Novelties in the foreign exchange operations’ control

The National Bank of Serbia, in accordance with the Law on Foreign Exchange Operations, is responsible for exercising control over foreign exchange transactions carried out by residents and non-residents. The new Decision retains the existing control model, which includes indirect and direct control.

Indirect control is carried out through the collection, analysis, monitoring and verification of reports and other documentation submitted by controlled entities to the National Bank of Serbia. This includes, among other things, statutory obligations for regular or periodic reporting on certain types of foreign exchange operations, such as direct foreign investments in Serbia, investments of residents abroad, execution of construction and investment works, turnover and balance of residents’ accounts abroad, as well as transactions with securities.

The control may also include the following areas:

• payments, collections and transfers between residents and non-residents, both in foreign currencies and in dinars;
• buying and selling of means of payment between residents and non-residents;
• unilateral transfers of funds – personal and physical transfers from and to Serbia that do not represent commercial transactions between residents and non-residents;
• current and deposit accounts held by residents abroad, as well as accounts held by non-residents in the Republic of Serbia;
• foreign credit transactions;
• all other types of foreign exchange transactions.

Within its control responsibilities, the National Bank of Serbia cooperates with the Tax Administration, customs authorities, police and other relevant institutions. This cooperation includes the exchange of data, reports and information necessary for the efficient implementation of controls.

Direct control begins with the issuance of a decision designating an authorized person to conduct the control. Authorized persons may be employees of the National Bank of Serbia or other persons engaged for that purpose. After that, the subject of control is obliged to provide the authorized person with:

• The entity over which direct control is exercised is obliged to provide the authorized person with the following:

• access to business books, documentation and all required data, whether in written or electronic form;
• unhindered and complete access to the equipment, databases, software and other components of the information system it uses;
• translation of business documentation, books and data not drawn up in the Serbian language, at the request of the National Bank of Serbia, at one’s own expense, with the obligation for the translation to be certified by a court interpreter;
• submission of written statements from members of the governing bodies, managers and responsible persons within the organization.

Also, during the conduct of an on-site inspection, the authorized person has the right to temporarily seize the following from the subject of inspection:

• foreign currency, cash, digital assets, checks, securities, dinar funds, electronic money, payment cards, as well as objects, business books, records, documents and other relevant documentation,

if there is a reasonable suspicion that the said funds and documents were used, intended for the execution of, or were acquired through the commission of a criminal offense, misdemeanor or other illegal act. An appropriate certificate shall be issued at the same time for each temporary seizure.

When it comes to the temporary seizure of digital assets, it is carried out based on a decision issued by the National Bank of Serbia. This decision may order the following measures:

• transfer of digital assets to an address (wallet) managed by the National Bank of Serbia, or
• that the digital asset service provider transfers virtual currencies to the account of the National Bank of Serbia opened with that service provider.

These measures are taken to secure digital assets during the duration of the control, in cases where there is reasonable suspicion of their illegal use or origin.

By issuing a decision imposing a fine on the subject of control, the National Bank of Serbia may simultaneously impose a ban on the disposal of funds on all of its accounts. This ban shall remain in force until the subject of control complies with the provisions of the said decision. Exceptionally, the disposal of funds is permitted for the purpose of paying the fine imposed or settling tax liabilities.

Such a decision has the status of an executive document and represents the legal basis for forced collection from the account of the subject of control.