Individuals engaged in cryptocurrency transactions or services must register with the Register of Crypto-Asset Service Providers. All cryptocurrency dealings exceeding 1,000 euros will be closely monitored, as will cash transactions ranging from 2,000 to 100,000 euros, based on the nature and intent of the transaction. The only exception applies to gambling activities, where organizers must collect information on all players making payments of 20 euros or more across one or more related transactions.

This is outlined in the proposed amendments to the Law on the Prevention of Money Laundering and Financing of Terrorism, which has been approved by the Government and forwarded to the Parliament for passage. The amendments revise or introduce a total of 52 articles to the existing law, but the Government submitted it to Parliament without conducting any public discussions.

The formal sponsor of the law is the Ministry of Internal Affairs.

Furthermore, the amendments clarify the definition of “reputation,” specifying who qualifies as a reputable citizen or businessman. The law also requires that the beneficial owner—defined as the ultimate natural person—of any legal entities conducting transactions be disclosed.

The amendments are set to take effect upon publication in the “Official Gazette,” with the Register of Crypto-Asset Service Providers to be established within nine months of the law’s enactment.

The Ministry of Internal Affairs emphasizes that these proposed amendments are crucial for enhancing the fight against money laundering and terrorist financing, contributing to Montenegro’s progress in the European integration process.

“As part of its EU accession efforts, Montenegro is required to close Negotiation Chapter 4 – Free Movement of Capital, which encompasses anti-money laundering and counter-terrorism financing measures. In this context, experts from the European Commission’s Directorate-General for Financial Stability, Financial Services, and Capital Markets Union (DG FISMA) have requested that the Law on the Prevention of Money Laundering and Financing of Terrorism align with Regulation (EU) 2023/1113 of the European Parliament and Council dated May 31, 2023, regarding information accompanying transfers of funds and specific crypto-assets, as well as modifying Directive (EU) 2015/849. Additionally, experts from the Organization for Economic Cooperation and Development (OECD) have called for amendments to the law to ensure full compliance with the ‘beneficial owner’ framework,” the explanatory memorandum notes, among other points.

The law’s authors assert that they have aligned the new regulations with EU directives and the demands of international organizations that standardize laws against tax evasion, money laundering, and terrorist financing, such as MONEYVAL and FATF. They have indicated that since the Crypto Assets Law is yet to be enacted, the recommendations from FATF will be addressed through these amendments.

Numerous Ambiguities

The amendments introduce measures requiring gambling operators to identify and monitor client transactions for any deposits and withdrawals exceeding 20 euros, which is a sharp reduction from the previous threshold of 2,000 euros.

These identification measures include gathering personal data, obtaining photocopies of identification documents, recording the date and time of document inspection, and retaining the photocopy and collected data per the law. For remote transactions conducted via technology, video-electronic identification must be performed.

Concerns arise regarding the practicality of these requirements for gambling operators. With the transaction monitoring threshold lowered to 20 euros across one or more payments, nearly all players will fall under this scrutiny. Furthermore, the implementation of these measures in casinos during live table games, where the minimum chip value often exceeds 20 euros, remains unclear.

There are questions as to why organizers would have the authority to collect and retain personal data from such a large number of citizens, whether betting shop workers would be considered official agents, and how they would track when an individual exceeds the 20-euro threshold across multiple transactions.

“The draft law suggests amendments obligating gambling operators to know and monitor client transactions involving deposits of 20 euros or more for one or more related transactions, previously applicable to payments or withdrawals of 2,000 euros or more. This amendment arises from the identified higher risk of money laundering and terrorist financing in the gambling sector. These measures will also apply to any occasional transaction involving the transfer of crypto assets valued at 1,000 euros or more,” the explanatory note states regarding this legislative proposal.

While international guidelines indicate that cryptocurrency transactions bear a particular risk for money laundering and terrorist financing, this proposal imposes a monitoring limit that is 50 times higher than that for gambling activities.

Organizers: Unsustainable Citizen Monitoring Norm

A collective of gambling organizers plans to send a letter to parliamentary groups advocating for amendments to discard the gambling provisions from the legislation. They argue that monitoring citizens who deposit just 20 euros is unfeasible, contradicts international standards and EU directives, and may lead players to shift to the grey market, resulting in a significant revenue loss for the state.

They are voicing their concerns over the lack of public debate regarding these proposed amendments, which were adopted without engaging representatives from the gambling sector and impose new obligations contrary to EU standards. This, they contend, directly infringes upon entrepreneurship and service provision freedoms.

The drafter’s note states that this stipulation contradicts Directive (EU) 2015/849, which sets a customer due diligence measure threshold of 2,000 euros and above specifically for gambling activities.

“These proposed amendments, which deviate from the current EU-compliant framework and inexplicably lower the threshold to 20 euros, lack legal or economic justification and support in comparative practices or standards. This creates unnecessary administrative challenges, compromising the viability of gambling operators and likely resulting in reduced budget revenues alongside an increasing illegal market share,” assert the organizers.

They also highlight that this norm conflicts with ongoing legislative discussions relating to the Law on Games of Chance.

“Such provisions would substantially escalate the administrative responsibilities of both operators and regulatory bodies tasked with preventing money laundering. The low threshold and excessive data flow would detract focus from the essential quality of oversight and controls,” the organizers explained.

They further argue that such thresholds cannot be modified at a national level without prior alignment with the EU directive and necessary changes to regulations throughout the EU. The 2,000 euro limit remains a standard not only across the EU but also in neighboring countries.

Operators also express concern regarding the financial burden these new obligations will impose as they will need to increase their administrative workforce.

Defining a Respected Individual

An additional clause has been introduced in the draft law outlining the criteria for determining who qualifies as a reputable natural person. Only individuals who meet this standard will be eligible for registration in the Register of Crypto-Asset Service Providers and must substantiate their standing as per the law.

Under this regulation, a natural person is deemed reputable if they are free of any criminal proceedings, have not been convicted of an offense warranting an unconditional prison sentence of one year or more, have not violated this law as a legal representative of a company, and are not affiliated with someone convicted of money laundering or terrorist financing… Additionally, even if there are suspicions of involvement in money laundering or terrorist financing, this person may be deemed less reputable.

News