The Council of Ministers of Bosnia and Herzegovina have adopted the rulebook on the application of the Law on Preventing Money Laundering and Terrorist Financing (the Law), which entered into force on May 29 2015.
A year later, on June 29 2016, certain amendments to this Law entered into force. The amendments relate to the Indirect Taxation Authority (ITA), which controls the carrying of cash, securities, traveller's cheques and other cash equivalents when entering or exiting the country and executes their temporary seizure in cases when money laundering or terrorist financing is suspected.
The Law sets out criteria for the collection of data necessary for identifying clients and transactions that must be reported to the State Investigation and Protection Agency (SIPA). Some general provisions of the Law are listed below.
Entities and individuals liable to file reports include:
- Post offices;
- Investment and mutual pension companies;
- Authorised intermediaries trading in money market instruments;
- Insurance companies;
- Casinos, gambling houses and other organisers of games of chance;
- Currency exchange offices;
- Pawnbroker offices;
- Public notaries, lawyers, accountants, auditors and legal or natural persons performing accounting and services of tax advising;
- Privatisation agencies;
- Real estate agencies;
- Legal and natural persons performing activities such as receiving and/or distributing money or property for humanitarian, charitable, religious, educational or social purposes; transfer of money or value; factoring; forfeiting; and safekeeping;
- Entities issuing, managing and performing operations with debit and credit cards;
- Financial leasing companies;
- Companies issuing financial guarantees and other warranties;
- Entities lending, crediting, offering and brokering in the negotiation of loans;
- Entities engaged in underwriting, placement and brokering in insurance policies;
- Companies organising and executing auctions;
- Companies trading in precious metals and stones and products made from these materials; and
- Entities trading with works of art, boats, vehicles and aircraft.
Legal persons failing to comply with the Law may be penalised for an offence with a fine ranging from BAM 2,000 ($1,100) up to BAM 200,000.
The above mentioned entities are obliged to adopt a written internal risk assessment programme for each client and monitor high-risk clients. The assessment needs to be prepared in accordance with guidelines on risk assessment, established by the SIPA and competent supervisory bodies, in accordance with sub-legal acts which determine the detailed criteria for the creation of guidelines (such as the type of responsible person, the scope and type of operations, type of clients) as well as the type of transactions for which it is necessary to perform a simplified identification of the client within the meaning of this law.
The responsible person is obliged to undertake a customer due diligence of a client in cases of:
- Establishing a business relationship with a client;
- Performing transactions amounting to BAM 30,000 or more;
- Existence of doubt in the validity and adequacy of previously received information about the client or the beneficial owner; and
- Existence of doubt of money laundering or financing of terrorist activities in terms of the transaction or client.
Lawyers, law firms, notaries, audit companies and independent auditors, as well as legal and natural persons who perform accounting and tax consulting services are required to enforce measures of prevention and detection of money laundering as well as funding of terrorist activities and act according to the provisions of this Law and the regulations issued on the basis of this Law.
Notwithstanding the above, lawyers, law firms and their staff should act in accordance with the provisions of this Law when:
- They assist in planning or processing transactions for a client in relation to:
- Buying and selling of a real estate or shares of a company;
- Managing of cash, financial instruments or other assets owned by the client;
- Opening and managing bank accounts, saving deposits or accounts for operations;
- Collecting assets necessary for the establishment, operation and management of a company; or
- Establishment, operation or management of an institution, fund, company or other similar organisation.
- They perform on behalf and for the account of a client a financial transaction or transactions related to real estates.
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