Macedonia – Know Your Customer (KYC) Rules

 

 

Macedonia is not a regional financial center. Money laundering in Macedonia is mostly connected to financial crimes such as tax evasion, smuggling, financial and privatization fraud, insurance fraud, bribery, misuse of official position, and corruption. Most of the laundered proceeds come from domestic criminal activities. A small portion of money laundering activity may be connected to narcotics trafficking, although there is no evidence narcotics trafficking organizations or terrorist groups control money laundering. Organized crime groups involved in trafficking weapons or humans in Macedonia may have laundered the proceeds from these activities by investing in businesses.

Macedonia is not an offshore financial center, and shell banks are not allowed. Most financial transactions are done through the banking system; however, cash transactions and settlements of considerable amounts sometimes take place outside the banking system. There is no evidence that alternative remittance systems exist. There are a few operational free trade zones in Macedonia, which all function as industrial zones within which some foreign-owned industrial production facilities have the legal right to receive the benefits of a free trade zone. The GOM is trying to attract more foreign investment by leasing out several large free trade zones throughout the country.

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

    • Foreign PEP: YES
    • Domestic PEP: YES

Macedonia – KYC covered entities

 

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

    • Banks
    • Savings houses
    • Exchange offices
    • Central securities depository
    • Brokerages
    • Life insurance companies
    • Auditing companies
    • Accountants
    • Notaries
    • Attorneys
    • Real estate agents
    • Consultants
    • NGOs
    • Car dealerships
    • Cadastre
    • Company service providers
    • Casinos

Macedonia – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: 123 – January – October 2011

Number of CTRs received and time frame: 69,347 – January – October 2011

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

    • Banks
    • Savings houses
    • Exchange offices
    • Central securities depository
    • Brokerages
    • Life insurance companies
    • Auditing companies
    • Accountants
    • Notaries
    • Attorneys
    • Real estate agents
    • Consultants
    • NGOs
    • Car dealerships
    • Cadastre
    • Company service providers
    • Casinos

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: Four – January – July 2011
Convictions: Four – January – July 2011

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Dealers of art, antiques, and other high-value consumer goods, entities dealing with jewelry and precious metals, and travel agencies are excluded from the list of entities obliged to report suspicious and cash transactions to the Macedonian FIU. In 2011, the Law on Money Laundering Prevention and other Criminal Proceeds and Financing Terrorism (AML/CFT Law) was amended to exclude stock exchanges, credit registry, credit bureaus, gaming centers, and non-life insurance companies from the list of obliged reporting entities. At the same time, car dealerships, cadastre, and company service providers were added to the list. So far, there is no evidence any of these entities engage in money laundering or terrorist financing activities. The amendments also strengthen and more precisely define the anti-money laundering/counter terrorist financing (AML/CFT) activities related to reporting entities other than banks.

Anonymous bank accounts and bearer shares are not permitted. Non-bank financial institutions, including exchange offices and non-bank money transfer agents, are poorly supervised and audited in regard to AML/CFT programs and practices. There is a need to improve supervision of the non-bank financial sector and provide necessary resources and training to ensure full implementation of laws. Reporting by lawyers, accountants, brokers, real estate agents, consultants, NGOs, casinos, and notaries is irregular, but improving due to awareness raising efforts.

The AML/CFT Law amendments give the FIU the authority to order the reporting entities to monitor the business relationship when there is suspicion of money laundering or terrorism financing. The law also provides a more precise definition of supervisory authorities, fines and penalties for non-compliance, and provisions for more education and training for reporting entities.

The FIU‗s competencies overlap in many areas with the Public Revenue Office, the Customs Administration, the Financial Police, and the regular police. Coordination among them has been effective in the past few years, especially when working in joint working groups formed and led by a public prosecutor. This has resulted in several coordinated large-scale investigations of cases concerning money laundering, tax evasion, fraud, corruption, and misuse of official position, involving numerous companies and individuals.

To date, there have been no convictions for terrorist financing. A few smaller banks and all savings houses lack the ability to electronically identify account holders and transactions by named individuals.

In 2010, Macedonia passed amendments to the Criminal Procedure Code (CPC) that allow the use of specialized investigative methods in investigating money laundering cases. The effective date of the new CPC has been moved back from late 2011 to November 2012. Real reforms in the judiciary that should enable much stronger efforts against organized crime, terrorism, money laundering, and narcotics smuggling are largely lagging behind. The judicial system is highly politicized and inefficient. Rule of law is not well respected, and selective enforcement of justice is common.