NEW DEVELOPMENTS IN FOREIGN EXCHANGE OPERATIONS

On March 14, 2025, the Amendments to the Statute on Foreign Exchange Operations¹ came into force, significantly enhancing the oversight role of the National Bank of Serbia (hereinafter: the NBS) in exchange and foreign exchange operations. These changes aim to advance the financial market and protect users of financial services. Although NBS's oversight is particularly emphasized in the control of exchange operations, this text is limited to the overview of changes in the foreign exchange operations as they affect a wider range of entities.

Control of Foreign Exchange Operations

The amendments detail the procedures for addressing irregularities in foreign exchange operations. The NBS can now issue binding decisions requiring the controlled entity to rectify the irregularities and comply with the Statute and regulations made by the NBS, within the deadline ordered by the NBS, within which the controlled entity must submit a report on compliance with the order, along with appropriate evidence. The decision is final, providing it can be disputed in an administrative dispute, which however does not prevent or delay the enforcement.

Controlled entities face fines for obstructing NBS controls, failing to provide requested information, or not complying with orders, in the cases such as:

• If they don’t allow NBS to carry out control of foreign exchange operations, in accordance with NBS regulations governing the manner of controlling foreign exchange operations of residents and non-residents.
• If they don’t provide all data and documents to NBS within the deadline specified in its request.
• If they don’t comply with the order to align its operations.

The scope of entities who can be fined has expanded to include branches of foreign legal entities, in addition to legal entities, responsible persons in legal entities, entrepreneurs, and individuals. The fines depend on the form or status of the controlled entity and range from:

• 100,000 RSD to 3,000,000 RSD for legal entities and branches of foreign legal entities, and from 10,000 RSD to 500,000 RSD for responsible persons in legal entities and branches of foreign legal entities;
• 50,000 RSD to 2,000,000 RSD for entrepreneurs;
• 10,000 RSD to 100,000 RSD for individuals.

The criteria to be considered when imposing fines, include: (1) the degree of cooperation of the controlled entity with authorities, (2) previous behavior of the controlled entity, (3) whether the controlled entity and the responsible person have already been fined, (4) readiness to comply with the order, (5) the duration of obstruction of foreign exchange control, (6) other relevant circumstances.

The controlled entity may also be prohibited from disposing of funds in all accounts until compliance is achieved, except regarding payment of the fine and settlement of tax obligations.

If the fines are not paid within the specified period, the NBS calculates default interest. Being that the decision imposing a fine is an enforceable document, enforcement can be initiated based on it.

Method of Control

While the previous solution allowed the NBS to engage other persons to attend control and provide expert support to bank officials, the NBS can now directly engage them to perform foreign exchange controls themselves, thus elevating their authority to match that of NBS employees.

Register of Measures and Fines

A register of measures and fines imposed by the NBS on entities, entrepreneurs, and individuals in accordance with the Statute has been established.

Data in the register are not publicly available but can be accessed by relevant authorities and affected entities upon request.

Penal Provisions and Protective Measures

Minimum fines for misdemeanors stipulated in Article 59 have increased fivefold and can now be imposed in the range of 500,000 RSD to 2,000,000 RSD for residents – legal entities, branches of foreign legal entities, banks, electronic money issuers, payment institutions, public postal operators, as well as non-residents – legal entities, while for responsible persons in these entities, the minimum fine has been increased tenfold and can be imposed in the range of 50,000 RSD to 150,000 RSD. Additionally, a new provision allows for a higher fine than prescribed, in accordance with Article 39, paragraph 4 of the Statute on Misdemeanors.

Resident entrepreneurs face minimum fines up to 15 times higher for violations of provisions regulating foreign exchange payments, reporting, investments, and foreign credit operations which now range from 150,000 RSD to 500,000 RSD.

In lieu of the previous approach, which mandated the full confiscation of undeclared cash and checks brought into or taken out of the Republic of Serbia—a measure temporarily enforced by customs authorities at border crossings—the new regulation stipulates that the court shall impose a protective measure of partial confiscation of such cash and checks, in addition to a fine. This partial confiscation is now the default measure unless the specific circumstances of the misdemeanor or its severity justify full confiscation.

This rule aligns domestic regulations with the standards of the European Court of Human Rights, which advocates for a fair balance between legitimate public objectives and the individual's right to peaceful enjoyment of their property.

For other misdemeanors outlined in the Statute, the standard procedure is to impose a protective measure of confiscation of items used or intended for the commission of the misdemeanor, or items resulting from the commission of the misdemeanor. Partial confiscation is prescribed as an exception, applicable when the motives or other circumstances surrounding the misdemeanor indicate that full confiscation is not justified.

Implementation timeline is set to three months of the enactment of the amendments to the statute, during which time, by-laws to support these amendments must be adopted.

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