AMENDMENTS TO REGULATION ON ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING– SERBIA ONE STEP CLOSER TO JOINING SEPA

Amendments to the Statute on Prevention of Money Laundering and Financing Terrorism¹ (hereinafter: the Statute) which entered into force in mid-March 2025, primarily aim to further harmonize national regulatory framework with the EU regulations and international standards in the field of prevention of money laundering and terrorism financing, as well as to fulfill the formal conditions for the Republic of Serbia to join the Single Euro Payments Area (SEPA).

Expanded Scope of Obliged Entities

In order to harmonize with the Fifth Directive (EU) 2018/843 of the European Parliament and Council of May 30, 2018, the amendments to the Statute have expanded the scope of obliged entities to include companies and other legal entities, entrepreneurs, and individuals who, based on legal authorizations, perform activities or services related to the incorporation of companies and other legal entities, as well as business and fiduciary services, and asset management for third parties. All of the aforementioned are now required to apply all the actions and measures provided by the Statute.

Furthermore, under the amendments to the Statute, entities engaged in the business of dealing with artworks, precious metals, and precious stones are also included as obliged entities if, in performing these activities, they conduct or receive payments amounting to 10,000 euros or more (or its equivalent in dinars at the official exchange rate of the National Bank of Serbia on the day of payment), regardless of whether it concerns one or several related transactions.

New Obligations for Clients and Stricter Sanctions

In addition to the obligations of the obliged entities regarding actions and measures for customer due diligence, obligations have also been imposed on clients, i.e., persons or legal entities who are in a business relationship with the obliged entities. The client is now required to provide the obliged entities with all accurate, adequate, and up-to-date information necessary for identifying and verifying their identity, the client's legal representative, proxy, and the beneficial owner. However, although it is clear that the intention of such an obligation is to increase the reliability and up-to-date nature of the information collected by the obliged entity, the effectiveness thereof remains questionable since there is no sanction for the client for the breach of that obligation.

Conversely, stricter penalties have been introduced for obliged entities in the case of serious, systemic, or repeated violations. Supervisory authorities are now empowered to impose fines up to twice the amount of benefit derived from the violation of the law. If the benefit cannot be determined, the fine can amount to up to 120 million dinars. For financial institutions as obliged entities, fines can be as high as 600 million dinars or up to 10% of their total revenue from the previous year, or up to 600 million dinars if the obliged entity is an individual. There are also new provisions specifying the types and amounts of fines, as well as the circumstances to be considered when determining the penalties.

SEPA – Single Euro Payments Area

SEPA is an EU initiative designed to streamline and standardize euro transactions across participating countries. The primary objective of SEPA is to simplify, expedite, and reduce the cost of cross-border payments within the SEPA region, thereby enhancing market integration. SEPA enables users to conduct transactions within the zone as if they were domestic, significantly lowering costs and administrative hurdles.

Serbia has made significant strides towards SEPA membership by aligning its regulations with European standards on anti-money laundering and counter-terrorism financing through legislative amendments. This alignment not only brings Serbia closer to international business norms but also enhances predictability and transparency in payment timelines and amounts. Joining SEPA will facilitate the movement of goods and services, improve financial planning and capital management, and streamline transaction processing, reducing administrative barriers and costs for businesses and individuals alike. Additionally, SEPA membership could incentivize business expansion by mitigating challenges associated with international financial transfers.

Serbia is expected to be formally admitted to full SEPA membership at the next European Payments Council session. The unified payment system is anticipated to be available to users early next year, following the completion of technical integration into the SEPA network. This development is projected to further integrate Serbia into the European payment system, offering long-term benefits for domestic enterprises and international financial flows.

Disclaimer: The text is informative and does not provide legal advice