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 Transparency International corruption perceptions index score of 46. While 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, challenges persist, particularly in government procurement and municipal regulations. Foreign investors often cite corruption as a barrier to investment, and the enforcement of anti-corruption laws is hampered by inadequate institutional coordination.

Montenegro's economy is primarily driven by tourism, energy, and agriculture, with tourism contributing approximately 25% to GDP, and possibly more when accounting for the informal sector. The energy sector is undergoing significant transformation, focusing on renewable resources, while the government is prioritizing infrastructure development, including new highways. Despite a decline in foreign direct investment in 2023, Montenegro has seen a reduction in its public debt-to-GDP ratio, which has improved due to strong economic growth and repayments.

Montenegro's investment climate is characterized by a 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 weak enforcement of laws, which hinder the establishment of a fully liberal business environment. Despite these challenges, the government is actively working to improve the investment landscape through reforms and the establishment of the Montenegrin Investment Agency to promote investment opportunities.