Anti-Money Laundering – AML in the Republic of Serbia

What is Money Laundering?

Money laundering is the process of concealing the illegal origin of assets or money obtained through criminal activities and integrating them into legitimate financial flows. Business entities can play a key role both in transactions that represent money laundering and in preventing such activities.

The Law on the Prevention of Money Laundering and the Financing of Terrorism (“Official Gazette of RS”, nos. 113/2017, 91/2019, 153/2020, 92/2023, 94/2024 and 19/2025) governs this area in the Republic of Serbia. It is aligned with international standards, primarily with the FATF (Financial Action Task Force) recommendations and EU directives.

Supervision of the implementation of the Law is carried out by the Administration for the Prevention of Money Laundering, which acts as the financial intelligence unit of the Republic of Serbia, in cooperation with other supervisory authorities.

 

The Role of Business Entities in Money Laundering

Business entities, especially large corporations and financial institutions, due to the nature of their operations, engage in transactions involving substantial sums of money. This makes them potential targets for money laundering, as such transactions can be more difficult to detect and harder to trace to their actual sources.

Moreover, complex corporate structures and a wide range of services can be exploited through fake or intricate business transactions to redistribute and conceal money.

Lastly, many commercial activities involve international transactions, allowing funds to move across borders with differing regulatory frameworks. This may facilitate money laundering if the foreign regulations are weaker or less effective at detecting suspicious flows.

Therefore, the prevention of money laundering is a crucial responsibility of business entities.

The Law identifies business entities as key players in the money laundering process, particularly when engaged in:

·       Real estate transactions

·       Auditing and accounting services

·       Tax advisory services

·       Credit intermediation

·       Factoring and forfeiting

·       Trade in specific goods (when involving over EUR 10,000 in cash)

 

Obligations of Business Entities in Anti-Money Laundering Compliance

Given their potential involvement in money laundering, the Law designates business entities (along with individuals, institutions, and organizations) as obliged entities responsible for implementing specific measures and procedures to prevent money laundering and terrorism financing.

Obliged entities under the Law include:

1.     Banks

2.     Authorized currency exchange offices

3.     Investment fund management companies

4.     Voluntary pension fund management companies

5.     Financial leasing providers

6.     Insurance companies

7.     Broker-dealer companies

8.     Organizers of games of chance

9.     Audit companies and independent auditors

10.  Electronic money institutions

11.  Payment institutions

12.  Real estate intermediaries

13.  Factoring companies

14.  Entrepreneurs and legal entities providing accounting services

15.  Tax advisers

16.  Postal operators providing payment services
16a. Postal traffic service providers

17.  Virtual asset service providers

18.  Central Securities Depository and Clearing House

19.  Legal entities, companies, entrepreneurs, and individuals involved in setting up legal entities, managing assets for third parties, trading or mediating in the trade of (including auctions of) artworks, precious metals, and stones, and warehousing artworks, if transactions exceed EUR 10,000

20.  Attorneys – when assisting in transactions involving real estate, asset management, opening or managing bank accounts, raising capital for business entities, or preparing loan agreements or conducting financial transactions on behalf of clients

21.  Public notaries – when preparing or solemnizing documents

22.  Trust or company service providers acting on the basis of authorization to perform such activities

Anti-money Laundering Compliance Measures and Procedures

To prevent and detect money laundering, terrorism financing, and the financing of weapons of mass destruction, obliged entities must take actions before, during, and after a transaction or business relationship is established.

They must establish a comprehensive Anti-Money Laundering program, which includes:

·       Conducting a risk analysis for their activities

·       Adopting internal Anti-Money laundering policies and procedures

·       Appointing a compliance officer and deputy

·       Performing regular internal audits

·       Maintaining records of AML measures taken

Specifically, obliged entities are required to:

1.     Know their client and monitor their business

2.     Provide the Administration with requested data, information, and documentation

3.     Appoint individuals responsible for Anti-Money Laundering compliance

4.     Regularly train and educate staff in this field

5.     Ensure continuous internal control

6.     Create a list of indicators for identifying suspicious transactions or persons

7.     Maintain and store relevant records

Risks of Non-Compliance

Entities that fail to implement appropriate AML measures face several risks:

·       Reputational risk: Damage to their image and trust among clients and partners

·       Legal risk: Exposure to criminal prosecution and fines (up to RSD 3,000,000 for legal entities), and potential business bans

·       Operational risk: Business disruptions and additional compliance costs after irregularities are detected

The KYC Principle – Know Your Customer

KYC is an internationally recognized principle adopted by most countries and regulatory authorities worldwide. Serbian AML Law mandates three levels of customer due diligence:

·       Standard measures – Identification and verification of the client and beneficial owner, collection of data on the nature of the business relationship

·       Enhanced measures – Applied to high-risk clients (e.g., politically exposed persons, clients from high-risk jurisdictions)

·       Simplified measures – May apply to low-risk clients as defined by the relevant Rulebook

Business entities must conduct KYC procedures prior to entering a business relationship, for transactions over EUR 15,000, or whenever there is doubt about the validity of previously obtained data.

Recognizing Suspicious Transactions

Entities must identify and report to the AML Administration any client or transaction that raises suspicion of money laundering. Common red flags include:

·       Requests for large cash payments

·       Transactions inconsistent with the client’s usual business activity

·       Complex ownership structures with no clear economic justification

·       Offshore transactions (e.g., to/from tax havens)

·       Refusal to provide necessary documentation

Suspicious activity reports must be submitted before executing the transaction or immediately after suspicion arises.

Employee Training

Companies must ensure regular training of employees involved in AML duties. The training must cover:

·       Client identification procedures

·       How to recognize suspicious activity

·       Recordkeeping requirements

·       Legal responsibilities

According to the law, training must be conducted at least once a year, following guidelines from supervisory bodies.

Technology and Tools
Although the law does not mandate specific technology, high-risk companies are increasingly using software tools for:

·       Automated transaction monitoring

·       Sanctions list screening

·       Client risk analysis

·       KYC process management

Investing in technology can significantly reduce operational compliance costs and improve the efficiency of detecting suspicious activities.

Legal Amendments in 2025
The latest amendments to the AML Law entered into force on March 14, 2025.

In line with FATF and EU recommendations, the key novelties include:

·       Cash transaction limitations: New cash threshold of EUR 10,000 for real estate transactions, loans, goods, and services. Transactions above this must be executed via bank transfer.

·       Digital asset service providers: These entities must now apply enhanced due diligence for foreign clients.

·       Stricter penalties: Supervisory bodies now have better tools for oversight, and penalties for non-compliance have increased.

Conclusion and Recommendations

Serbian businesses must be proactive in preventing money laundering through:

·       Ongoing legal compliance

·       Building a culture of compliance

·       Continuous employee training

·       Risk-based approach to clients and transactions

The Law provides a three-month period for harmonizing by-laws, but presumes that all entities are already complying with their AML obligations. For companies without a developed legal department, this may be a challenge.

Considering the complexity of AML obligations and the need for constant alignment with both local and international regulations, engaging an external legal expert or law firm can significantly improve implementation. Legal support not only ensures full compliance but also protects the company from legal, financial, and reputational risks.

Petrović Mojsić & Partners Law Firm