Following the favorable review according to a new follow-up report published by the Council of Europe anti-money laundering body MONEYVAL (more about this in the text below), the regulatory authorities prepared a compendium of the comprehensive National Risk Assessment and made it available to the public.
As already reported, in September 2021, the Government of Serbia adopted:
✓ National money laundering risk assessment
✓ National terrorism financing risk assessment
✓ National money laundering risk assessment and terrorism financing risk assessment in the field of digital assets
✓ National risk assessment of financing the proliferation of weapons of mass destruction.
National ML/TF risk assessment (NRA) as a process and the document, which is the outcome of the analysis, are a major source of information providing guidance as to what segments of the system resources should be (re-)allocated. A NRA exercise identifies threats for the system and its vulnerabilities based on which conclusions are drawn with respect to the risks facing the various segments of the system at the national level and at the level of specific sectors. Regular review of risk is an international standard, and the requirement to conduct an NRA is also enshrined in the AML/CFT Law. The findings of the NRA are taken into account for the purpose of developing a national AML/CFT strategy, and all stakeholders are required to reallocate their resources in line with the findings of the NRA. Serbia has conducted four ML/TF NRAs so far, the first in 2013, and the two updates in 2018 and one in 2021.
The Working Group formulating the national assessment comprised representatives of the National Prosecutor’s Office of Serbia, Prosecutor’s Office for Organized Crime, Security Information Agency, Ministry of Justice, Anti-Money Laundering Authority, National Bank of Serbia and the Securities Commission. In addition to the working group members, hundreds of representatives of the public and private sector contributed to the risk assessment process.
The MONEYVAL statement on Serbia's improved measures to combat money laundering and terrorist financing:
Serbia has improved measures to combat money laundering and terrorist financing, demonstrating significant progress in the level of compliance with the FATF (Financial Action Task Force) standards, according to a new follow-up report published by the Council of Europe anti-money laundering body MONEYVAL. The positive steps taken by the authorities have led to the upgrade of Serbia from “partially compliant” to “largely compliant” in four areas related to the activities of designated non-financial businesses and professions, as well as to international co-operation. However, in the field of new technologies, where new international requirements for virtual assets have been introduced, the rating of Serbia was downgraded.
The review focused on Serbia’s AML/CFT (Anti-Money Laundering and Countering the Financing of Terrorism) obligations for lawyers and notaries, market entry requirements for accountants and real estate agents, international cooperation of financial supervisors. MONEYVAL has examined a range of legislative, regulatory, and institutional measures introduced by Serbia in these areas, however, due to its procedural limitations, it has not assessed the degree to which they have been effectively implemented in practice.
Among the positive developments marked by the MONEYVAL is the extension of the scope of the entities obliged to carry out customer due diligence to lawyers and notaries. Besides, the amended legislation now obliges casinos to identify and verify the identity of the customer at the entry, to obtain a written statement of the client stating that he/she is taking part on his/her behalf, and in case of single transaction or several interrelated transactions exceeding 2,000 EUR to conduct customer due diligence in order to identify and verify the beneficial owner of the transaction. Previously identified deficiencies regarding the need for enhanced due diligence for high-risk countries, tipping-off and confidentiality have also been addressed. Serbia has equally made necessary steps in the area of licensing of accountants and real estate agents with the view to preventing criminals and their associated from being professionally accredited and from holding a significant/controlling interest or a management function in such enterprises.
In the area of international co-operation, financial supervisors are now clearly empowered to co-operate with foreign counterparts; a general obligation has been imposed on supervisory authorities to put in place appropriate safeguards and observe confidentiality requirements. However, some minor deficiencies remain, including the definition of the beneficial owners, record-keeping requirements fulfilled by lawyers and notaries, as well as the application of countermeasures proportionate to the risks identified.
The follow-up report also looks at the implementation of new international requirements for virtual assets, which cover, inter alia, the most prominent virtual currencies and the providers of these assets. While MONEYVAL has registered significant progress in the implementation of the new requirements for virtual assets, it has also found strategic deficiencies, and Serbia’s rating on the implementation of this updated Recommendation has been downgraded from “largely compliant” to “partially compliant”.
All in all, Serbia has succeeded in meeting the general expectation of MONEYVAL for countries to have addressed most - if not all - of the technical compliance deficiencies within five years after the adoption of the mutual evaluation report. The jurisdiction has achieved full compliance with five of the 40 FATF Recommendations constituting the international AML/CFT standard. Serbia retains minor deficiencies in the implementation of 34 Recommendations where it has been found “largely compliant”. One Recommendation (on new technologies) remains “partially complaint”. Serbia has no “non-compliant” ratings.
Serbia will report back to MONEYVAL on further progress to strengthen its implementation of AML/CFT measures in two years.