Bosnia and Herzegovina
Last Updated: 09/03/2010
CENTRAL AUTHORITY FOR REPORTING
Financial Intelligence Department of the State Investigation and Protection Agency (member of the Egmont Group).
The Committee of Experts on The Evaluation of Anti-Money Laundering Measures and The Financing of Terrorism (Moneyval) Second Mutual Evaluation Report dated 10 December 2009 (the “Moneyval Report 2009”) finds that the FID has been established with operational independence within SIPA, as the FID is cooperating internationally as a member of the Egmont Group and shares information internationally with its counterpart financial intelligence units.
OTHER ANTI-MONEY LAUNDERING REGULATOR(S)
The State and Protection Agency (SIPA).
HAVE BOSNIA’S PROVISIONS BEEN HARMONISED WITH THOSE OF THE THIRD EU MONEY LAUNDERING DIRECTIVE? IF NOT, IS IT EXPECTED TO HAPPEN? AND WHEN WILL IT BE IMPLEMENTED?
The new Law against Money Laundering and Financing of Terrorist Activities was enacted in June 2009. A national AML/CFT strategy has also been adopted.
However, the European Commission (EC) noted in October 2009 that preventative and supervisory measures still needed implementation and had to be extended to non-bank financial institutions. [1]
ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?
Yes. Article 4(2)(i) of the AML Law (see box below) includes lawyers as one of the covered persons.
However, the Moneyval Report 2009 states that lawyers are strongly opposed to being subjected to the provisions of the AML Law.
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
The Law on Preventing Money Laundering and Financing of Terrorist Activities (Official Gazette B&H, No 53/2009, in force 15 July 2009 – AML).
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
No information available.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.
No information available.
IS THE LAW SOCIETY/ BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
The Chambers of Lawyers supervises the legal profession. However, the Moneyval Report 2009 noted that the Chambers of Lawyers at entity level do not have legislatively provided powers for supervising implementation of the obligations set forth in the AML Law.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.
Article 4 (AML Law)
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Measures for detecting and preventing money laundering and funding terrorist activities shall be carried out according to this law, when conducted by persons under obligation as listed below.
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Persons under obligation are the following legal and natural persons:
- Banks;
- Post offices;
- Investment and mutual pension companies and funds whatever the legal form;
- Stock exchanges, stock exchange agencies, stock exchange agency branches and any other legal or natural person trading in money market instruments, foreign exchange, exchange, interest rate and index instruments, transferable securities and commodity futures trading;
- Insurance and reinsurance companies;
- Casinos, gaming houses and other organizers of games of chance and special lottery games;
- Currency exchange offices;
- Pawnbroker offices;
- Public notaries, Lawyers, accountants, auditors and legal or natural persons who perform accounting and tax consultant services;
- Privatization agencies;
- Real estate agencies;
- Legal and natural persons performing the following activities:
- Receiving and/or distributing money or property for humanitarian, charitable, religious, educational or social purposes;
- Transfer of money or value;
- Factoring;
- Forfeiting;
- Safekeeping, investing, administering, managing or advising in the management of property of third persons.
- Issuing, managing and performing operations with debit and credit cards and other means of payment;
- Financial leasing;
- Issuing financial guarantees and other warranties and commitments;
- Lending, crediting, offering and brokering in the negotiation of loans;
- Underwriting, placement and brokering in insurance policies;
- Organizing and executing auctions;
- Trade in precious metals and stones and products made from these materials;
- Trading with works of art, boats, vehicles and aircraft.
Article 5.1
A person under obligation is obliged to make a risk assessment which determines the degree of risk groups of clients or individual client, business relationships, transactions or products in respect to opportunities of misuse in purposes of money laundering or financing terrorist activities. A person under obligation includes lawyers.
Article 6
A person under obligation shall take measures to identify and monitor the client during:
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When a person under obligation establishes a business relationship with a client;
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A person under obligation shall be required to identify the client during each transaction or connected transactions of 30.000 KM or more;
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The existence of doubts in the credibility and usage previously obtained information about the client or beneficial owner;
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Existence of doubts in money laundering or terrorist financing activities related to the transaction or the client, regardless of the amount of transactions.
Article 7
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Unless otherwise provided by this law, the measures of identification and monitoring include:
- Identification and authentication based on client's documents, data or information obtained from credible and objective source;
- Determining the actual owner;
- Obtain information about the objective and the purpose of a business relationship or transaction, as well as other information prescribed by this Law;
- Regular monitoring of business activities that take a client through a person under obligation.
Article 9
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For a client who is a natural person and its legal representative and the customer is an entrepreneur or other person who performs an independent activity, the person under obligation establishes and verifies the identity, collecting of data under Article 7 of this Law, and by examining a valid identification document of the client in his presence;
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If the person under obligation cannot collect all necessary information by examining a valid document, the missing data should be collected from other valid documents presented by the client, or directly from the client or otherwise;
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The person under obligation may identify and verify the identity of a client who is a natural person or her legal representative, craftsmen and persons conducting other self-employed activities and otherwise, if that is appointed by the regulations set by the Minister of Security of B&H.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
Yes. Please see above.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Yes. There are special procedures: politically exposed person checks and special test procedures when dealing with counsel, agents or foreign clients.
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
Yes. The simplified procedure is applicable in cases where the client is an institution of the state, an entity of the district, a bank, an insurance company or clients who are low risk etc.
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.
Yes. Under the conditions prescribed by the Law, checking identity of the client may be entrusted to third parties.
Prior entrusting the identification procedure of a client to a third person, a lawyer is obliged to check whether a third person meets the conditions prescribed by the Law. However, the person under obligation (lawyer) still continues to bear the responsibility for the identification procedure.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
Article 30 (AML Law)
The person under obligation shall be obliged to forward the information to the FID when (in relation to Article 44.1):
- Upon each attempt and making the transaction to customers or physical entity if there is suspicion of money laundering or terrorist financing activities;
- Cash transaction in value or whose value exceeds the amount of BAM 30,000;
- Connected cash transactions in the total value or whose value exceeds the total amount of BAM 30,000.
Article 31
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In such cases as referred to in Article 30 of this Law, a person under obligation shall forward the information, data and documentation to the FID immediately and shall state the period during which the transaction is expected to be executed.
DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
Article 39 (AMLLaw)
Exceptionally, a lawyer shall act in accordance with the provisions of this Act only if acting for, or on behalf of clients in the planning, preparation or execution of transactions relating to:
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Buying and selling of real estate, shares, ownerships of business companies;
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Managing of client money, securities and other assets;
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Management of bank, savings or securities accounts;
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Organization of contributions for the creation, operation or management of companies;
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Creation, operation or management of legal persons, funds or arrangements and buying and selling business entities.
Article 41
The persons engaged in professional activities, in other words, a lawyer who has been asked by a client to provide advice in relation to money laundering or financing terrorist activities is obliged to inform the FID every time a customer asks, immediately, or within three days from the date the client requested such advice.
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
Yes. There is a special section in the Law – Penal Provisions (Article 72 – 73) providing fines.
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
The FID has capacity to suspend suspicious transactions, but there are no clauses on allowing the lawyer to proceed or not proceed with the legal advice.
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
Yes. Article 29 of the AML Law provides:
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A person under obligation and its staff shall not reveal to a client or third person the forwarding to the FID of the information, data or documentation about a client or transaction or that the FID has in accordance with the provisions of Article 18 of this Law temporarily suspended a transaction or given instructions to a person under obligation;
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Information about a request from the FID or about forwarding information, data or documentation to the FID and about the temporary suspension of a transaction or about the instructions referred to in paragraph 1 of this Article shall be official secrets;
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The FID shall decide on the lifting of the classification of the official secrecy.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.
No information available.
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.
There is no available information on monitoring requirements for existing clients. However, the Law obliged the persons under obligation to compile a list of indicators (see below) and the Law does not state which clients should be included on this list. Therefore, this could imply existing clients.
Article 75 (AML Law)
The persons under obligation are obliged to compile a list of indicators for identification of suspicious transactions in accordance with the provisions of this Law, no later than six months from the date the Law came into force.
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.
No information available.
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION
No information available.
HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
The Moneyval Report 2005 mentions that Bosnia Herzegovina still has a considerable way to go before a sufficient level of compliance with the FATF 40 + 9 Recommendations is reached. To improve the AML/CFT system, financial institutions and non financial institutions need to be involved.
In October 2009, the European Commission (EC) published a progress report against European Union standards, including a brief AML/CFT update, which found that despite continued progress, further considerable efforts needed to be made.
Moneyval issued its Second Mutual Evaluation Report dated 10 December 2009. In this Report, the evaluators commended Bosnia and Herzegovina for the efforts made to improve the AML regime.
However, the Report also highlighted numerous problems that should be addressed. Some of the issues to be addressed are:
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The backlog of money laundering cases pending before the Court is a problem that must be addressed by state-level authorities;
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Appropriate training for the judiciary and prosecutors must be provided on the overall AML/CFT legislation;
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The FID should develop and use better electronic means to monitor money laundering.
Information provided by:
Nusmir Huskic
Associate
Maric Law Office
Mehmeda Spahe 26
71 000 S a r a j e v o
Bosnia & Herzegovina
Tel:+387 33 566 700
Fax:+387 33 566 704
e-mail: nusmir.huskic@mariclaw.com
website: www.mariclaw.com
Sources
Law on the Prevention of Money Laundering 2004.
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- FATF