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- Conflict with EU Law – Despite the country’s progress towards EU membership, five key EU legal provisions clash with the country’s laws, raising concerns over its alignment with EU legal framework
- The use of mobile and e-banking payments that violate global payment and financial standards is effectively blocked
- In just five days more than 25,000 signatures were collected, which represents approximately 8% the electorate in France. This shows a widespread discontent among the public.
- The new legislation poses significant operational and economic risks to this segment of business, which accounts for only 2% of Montenegro’s employment.
- Experts and think-tanks from the EU have raised concerns over the negative solutions that are included in these provisions.
A legislative battle in the Western Balkans is currently underway and sending ripples throughout the European fintech community. Montenegro’s recent amendments to the Gambling Law have sparked significant debate, especially Article 68f. This change, which focuses on the limitations of deposit methods for player accounts online, is not only a local issue, but resonates globally with EU legal standards.
Jovana Klisic is the representative of Montenegro Bet – the leading trade association for the industry in Montenegro. Ms. Klisic has a wealth of experience, and is well versed in both the local and global aspects of the industry. She offers an unique perspective of the impact of Montenegro’s regulatory changes, and the ongoing battle of institutions to mitigate this adverse regulatory treatment.
Article 68f in stark Contravention with Montenegrin Legal Norms
Can you please explain briefly what the problem is with Article 68f, Ms Klisic?
The provision is in stark contrast to multiple EU directives, regulations and laws. This provision is in direct opposition to Article 72 of the Montenegro-EU Stabilization and Association Agreement which requires alignment with EU acquis. This law is also in conflict with the Payment Services Directive (PSD2) which aims to create an integrated market for electronic payment. PSD2 provides equal treatment for existing and new players on the market, while promoting consumer protection and payment transparency throughout the Union. Article 68f, however, effectively denies electronic payments companies access to the EU’s market.
Cash transactions are also considered high-risk under the EU 4/5AML Directive. Limiting transactions to card or cash payments at physical locations does not adequately address money laundering risks. Smaller cash transactions (often below 1,000 EUR) could be used as a means of money laundering. Montenegro’s decision is in direct contradiction with the EU’s vision for a digital and integrated financial system, which applies to both EU members and candidate countries.
The article in question also ignores obligations under the Montenegrin Law on Law on Administrative Procedure which mandates consultations with the public in the preparation of law and strategy – an apparent step that was bypassed here.
To comply with the current law, many locations must be within a certain distance of the school to collect the cash deposits. This raises questions about the validity and sustainability of such a controversial article.
Macroeconomic Impact: 2% of Montenegro’s jobs at Risk
What is the impact of this new legislation on business and Montenegro?
This industry faces a double-edged blade – inefficiency and possible economic consequences. The sector employs almost 2% directly and indirectly of the workforce, and with a 15% unemployment rate, any negative impacts on the industry could be very damaging and have far-reaching effects. The removal of electronic banking and newssagents as deposit options, despite compliance and transparency, affects not only operational efficiency, but also jobs. This echoes the negative effects on the wider economy of Montenegro.
A Unified Position: Mobilizing 25,000 voices for Fair Regulatory Treatment
What are the measures being taken to address concerns raised by Article 68f?
Our approach is proactive and comprehensive. Montenegro Bet – our trade association, which has decades of experience in pursuing EU-compatible regulatory options – has initiated a constitutional revision, raising concerns over the unconstitutionality.
We have mobilized the public to support our cause. In only five days, we gathered over 25,000 signatures, which represents about 8% the electorate in the country. This petition was then submitted to the Assembly. This impressive show of support not only highlights the wide-spread concern, but also illustrates the risk of job losses that could occur in our industry.
We are also engaging with international institutions to draw attention to the fact that this law is in direct conflict with EU directives as well as global standards for anti-money laundering. Our main goal is to align Montenegro’s regulatory framework to both EU and international financial norms. This will ensure a fair and transparent industry.
Montenegro’s Isolated move Amongst Globally Accepted financial practices
Does Article 68f align itself with international financial regulation practices?
This article is a lone wolf when compared to global trends. As a result of the advocacy of bodies such as MONEYVAL, and FATF, there is a shift in international trends towards electronic payments. Digital solutions are gaining popularity in the global financial community due to their efficiency and transparency. Montenegro is therefore isolated from EU practices, but also the direction of the global financial community, by Montenegro’s move.
The European Commission has urged Montenegro in 2021 to intensify its efforts on money laundering investigations. Montenegro could be placed in a group of countries that are at heightened risk for money laundering and terrorist financing if it does not adhere to the payment limits set out by Article 68f.
In 2022, European Banking Authority (EBA), a European regulatory body, will emphasize the importance of basic online banking for all EU citizens and, by extension, those countries that are aspiring to join the EU. This directive is in line with the trend towards digitalizing financial transactions, where mobile and e-banking services are becoming commodities. Article 68f of Montenegro’s Law on Games of Chance excludes these vital services, which is in direct contradiction to the EU’s position on modern financial inclusion.
What are the implications of these changes for Montenegro’s fintech sector?
We can say without exaggeration that we are at a crossroads. We are focusing on minimizing the negative effects of this law. Looking ahead, this communication crisis is an opportunity for Montenegro to align its financial practices with EU standards. This is about more than just a single law. It’s also about making sure that Montenegro has a financial and regulatory structure that’s beneficial to a fair, competitive industry.
