Montenegro Country Summary

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 is a major concern in Montenegro, affecting both public and private sectors, with a Transparency International corruption perceptions index score of 46. The government has made some strides in combating corruption, including the establishment of a National Council for the Fight against Corruption and high-level investigations leading to arrests of officials. However, pervasive issues such as arms trafficking, human trafficking, and financial crimes persist, compounded by political instability and a fragmented judicial system.

Montenegro's economy is primarily driven by tourism, energy, and agriculture, with tourism contributing approximately 25% to GDP, although some estimates suggest it could be over one third when including the informal sector. The energy sector is undergoing significant transformation towards renewable resources, highlighted by projects such as a new wind power plant and an underwater electricity cable to Italy, which enhances energy exports. Despite a recent GDP growth of 6% in 2023, the economy remains vulnerable due to its reliance on a few sectors and outstanding debt, although public debt-to-GDP ratios have improved significantly in recent years.

Montenegro has established an investment framework that encourages foreign direct investment (FDI), allowing foreign entities to own 100% of domestic companies and repatriate profits without restrictions. However, the country still faces challenges in creating a fully liberal business climate, with ongoing structural barriers and concerns regarding the rule of law, corruption, and a significant grey economy. While the government has made efforts to simplify business registration and improve transparency, the inconsistent enforcement of regulations and the slow judicial process remain significant hurdles for potential investors.