FATF status

Montenegro is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Montenegro was undertaken in 2023. According to that Evaluation, Montenegro was deemed Compliant for 2 and Largely Compliant for 19 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 2 with regard to the areas of Effectiveness of its AML/CFT Regime.

Corruption remains a significant issue in Montenegro, affecting both public and private sectors, with a corruption perceptions index of 46. Despite some progress in combating corruption, including the establishment of a National Council and ongoing high-level investigations, foreign investors still view corruption as a major obstacle. The regulatory environment is complex and inconsistently applied, particularly at the municipal level, leading to widespread bribery and a lack of effective integrity mechanisms.

Montenegro's economy is primarily driven by tourism, energy, and agriculture, with tourism contributing approximately 25% to GDP. The country is undergoing significant energy sector transformations aimed at increasing renewable energy reliance, while infrastructure development, including highway construction, is a government priority. Despite a decline in foreign direct investment in 2023, Montenegro has seen a GDP growth of 6%, aided by strong private consumption and a robust tourism season.

Montenegro's investment climate is characterized by a legal framework that encourages foreign direct investment (FDI), allowing foreign entities to own 100% of domestic companies and repatriate profits without restrictions. However, the country faces challenges such as a reliance on imports, a significant grey economy, and ongoing issues with corruption and the rule of law, which hinder the establishment of a fully liberal business environment. Despite these obstacles, Montenegro has made strides in simplifying business registration and improving transparency, aiming to attract more foreign investment, particularly in the tourism, energy, and agriculture sectors.