Novelties in the field of money laundering prevention

The Law on Prevention of Money Laundering and Financing of Terrorism was recently expanded by adding new obligees, namely persons dealing with traffic, organizing and conducting auctions of works of art, precious metals and precious stones, storage and safekeeping of works of art, who will be obliged to apply all the actions and measures provided for by the Law in the same way as banks and other financial institutions.

In addition to accountants and factoring companies, the Directorate for the Prevention of Money Laundering is also responsible for the supervision of new taxpayers, i.e. legal entities, companies, entrepreneurs and natural persons who, on the basis of legal authorizations, perform activities, i.e. jobs:

1. provision of services during the establishment of legal entities and other companies, as well as business or fiduciary services;
2. asset management for third parties; 
3. traffic and mediation in traffic, including conducting auctions of works of art, precious metals and precious stones and products thereof, if payments are made or received in the amount of 10,000 euros in dinar equivalent or more at the official exchange rate of the National Bank of Serbia on the day of payment, regardless of whether it is one or more related transactions;

    

4. storage and safekeeping of art objects or traffic or mediation in the traffic of art objects, when these operations are carried out in a free zone, port or warehouse, if payments are made or received in the amount of 10,000 euros or more in dinar equivalents at the official exchange rate of the National Bank of Serbia on the day of payment, regardless of whether it is one or more related transactions.

Penalties for failure to comply

One of the most significant changes relates to the tightening of the penalty policy, where fines can amount to up to 10% of the taxpayer’s income, thus achieving the harmonization of the penalty policy with European standards and the requirements of the EU’s umbrella regulations in this area.

In the case of serious, systemic illegalities or repeated irregularities, supervisory authorities may impose a fine as an administrative measure of up to twice the amount of the benefit gained from the violation of this Law, and if that benefit cannot be determined, up to 120 million dinars.

Also, the fine imposed on a taxpayer that is a financial institution may be set at up to 600 million dinars or up to 10% of the total income of that taxpayer generated in the previous year, or 600 million dinars if that taxpayer is a natural person.

Another change relates to the obligation to develop internal controls and audits of operations, extending them to the area of ​​financing the proliferation of weapons of mass destruction in addition to the area of ​​preventing and detecting money laundering and terrorist financing.

In addition, an obligation has been added for international organizations operating missions in the Republic of Serbia to publish and update a list of prominent public officials in those organizations, and to submit the list to the Administration immediately after publication and updating. This will make it easier for taxpayers in Serbia to recognize officials of international organizations.

As for parties and transactions from countries that do not apply international standards in the field of preventing money laundering and terrorist financing, their obligations have been expanded, so the obligor is obliged to conduct increased monitoring of the business relationship and transactions carried out by that client, including an increased number of control procedures, i.e. audits of subsidiaries and affiliates.

The new Law also expands the authority of the Administration, so that in the event of reasonable suspicion of money laundering or terrorist financing, the Administration may issue an order to temporarily suspend the execution of a transaction.

It also prescribes the conditions under which the Administration may reject a state authority of a foreign country, in the following cases:

1. when the provision of data, information and documentation would be disproportionate to the legitimate interests of a natural or legal person or the Republic of Serbia;
2. when the provision of data, information and documentation would jeopardize or could jeopardize the course of criminal proceedings in the Republic of Serbia;
3. when the submission of data, information and documentation is not in accordance with the basic principles of the legal system of the Republic of Serbia.

It is prescribed that the exchange of data, information and documentation be carried out electronically, via the Egmont Group platform or via another international communication system that provides the same or higher level of data protection and confidentiality, or in another appropriate manner in accordance with an international agreement.

Also, what is new is that it is stipulated that the Administration is obliged to designate at least one person as a contact point for the exchange of data, information and documentation in relation to the financial intelligence services of other countries.

A six-month deadline has been given for taxpayers to comply with the new obligations, and a three-month deadline has been prescribed for the adoption of by-laws.