Kosovo – Know Your Customer (KYC) Rules

 

 

Kosovo is not considered a regional financial or offshore center. The country has porous borders which facilitates an active black market for smuggled consumer goods and pirated products. According to the Customs Service, significant amounts of cigarettes and fuel are smuggled into the country. Kosovo is a transit point for illicit drugs, not a destination point. Proceeds of drug trafficking do not fund the black market of smuggled and pirated items.

Illegal proceeds from domestic and foreign criminal activity are generated from official corruption, tax evasion, customs fraud, organized crime, contraband and other types of financial crimes. Most of the proceeds from smuggling activity are believed to be laundered directly into the economy in areas such as construction and real estate, retail and commercial stores, banks, financial services, casinos and trading companies. Smaller amounts are thought to be laundered through the financial system.

KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably.

The definition of PEP in Kosovo law is not comprehensive, largely covering only members of political parties.

    • Foreign PEP: NO
    • Domestic PEP: YES

Kosovo – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Kosovo Law:

    • Banks
    • Money exchangers and remitters
    • Securities brokers and service providers, portfolio and fund managers
    • Insurance companies
    • Issuers of traveler’s checks, money orders, emoney, and payment cards
    • Political parties
    • Casinos
    • Attorneys, accountants, notaries, and auditors
    • Real estate agents
    • High-value goods dealers
    • NGOs and Micro-Finance Institutions

Kosovo – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: 224 from July 2010 – June 2011

Number of CTRs received and time frame: 109,098 from June 2011 – October 2011

The following is a list of STR covered entities covered by Kosovo Law:

    • Banks
    • Money exchangers and remitters
    • Securities brokers and service providers, portfolio and fund managers
    • Insurance companies
    • Issuers of traveler’s checks, money orders, emoney, and payment cards
    • Non-governmental organizations
    • Political parties
    • Casinos
    • Attorneys, accountants, notaries, and auditors
    • Real estate agents
    • High-value goods dealers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: Three from January – June 2011
Convictions: Two from January – June 2011

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Kosovo Police Economic Crimes and Corruption Directorate, the Organized Crime Directorate, the Special Prosecutors Anti-Corruption Task Force, the Financial Intelligence Unit (FIU), the Agency for the Management of Confiscated and Sequestered Assets, the Tax Investigations Unit, the Tax Administration of Kosovo (TAK) Gaming Department, and Customs Intelligence and Investigations are nascent entities which receive significant training and assistance. As each organization develops its capacity in enforcing laws, it must also learn how to coordinate with other agencies across the government. The weaknesses faced by these financial and law enforcement institutions do not represent a lack of commitment by Kosovo officials, rather the limitations are illustrative of a judicial and regulatory system that is in its infancy and still developing capacity.

The definition of PEP in Kosovo law is not comprehensive, largely covering only members of political parties.

The Kosovo draft Law on Games of Chance has been forwarded to Parliament for the first reading. Following passage into law, the TAK Gaming Department will be tasked with the development and implementation of a regulatory framework in accordance with the new law.

The Government of Kosovo (GOK) should continue its efforts to have the FIU become fully operational, compliant with international standards, and accepted by the international community. A review of Kosovo‘s judicial and regulatory regime to assess Kosovo‘s current state of compliance with international standards led to the development of an 89-item action plan to achieve compliance. The government now needs to develop a plan for achieving the suggested legal and/or regulatory changes.

Kosovo‘s lack of UN membership, stemming from political disagreements with Serbia, is a limiting factor on the country‘s participation in regional and international organizations, and makes Kosovo unable to become a party to any UN treaty or convention.