On 14 December 2017, the Serbian Parliament passed a new Law on Prevention of Money Laundering and Financing of Terrorism (“Law”).
The main reason for the adoption of the new Law, in which more than half of the articles were changed, is the need to harmonize and adjust Serbian legislation with international requirements and standards in the area of prevention of money laundering and terrorist financing (the so-called Fourth EU Directive and other UN and Council of Europe acts).
1. Main novelties of the Law
Some of the main novelties which are stipulated by the Law are as follows:
- Definition of the official – Politically exposed person (instead of the earlier definition which referred only to foreign officials, the official is now determined as official of the foreign state, official of the international organization as well as the official of the Republic of Serbia);
- New obliged entities under the Law (among the existing obliged entities – banks, investment funds, brokers, insurance companies, real estate agents, factoring and tax consulting, JP “Pošta Srbije“ and public notaries have been added);
- Definition of a trust as foreign legal entity (trust has not been defined as legal entity in the Serbian Law prior to the adoption of this Law);
- Obliged entities are obliged to do assessment of the risk concerning: (i) their whole business and (ii) each client i.e. business cooperation, business transaction and service which is provided by obliged entity.
- Facilitated procedure of determination and checking of the identity (obliged entity may obtain required data by direct insight into the register of the Business Registers Agency or other register);
- Application of reinforced measures (in the case of absence of the client during the procedure of determination and checking of the identity);
- Obligation to notify about decision imposing the penalty or other measure in case of the violation of the Law (notification on penalty and person to whom the penalty is imposedon the website of the supervisory authority);
- The lower limit of fines has been increased (in some cases).
2. Responsibilities of the obliged entities after entry into the force of the Law
The Law shall entry into the force on the eight day of the publishing day of the Law in the “Official Gazette of the Republic of Serbia”, and shall be applied as of 1 April 2018, Once the Law enters into the force, the obliged entities, among others, shall be obliged to:
- preform activities and measures relating to the prevention of money laundering for clients with whom business cooperation was established before the entry into force of the Law and to make a risk assessment (the deadline: one year after the entry into force of the Law);
- harmonize their internal acts (the deadline: within three months from the entry into force of the Law, and after the competent issued the bylaws).