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Montenegro’s gambling laws have been amended to effectively ban modern electronic payment methods such as Apple Pay, PayPal and mobile banking.
Ironically, just a few weeks ago, the Minister for Finance said that the country was not bound to follow EU regulations. This is a paradoxical position, especially since the nation actively seeks EU membership and wants to integrate itself into the digital world.
The European Commission has urged Montenegro in 2021 to intensify its efforts against money laundering. The recent amendments, however, move in the opposite directions, and could isolate the country from EU trends and global financial community practices.
The gambling industry in Montenegro has been in turmoil since the start of 2024.
The Industry’s Response
The controversial ban on electronic payment seems to be designed to limit competition and prevent the growth of companies owned by foreigners, including U.S.-based enterprises. This action is in direct contradiction to global business practices, and undermines competitive business principles. In just five days, a petition to stop the change attracted 25,000 signatures. This represents around 5% the electorate of the country. The petition highlighted the possibility of job losses and economic consequences of such legislation.
Montenegro Bet is the national trade association of Montenegro. They have submitted the petition and started a constitutional review to highlight concerns about the unconstitutionality. They are also working with international organizations to bring attention to the negative effects of the changes in the laws and their contradictions to EU directives. These attempts were all met with no response from any institution.
Overview on Article 68f Violations of EU Acquis
The amendments have been met with a lot of opposition because they are perceived as being in conflict with the law of the European Union (EU). Montenegro, while not a member of the EU at this time, is a candidate and must align its laws to EU standards. The amendments are in conflict with several important EU legal provisions including the TFEU Payment Services Directive which aims to create an integrated market for electronic payment and the EU 4AML Directives which classify cash transactions as high-risk for money laundering.
Multiple Lawsuits Coming
Combining the apparent corruption of local companies in the same industry with certain individuals in the Ministry of Finance, the result is an attempt to de-facto expel several operators, including those from the United States, denying them equal market access.
It has led to significant legal challenges. Multiple operators have taken preliminary steps towards legal action. This includes a lawsuit filed before the International Court for Settlement of Investment Disputes.
A cash and retail-loving law in the middle of the digital age
The gambling industry in Montenegro is very concerned about the amendments to Article 68f. The new law prohibits the use of electronic payment methods such as mobile payments and e-banking to deposit funds into betting account. The new law leaves Montenegro bettors with two options. They can either go to a betting store and place a wager in cash, which will then transfer funds into their account, or they can pay by card at a terminal inside a betting house.
This bizarre move forces players into a store to fund their accounts online, which is an inconvenience in a day and age when digital transfers are the norm.
What next after Defying global trends and AML standards?
Montenegro’s decision to limit electronic payment is a departure from global trends. Moneyval, the Financial Action Task Force, and other organizations like them, have advocated a shift in international trends towards electronic payments. Digital solutions are being adopted by the global financial community for their efficiency and transparency.
Montenegro’s position not only separates it from EU practice, but also goes against the direction of global financial community. This increases the risk of money-laundering and undermines investor confidence.
It is alarming that the most secure and advanced online payment methods, like Apple Pay and PayPal are being banned in favor of cash transactions. This development requires urgent attention from national and international stakeholders.
