Kosovo

Last updated: 04/04/2014


CENTRAL AUTHORITY FOR REPORTING

The Financial Intelligence Unit of Republic of Kosovo (‘FIU’).

The FIU is a central independent national institution operating within the Ministry of Finance (‘MF’) and is responsible for requesting, receiving, analyzing and disseminating to the competent authorities disclosures of information which concern possible money laundering and terrorist financing. 


OTHER ANTI-MONEY LAUNDERING REGULATOR(S)


ARE LAWYERS COVERED BY MONEY LAUNDERING LEGISLATION?

Yes. 


LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Law No. 03/L-196 dated 30.09.2010: “Law on the prevention of money laundering and financing of terrorism”, amended with the Law No. 04/L-178 “on amending and supplementing the law no. 03/l-196 on the prevention of money laundering and prevention of financing of terrorism”, dated 11.02.2013 (hereinafter the Law’).


ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

The Law does not provide any exemptions for visiting lawyers in matters related to reporting of money laundering or financing of terrorism.

Under the Law, lawyers, notaries, certified accountants and licensed auditors, and tax advisors as defined under the term “covered professionals” are subject to reporting to the relevant authority.

Any covered professional who, in the course of performing services for a client, receives €10,000 or more in currency in a transaction or related transactions from a client, must file a report with the FIU within fifteen working days of the reportable transaction. A transaction shall also be reported if the covered professional receives the currency as an intermediary; that is, he or she intends to transfer the currency to a third party on behalf of the client. A transaction may not be divided into multiple transactions in order to avoid reporting under the above.


LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.)

Article 26.12 of the Law foresees that FIU, in consultation with the Kosovo Bar Association, the Kosovo Board on Standards for Financial Reporting, and any other relevant professional association of ‘covered professionals’ shall establish minimum standards, written procedures and controls for the prevention and detection of money laundering by covered professionals and supervise them.

These procedures shall include, but need not be limited to, the following:

  1. client identification procedure;
  2. procedure for collecting information and maintaining the records pursuant to this Law and for preventing unauthorized access;
  3. procedure for reporting to the FIU in compliance with the law;
  4. detailed list of the indicators of a suspicious act or transaction, taking into account the particular crime problems of Kosovo and Kosovo’s legal and business systems;
  5. measures to be taken by the covered professional from the moment of the detection of a suspicious act or transaction to the submission of the report to the FIU;
  6. procedures for ensuring the institution and provision of an employee training program on the obligations under present article and the prevention of money laundering; and
  7. audit function to test the reporting and identification system.

Currently there are no such rules and procedures in place.

Article 26.12 of the Law foresees that FIU, in consultation with the Kosovo Bar Association, the Kosovo Board on Standards for Financial Reporting, and any other relevant professional association of ‘covered professionals’ shall establish minimum standards, written procedures and controls for the prevention and detection of money laundering by covered professionals and supervise them.


IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

The Law on Article 26.13 requires the Kosovo Bar Association to inform it members of their obligations, possible sanctions, and the correct procedure in which to report to the FIU. The Kosovo Bar Association has the obligation to supervise the compliance of lawyers with the said Law. A sanction imposed by the competent Kosovo Bar Association for a breach of the Law shall be without prejudice to any criminal proceedings.


DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

Article 26.1 of the Law requires lawyers, notaries, certified accountants, licensed auditors and tax advisors (“covered professionals”) to verify the name and address, and, in the case of persons, the date of birth of every client before performing professional services for the client. If the covered professional is unable to identify a client or verify his or her identity, he or she shall not accept property from or on behalf of the client for any purpose.


DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Yes, a risk-based approach has been introduced with the Law. 


ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Reporting subjects should apply enhanced due diligence of customers inter alia with regard to transactions, relationships or services provided by politically exposed persons.  Pursuant to article 21 paragraph 5 of the Law, reporting subjects shall take reasonable measures to determine if their clients are domestic politically exposed persons. If it results in a client being determined to be a domestic politically exposed person, then banks and financial institutions whose activities include wire transfers shall in respect of such client, obtain and verify the full name, account number, the address, or in absence of address the national identity number or date and place of birth, including when necessary the name of the financial institution, of the originator of such transfers. The information shall be included in the message or payment form accompanying the transfer. If there is no account number, a unique reference number shall accompany the transfer.

The Law further provides that reporting subjects shall ensure that they determine whether their clients are foreign politically exposed persons, and if results in a client being determined to be a foreign politically exposed persons then reporting subjects shall take the following measures:

i. obtain the approval of a senior officer of the reporting subject;

ii. take adequate measures to establish the origin of the assets used in the relationship or transaction; and

iii. ensure continuous and strengthened monitoring of the account and the relationship.

FIU has adopted on 28 January 2014 Administrative instruction no. 04/2014 “On politically exposed persons” (the ‘Instruction’) which aims to provide for the definitions for politically exposed persons,to provide guidance on the application of the provisions on politically exposed persons as well as to harmonize the practices of verifying whether person is a politically exposed person.

Regarding the identification of customers and verification of identity, the Instruction provides that all reporting subjects shall identify the beneficial owner and/or a natural person or persons who directly or indirectly control 20% or more of a legal person.  In the identification of customer and verification of, reporting entities shall apply provisions of article 17 of Law regarding customer due diligence.

Where the reporting subject suspects that the customer is a foreign politically exposed, it shall take enhanced measures to verify his or her identity. Where an elevated risk is found to exist in respect of domestic politically exposed persons, they should also be subject to such enhanced measures.

The Instruction further provides that the reporting subject has the primary responsibility for verifying the identity of the customer.

Procedures for determining who is  political exposed person may include:

i. seeking relevant information from the potential customer;

ii. referring to publicly available information; and

ii. to make access  to commercial electronic databases of political exposed persons


ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

FIU has through Administrative Instruction ‘On exemption of certain transactions’ dated 15.01.2014 excluded from reporting multiple transactions that are, pursuant to the Law,   treated as a single transaction (i.e. if the bank or financial institution has knowledge that the transactions are by or, on behalf of one person or entityand reach value of more than  ten thousand Euros ( EUR 10,000) in a single day) Such transactions will not be subjected to legal obligation of reporting from banks and financial institutions, if the transactions are conducted for the following purposes:

i. payments of municipal obligations provided by companies in public ownership;

ii. payments of taxes to public authorities;

iii. payments of insurance policies which are legally mandatory as vehicle insurance policies; and

iv. payments of registration in faculty and/or other payments for study purposes in public institutions of higher education.

However, the obligation of reporting of all individual transactions in amount of ten thousand (10.000) Euro or more, remain in force for all categories and all persons


ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

Under Article 26.1 of the Law, lawyers are obliged to verify the name and address, and, in the case of persons, the date of birth of every client before performing professional services for the client.

Therefore, a third party due diligence would not be considered in compliance with the above mentioned provisions and in general with the purpose of the Law  


WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

The Law provides that lawyers, notaries,certified accountant, or licensed auditors who, in the course of performing services for a client, receive more than €10,000 in currency for a transaction or related transactions from a client, shall file a report with the FIU within 15 days of the reportable transaction.

A transaction shall also be reported if the covered professional receives the currency as an intermediary; that is, he or she intends to transfer the currency to a third party on behalf of the client. A transaction may not be divided into multiple transactions in order to avoid reporting under this article.

The report shall include the name and address of the person from whom the currency was received, the amount of currency received, the date and nature of the transaction, and any other information that the FIU may require.

Attorneys engaged in specified activities shall report any suspicious act or transaction to the centre within three business days and prior to taking further action in connection with any such act or transaction. The full list of specified activities may be found in article 26.8 of the Law. These are:

(a) Assisting or representing a client or clients in:

i. buying and selling of real estate;

ii. managing of client money, securities or other assets;

iii. management of bank, savings or securities accounts;

iv. organization of contributions for the creation, operation or management of companies;

v. creation, operation or management of legal persons or arrangements; and

vi. buying and selling of business entities are obliged to report suspicious transaction to the FIU.

(b) Acting on behalf of or for the client in any financial or immovable property rights transaction.


DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

Based on Article 26.9 a lawyer shall not, without authorization from the client or by court order, provide information he or she received from a client or obtained on a client in order to represent the client in criminal or judicial proceedings, unless the lawyer reasonably believes that the client is seeking the lawyer’s advice or assistance to commit a criminal offence.


DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

According to Article 35 of the Law, no civil or criminal liability action may be brought nor any professional sanction taken against the lawyer based solely on the good faith transmission of information, submission of reports, or other action taken pursuant to this Law, or the voluntary good faith transmission of any information concerning a suspicious act or transaction, suspected money laundering or suspected financing of terrorist activities to the FIU.


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?

Yes. Once the suspicious transaction report has been filed, the lawyer may proceed with the legal advice or transaction. The Law does not provide any rule that prior consent should be obtained from authorities for the lawyer to proceed with the advice or transaction.


IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

The Law does not provide any tipping-off prohibition.


DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

Article 26.1 of the Law bans lawyers from establishing or carrying out business relationships if they are unable to identify or verify the identity of the client.


ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

There are no ongoing monitoring requirements for existing clients.


DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

Pursuant to article 26 paragraph 14, a sanction imposed by the Bar Association shall be without prejudice to any criminal proceedings.

Pursuant to Administrative Instruction no.03 2014 “On procedure for applying sanctions” in case of failure to comply with the obligations provided in the Law, FIU shall make a decision on imposing administrative sanctions and determine sanctions under Articles 31.a and 31.b of the Law.


HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

There is currently 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?

There is currently no information available.



Information supplied by:
 

Sabina Lalaj
Senior Associate

Boga & Associates
Nene Tereza str. Entry 30, No.5
Pristina, Kosovo

Tel: +381 38 223152
Fax: +381 38 223153
slalaj@bogalaw.com

 

Delvina Nallbani
Associate

Boga & Associates
Nene Tereza str. Entry 30, No.5
Pristina, Kosovo

Tel: +381 38 223152
Fax: +381 38 223153
dnallbani@bogalaw.com


General Email: boga@bogalaw.com  
Official Website: www.bogalaw.com  

 

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