6.0.
In Montenegro, about 30 of the 5 700 registered civil society organizations (CSOs) focus on countering organized crime and corruption. Their efforts against IFFs face significant obstacles, including limited space to operate, verbal attacks from officials, financial instability and restricted access to information. Despite government recognition, civil society feels neglected, leading to various civic initiatives. Media interest in investigating and reporting on these cases is rising, despite their limited capacity. There is little evidence of civil society and media involvement in the development of the National Risk Assessment (NRA) for money laundering and terrorist financing risk assessment.
Montenegro's most recent NRA was conducted in 2020, categorizing money laundering in the country as 'medium' risk. The assessment highlighted several vulnerable areas and identified systemic weaknesses that need to be improved (see Figure 1). Drug trafficking at the international level poses the highest risk.
Threat level of money laundering from predicate criminal offences in Montenegro
Predicate criminal offence
Threat level
Drug trafficking at the international level
Loan sharking
Evasion of taxes and contributions
Low
Medium
low
Medium
Medium
high
High
Corruption crimes
Serious murders related to organized crime
Drug trafficking at the national level
Low
Medium
low
Medium
Medium
high
High
Property crimes
Theft, aggravated thefts and robberies
Illegal migration and human trafficking"
Low
Medium
low
Medium
Medium
high
High
The 2020 NRA highlights Montenegro's normative shortcomings, inadequate results in combating money laundering, insufficient technical capacity, lack of cooperation between state authorities, inadequate statistical records and underutilization of available data. The assessment also categorizes obliged entities in both the financial and non-financial sectors according to their level of risk .
Risk levels to money laundering among reporting entities
Financial sector
Threat level
Low
Medium
low
Medium
Medium
high
High
Low
Medium
low
Medium
Medium
high
High
Banking sector
Capital markets
Leasing service providers
Low
Medium
low
Medium
Medium
high
High
Microcredit financial institutions
Payment institutions
Factoring companies
Inward and outward remittance service providers
Low
Medium
low
Medium
Medium
high
High
Insurance sector
Investment and development funds
Low
Medium
low
Medium
Medium
high
High
Non-financial sector
Threat level
Persons dealing in real estate investment transactions, sales and brokerage
Lawyers
Low
Medium
Low
Medium
Medium
high
High
Organizers of game of chance
Persons dealing with marketing and consulting activities related to business and other management
Low
Medium
Low
Medium
Medium
high
High
Persons dealing with asset management for third parties
Persons dealing with the activities and transactions of sale of precious metals and stones
Notaries
Accountants and auditors
Motor vehicle retailers
Low
Medium
Low
Medium
Medium
high
High
Low
Medium
Low
Medium
Medium
high
High
Low
Medium
Low
Medium
Medium
high
High
Montenegro's approach to blockchain, cryptocurrency and financial technology businesses poses multifaceted risks. Despite the authorities' efforts to start regulating blockchain in early 2022, it remains unregulated in the country. Although cryptocurrency is not recognized as an official payment method, its possession and use are not prohibited. For example, real estate can be purchased with ethereum or bitcoin and then converted into euros. Moreover, current tax regulations do not include income from cryptocurrencies as a taxable category. The Central Bank of Montenegro does not see cryptocurrencies as a threat to its stability.
Corruption presents a substantial risk to Montenegro, with numerous allegations pointing to close connections between organized crime and high-ranking authorities.
Improving international cooperation has been highlighted as a top priority across Montenegro's strategic documents on money laundering and IFFs. In the last three years, substantial data has been obtained from foreign police services and financial investigation units through collaborative efforts.
In 2022, there was a notable increase in the total number of international police cooperation cases processed, rising from 9 882 in 2021 to 10 938. Furthermore, there was a notable surge in 2021, with foreign financial intelligence services initiating a 170% increase in the number of cases opened, from 46 cases in 2020 to 115 cases. However, in 2022, this trend reversed significantly, with a sharp decline to 66 cases, a notable drop from the previous year.
Montenegro underwent a legal and institutional shift from an administrative to a police model for its FIU, which lead to its cessation as a member of the Egmont Group of Financial Intelligence Units in 2019. Subsequently, Montenegro signed bilateral memoranda of understanding with the FIUs of Serbia, Kosovo, North Macedonia, Slovenia, Cyprus and Azerbaijan. A liaison officer and INTERPOL channels have been established with the United Kingdom, as well as an INTERPOL channel with the FIU of Bosnia and Herzegovina.
The anti-money laundering regulation has pinpointed key supervisory institutions. The 2020 NRA identified three institutions that play a crucial role in combating money laundering and illicit financial transactions: the special state Prosecutor's Office, the police administration and the national security agency.
Overview of supervisory authorities for obliged entities in Montenegro
Supervisory authority
Obliged entity
Capital market authority
Companies for the management of investment funds, branches of foreign companies for the management of investment funds and companies from EU member states that are authorized to be directly engaged in the management of investment funds on the territory of Montenegro.
Companies for the management of pension funds.
Investment companies and branches of foreign investment companies whose business activities are prescribed by the law that defines the capital market and that provide:
Stock exchanges and clearing and depository companies.
Insurance supervision agency
Life insurance companies and branches of foreign life insurance companies.
Insurance mediation companies and insurance representation; companies, and insurance mediators and insurance representatives in the part related to life insurance.
Directorate for inspection affairs
Organizers of lottery and special games of chance and online games of chance or games of chance which use other telecommunications means.
Non-profit organizations.
Tax administration
Pawn shops
Bar association of Montenegro
Lawyers and law offices
Notary chamber
Notaries
Finance ministry
Other business organizations, legal persons, entrepreneurs and natural persons engaged in an activity or business of:
Since 2015, Montenegro has undergone significant legislative and institutional reforms in line with European Commission recommendations to combat terrorism and financial crime. The country established specialized offices, such as the special prosecutor's office and a dedicated police department to address terrorism, arms smuggling and organized crime. These units collaborate closely and form investigation teams with members from different administrations.
In 2019, as part of the restructuring from administrative to police financial investigation, the government formed a new department within the Police Administration specifically focused on preventing money laundering and terrorist financing, improving compliance with reporting requirements and rebuilding trust with reporting entities. The National Security Agency, through its specialized department, addresses terrorism by gathering and analyzing intelligence data.
In addition, Montenegro’s anti-money laundering and counterterrorism financing (AML/CFT) law designates the Capital Market Commission as the authority overseeing these regulations within capital market entities. Laws governing capital markets, investment funds and pension funds detail the Commission's powers and supervisory procedures, ensuring robust AML/CFT supervision within these sectors.
The 2020 NRA outlines detailed measures to effectively combat IFFs and money laundering. Strengthening the legal framework in specific areas, identifying offences that generate illicit proceeds and tracing assets derived from such activities are key priorities. The implementation of investigative measures will lead to more identified cases, prosecutions and confiscation of illicit proceeds.
Improving technical capacity, integrating databases and using advanced analytical tools are essential to optimize data use and analysis. Ongoing training of staff involved in anti-money laundering efforts is essential, given the evolving nature of money laundering techniques.
Raising awareness among the authorities and the public, allocating adequate resources and promoting close cooperation between institutions are essential. Prosecutors play a central role in coordinating efforts and increasing convictions by effectively managing inter-agency operations.
Addressing organizational issues in the management of statistics through the introduction of by electronic databases and standardized forms, establishing connections among institutions, and comprehensive networking systems will improve the overall effectiveness of the anti-money laundering system.
Estimating the scale of IFFs in Montenegro is difficult, but civil society and official reports provide similar estimates. According to civil society, inflows of IFFs amount to about 3.95% of Montenegro's GDP, while outflows amount to 4.10%. Similarly, the finance ministry reports that illicit outflows represent about 4.1% of GDP.
The Department for Financial Intelligence Affairs acts as the FIU in Montenegro. It was integrated into the Police Administration in 2019, as a result of legal and institutional reforms. The FIU plays a central role in Montenegro's AML/CFT legislation, focusing on data collection, analysis and cooperation for the detection and prosecution of money laundering and terrorist financing.
Suspicious transaction counts from various sources
Entities reporting suspicious transactions
Obligors (banks, exchange offices, trust funds, etc.)
234
Government bodies
90
National financial intelligence unit initiative
33
Foreign financial intelligence unit initiative
66
Entities reporting suspicious transactions
Obligors (banks, exchange offices, trust funds, etc.)
285
Government bodies
140
National financial intelligence unit initiative
25
Foreign financial intelligence unit initiative
115
Entities reporting suspicious transactions
Obligors (banks, exchange offices, trust funds, etc.)
234
Government bodies
126
National financial intelligence unit initiative
57
Foreign financial intelligence unit initiative
46
Entities reporting suspicious transactions
2020
2021
2022
Obligors (banks, exchange offices, trust funds, etc.)
234
285
234
Government bodies
126
140
90
National financial intelligence unit initiative
57
25
33
Foreign financial intelligence unit initiative
46
115
66
Montenegro lacks central registries for bank accounts and beneficial owners, and outdated data in state records further complicates financial intelligence efforts.
Over the past three years, Montenegro’s track record on money laundering investigations has continued to improve, according to the European Commission (see Figure 5). Between 2016 and 2022, Montenegro initiated 80 financial investigations, of which, according to our research, only two were successfully completed. According to the NRA, the special prosecutor’s office predominantly initiates financial investigations, highlighting the limitations of other prosecution offices.
In most cases, financial investigations are opened after the criminal investigation, which is too late, according to interviews and expert reports. In very few cases, the financial investigation was conducted in parallel with the criminal investigation. The aim of the procedure is extended confiscation. While the use of the extended confiscation procedure is in line with good practice, financial investigations should be opened in parallel with criminal investigations into organized or serious crime in order to trace the financial flows behind the criminal activities.
Money laundering related full and preliminary investigations
Type of investigation
Full investigations
5
Preliminary investigations
18
Type of investigation
Full investigations
n/a
Preliminary investigations
31
Type of investigation
Full investigations
7
Preliminary investigations
10
Type of investigation
2020
2021
2022
Full investigations
7
n/a
5
Preliminary investigations
10
31
18
Montenegro's legal framework addresses proceeds from criminal activities in line with international legal standards, but faces challenges in asset confiscation. While the special prosecutor's office achieved some permanent confiscations in the period 2016–2021, no final court decisions on asset confiscation were identified in 2021. At the same time, two temporary confiscation orders were issued. In cases where there are no traceable proceeds, the legal framework still does not include the confiscation of assets of equivalent value.
The 2020 NRA did not identify any CSOs that were involved in, or intended to be involved in, terrorist financing. As a result, CSOs were not considered a threat and remain unaddressed in the national counter-terrorism financing framework.
While the role of civil society in monitoring government and security institutions is growing, improvements in the legal framework for transparency and freedom of information are needed. Civil society and the media show a strong interest in money laundering issues in Montenegro. However, their capacity and understanding of IFFs needs to be strengthened to allow for more effective oversight.
A number of comprehensive measures are recommended to improve the overall approach to combatting IFFs in Montenegro. Implementing these measures collectively will contribute significantly to a more robust and effective framework for combating IFFs.
