Serbia

The Administration for the Prevention of Money Laundering (APML)

According to the Law on the Prevention of Money Laundering and the Financing of Terrorism, money Laundering is the:

1. conversion or transfer of assets acquired in a criminal offence;

2. concealment or untrue presentation of the true nature, origin, location, movement, disposal, ownership or rights in relation to the assets acquired in a criminal offence;

3. acquiring, holding or using assets acquired in a criminal offence.

According to the Criminal Law of the Republic of Serbia, the following actions constitute a criminal offence:

1. Conversion or transfer of assets, with the knowledge of such assets’ origin from criminal activities, with the intent to conceal or fraudently present the unlawful origin of the assets;

2. concealing or fraudently showing the facts relating to assets, with the knowledge of such assets’ origin from a criminal activity;

3. acquiring, keeping or using the assets with the knowledge, in the moment of receivement of such assets, that they originate from criminal activity.

Additionaly, The Law on the Prevention of Money Laundring and the Financing of Terrorism introduces over 80 misdemeanors related to breach of obligations imposed by the very same law.

Division for Combating Organised Financial Crime (Ministry of Interior)

Yes, The Fourth EU Directive was implemented throught the latest Law on the Prevention of Money Laundering and the Financing of Terrorism.

• Law on the Prevention of Money Laundering and the Financing of Terrorism 2017 (hereinafter referred to as the Law) – entered into force in December 2017, applicable from April 2018- applicable to lawyers
• Rulebook Concerning the Methodology for the Implementation of Tasks Pursuant to the AML/CFT Law by the Ministry of Finance– is implemented as of 1 April 2018 - applicable to lawyers
• Guidelines for Evaluation of Risk of Money Laundering and Financing of Terrorism, rendered by the Serbian Bar Association, 2018 – applicable to lawyers
• Criminal Code
• The list of indicators for identifying suspicious transaction for lawyers and law firms by the Serbian Bar Association, 2018 – applicable to lawyers
• Numerous lists of indicators for identifying suspicious transactions for public notaries, real estate market, accountants, custody banks, investment funds’ management companies, factoring companies, investment companies, auditors, commercial banks, insurance companies, leasing, etc.

No. However, please note that, although the relevant law does not contain any provisions relating to visiting lawyers, and that, therefore, it could be interpreted that only members of the Serbian Bar Association are subject to local anti-money laundering regulations. Nonetheless, it is a general principle of the Criminal Law that its provisions apply to any person who commits a crime at the territory of the Republic of Serbia, including money laundering offences (Article 231 of the Serbian Criminal Law).

Reporting obligations apply to: commercial banks, licensed exchange officers, investment funds’ management companies, voluntary pension funds’ management companies, providers of financial leasing, insurance companies, broker-dealer companies, organizers of special games of chance, audit companies and independent auditors, electronic money institutions, payment institutions, brokers in the real estate market and lease of real estate, factoring companies, entrepreneurs and legal entities engaged in the provision of accounting services, tax advisors, a public postal operator based in the Republic of Serbia, persons engaged in the provision of services for the purchase, sale or transfer of virtual currencies, as well as lawyers and public notaries, provided certain conditions are met.

Guidelines for Evaluation of Risk of Money Laundering and Financing of Terrorism, rendered by the Serbian Bar Association.

Under Article 104 of the Law, the Serbian Bar Association supervises the implementation of the Law and relevant by-laws by lawyers. If the Bar Association finds irregularities or illegal acts in the implementation of the Law, it should:

i. demand that the irregularities and deficiencies are removed within a given period;

ii. file a request to the competent body for initiation of an adequate procedure and

iii. undertake other actions for which it is authorized under the Law.

The Association is obliged to promptly inform the Administration for Prevention of Money Laundering (hereinafter the APML) in writing of all the actions undertaken during the supervision, any irregularities or illegalities found as well as of any other relevant facts in relation to the supervision, and should send a copy of a document enacted during the supervision (if any).

Furthermore, if the Bar Association, during the execution of their competences, establishes or identify facts that are or may be linked to money laundering or terrorism financing, it should inform the APML in writing.

According to Article 49 of the Law, there is an obligation to appoint an authorized person and his deputy for performing certain actions and measures for prevention and detection of money laundering and terrorist financing, in accordance with the Law and the regulations adopted on the basis thereof. Such person has to meet the following requirements:

1) he/she is employed by the obliged entity/subject in the position covering the authorities enabling him / her to perform effective, prompt and quality execution of tasks prescribed by this Law;

2) he/she has not been convicted or has not been prosecuted for criminal offenses processed ex officio, which make him/her unsuitable for performing the authorizations of an authorized person;

3) he/she has been professionally trained in the prevention and detection of money laundering and terrorist financing;

4) he/she knows the nature of the business of the employer in the areas that are vulnerable to money laundering or terrorist financing.

The deputy of an authorized person must meet the same conditions.

Please note that the Law does not impose the obligation of such person to report anything directly to the reporting authority.

Client due diligence must be undertaken by lawyers:

1) when assisting in the planning or execution of transactions for a client concerning: purchase or sale of real estate or a company; managing customer’s assets; opening or disposing of an account with a bank (bank account, savings or securities accounts); collection of contributions necessary for establishment, operation or management of a company; foundation, operations or management of an entity under foreign law; and

2) when carrying out, in the name and on behalf of a client, any financial or real estate transaction.

The client due diligence should refer to establishing the client’s identity, verifying the client’s identity, establish the identity of the client’s ultimate beneficial owner, obtaining and verifying information on the purpose of the business relationship or transaction, origin of assets being the subject of a business transaction/relationship, monitoring of client’s business activities.

The specific measures that should be undertaken in accordance to perform a CDD are:

- when establishing a business relationship:

1) identification and verification of the identity of the client or its representative, proxy, power of attorney holder or empowered representative and entrepreneur;

2) identification of the beneficial owner and verification of its identity in the cases specified under the Law;

3) the purpose and intended nature of a business relationship, as well as the client’s business activities;

4) date of establishing a business relationship;

- when performing transaction exceeding 15.000 EUR:

1) identification and verification of the identity of the client or its representative, power of attorney holder or empowered representative and entrepreneur;

2) identification of the beneficial owner and verification of its identity in the cases specified under the Law;

3) date of performance of transaction, value of transaction and its currency, the purpose of the transaction, as well as the name and surname and place of residence, i.e. business name and registered office of the person to whom the transaction is intended, the method of performing such transaction.

- when there are grounds to suspect that a money laundering or financing of terrorism, connected with the client or its transaction, is taking place, or there is a doubt regarding the credibility of the data obtained on the client, or its ultimate beneficial owner:

All the above stated, plus the information on reasons for doubt that a money laundering or terrorism financing is taking place, information on origin of assets being the subject of a business relationship of transaction, and information regarding the origin of assets being the subject of a business relationship/transaction.

Yes

If yes is there a set framework in place or guidelines to assist with this?

Guidelines for Evaluation of Risk of Money Laundering and Financing of Terrorism, rendered by the Serbian Bar Association

Yes, simplified CDD measures can be undertaken when establishing a business relationship with the client, when performing transactions whose value exceeds 15,000 EUR, or when transferring funds without previously established business relationship (for payment services providers) if the client is:

1. A commercial bank, licensed exchange officer, investment funds’ management company, voluntary pension funds’ management company, provider of financial leasing, insurance company, broker-dealer company, money institution, payment institution, a public postal operator based in the Republic of Serbia;

2. A state authority, local self-governance authority, public agency, public fund, public association, etc;

3. a company whose financial instruments are accepted and traded with on the stock market or the regulated public market (i) in the Republic of Serbia, or (ii) any other country, provided that the data disclosing requirements in such countries follow or exceed those of the EU regulations;

4. a person with regard to which the risk of money laundering or financing of terrorism is negligible, pursuant to the criteria set forth under the applicable regulations.

Simplified due diligence measures require gathering of less detailed information on the client. In any case, simplified measures cannot be undertaken if there is a doubt that money laundering or financing of terrorism is taking place.

Yes, pursuant to the Law, the enhanced due diligence measures should be implemented when carrying out a transaction amounting to the RSD equivalent of EUR 15,000 or more (irrespective of whether the transaction is carried out in one or more than one connected operations), only if a client is an official (i.e. a politically exposed person - PEP).

In such case, the obliged person/entity is required to determine the procedure for determining whether the client or its beneficial owner are PEPs. If the client, or its ultimate beneficial owner, is a PEP, apart from regular requirements described under question no. 13, the obliged person/entity must:

• Obtain data on the origin of assets being the subject of a business relationship/transaction, from the client himself;
• Obtain data on all assets owned by the official, publicly available or from other sources, as well as directly from the client;
• Ensure that its employees, prior to establishing a business relationship with an official, obtain the consent of the management bodies for such relationship;
• Monitor, with due diligence, transactions and other business activities of PEPs in the course of the business relationship.
• The same applies to members of the PEP’s family, and their closest associates.

General CDD requirements apply to all entity types. However, for some entity types there are some additional requirements:

1. Offshore company – the obliged person/entity is required to determine a procedure for determination of whether a client, or an entity identified within its ownership structure, is an offshore company. If that is the case, additional measures must be undertaken, and the obliged person/entity must:

• Determine the reasons for establishing a business relationship, i.e. performance of transaction exceeding the amount of 15,000 EUR (without previously established business relationship) in the Republic of Serbia;
• Perform an additional examination of the data on the client’s ownership structure – if the ownership structure is a complex one, a written statement on reasons of such complexity should be obtained by the client’s representative or beneficial owner, and it must be reconsidered whether there is doubt that money laundering/terrorism financing is taking place;

2. A client comes from a country having strategic deficiencies in the system for combating money laundering and terrorist financing – the obliged person/entity is required to carry out additional checkups and obtain additional documentation.

No.

Yes. The subjects are entitled to entrust certain due diligence actions to third persons, under conditions prescribed by the Law, i.e. if a third person itself is a person/entity obliged by the Law. These actions include determination and verification of the client’s identity and the beneficial owner of the client, as well as the nature and envisaged purpose of the business relationship and the transaction, and obtaining and verification of information regarding the assets being the subject of a business relationship/transaction. The third person performing the due diligence assumes all relevant obligations under the Law, but the Subject remains liable for the correct performance of the due diligence actions. The delegation of the due diligence may not be entrusted to an offshore or an anonymous entity or to a third person registered in a country not applying the money laundering and terrorism financing prevention standards.

No.

Pursuant to Article 58 of the Law, if the lawyer:

1) when assisting in planning or executing transactions for a client concerning: the purchase or sale of real estate or a company; managing a customer’s assets; opening or disposing of an account with a bank (bank account, savings or securities accounts); the collection of contributions necessary for the establishment, operation or management of a company; foundation, operations or management of an entity under foreign law; and

2) when carrying out, in the name and on behalf of a client, any financial or real estate transaction;

deems there are reasons to suspect money laundering or terrorism financing in connection to the transaction or the client, he/she should inform the APML accordingly, prior to performing the transaction, and indicate in the report the time when the transaction should be executed. In urgent cases, such a report may be delivered also by telephone, in which case it shall consequently be sent to the APML in writing, but no later than the next business day. This reporting obligation also applies to a planned transaction, irrespective of whether or not the transaction was carried out.

If the lawyer is not able to act as described above for any justified reasons or due to the nature of transaction, he/she should send data to the APML as soon as possible, upon acknowledging the reasons for suspicion of money laundering or terrorist financing. In this case, the lawyer should give a written statement explaining the reasons why he/she did not act in compliance with the Law.

Furthermore, pursuant to the Law, when a client requests advice from the lawyer concerning money laundering or terrorism financing, the lawyer should report it to the APML promptly, but no later than 3 days (within the day when the client requested the advice).

Yes, the Law sets forth an exception to the requirement of reporting suspicious transactions. Namely, lawyers are not bound to provide information obtained from or about the client when ascertaining a client’s legal position or representing the client in court proceedings or with regard to court proceedings, which includes advising on initiating or avoiding court proceedings, regardless of whether the information was obtained prior to, during or after the proceedings.

If the APML requests such information in any of these situations, the lawyer will not be bound to provide the information or documentation, but will be bound to notify the APML in writing stating the reasons due to why he/she did not act according to the APML request, within 15 days from the receipt of such request.

The Law sets forth an exemption from responsibility for any damage caused to clients or third parties when lawyers (or employees in a law firm, and generally entities obliged by the law) obtain and process data, information and documentation about clients; provide APML with data, information and documentation about their clients; execute the order of the APML to temporarily suspend the execution of a transaction or to monitor the financial transactions of a client; temporarily suspend a transaction in accordance with the Law. Please note that there is no exemption if it has been proven that such damage was caused intentionally or with gross negligence.

Moreover, the lawyer is not in breach of the attorney/client confidentiality when sending data, information and documentation to the APML in accordance with this Law. The same applies when processing data, information and documentation in order to examine details of the client or of transactions in cases where there are reasons for suspicion of money laundering or terrorism financing.

Yes, the Law does not set any prohibition to proceed with the legal advice/transaction once a suspicion transaction report has been filed.

If yes, must consent from authorities be obtained first?

No.

The Law states that the obliged person/entity is required to monitor, on a regular basis, client’s business operations and compliance of client’s activities with the nature of a business relationship and in accordance usual scope and type of client’s business operations

The Law does not provide any examples of documents appropriate for this purpose. However, we are of the opinion that any document proving a valid legal basis for the origin, i.e. source of wealth should be enough.

The Law does not provide any examples of documents appropriate for this purpose. However, we are of the opinion that any document proving a valid legal basis for the origin, i.e. source of funds should be enough.

A personal ID document (ID card, passport) is needed for determining the identity of such a client. If such a document does not provide enough information, other official documents will be used.

The identity of a private individual can also be verified on the basis of a qualified electronic certificate, issued by the certification body based in the Republic of Serbia, or foreign electronic certificate which is equal to the national one.

If a private individual is an entrepreneur, an excerpt from the relevant register is also needed.

Verification of the company’s statutory representative shall be performed in the same manner as a verification of a private individual. Apart from verifying the company’s representative, the company’s identity shall be determined on the basis of: an original or certified copy of the documentation from the register kept by the competent authority of the company’s headquarters, not older than 6 months, or by an insight into the relevant register, if possible.

If the excerpt does not contain all of the relevant information, the obliged person/entity shall obtain the missing data from the original documents or other business documentation submitted by the client. If some missing data, for objective reasons, cannot be determined in the prescribed manner, the obliged person/entity is required to determine this information on the basis of the client’s written statements.

There are no additional ways in which lawyers are affected by anti-money laundering legislation, apart from those described herein.

Although this has happened in practice, there is no public data available relating to these situations.

No. Please note that Serbia is not member of the FATF. However, Serbia is a member of the Moneyval Committee within the Council of Europe, which is a FATF Associate Member, and there is a mutual evaluation performed by Moneyval (Mutual Evaluation of Serbia from April 2016).

If yes, what were the findings concerning Lawyers' compliance with the FATF 40+9 recommendations?

The Mutual Evaluation of Moneyval (relating also to FATF 40 Recommendations) found that Serbia has made efforts to improve its AML/CFT legal and institutional framework since the previous evaluation. Deficiencies remain with respect to some important FATF Recommendations, particularly those dealing with financing of terrorism (FT) and proliferation financing (PF) targeted financial sanctions (TFS), non-profit organizations (NPOs), financial sanctions, supervision of certain designated non-financial businesses and professions (DNFBPs), politically exposed persons (PEPs), wire transfers and high-risk jurisdictions.

Yes: The National Risk Assessment for Serbia.

Please note there is no public information regarding transactions reported to the central authority.

N/A