Countries/Jurisdictions of Primary Concern - Macedonia
Macedonia is not a regional financial center. While most financial transactions are done through the well regulated and supervised banking system, cash transactions of considerable amounts occasionally take place outside the banking system. Money laundering in Macedonia is most often linked to financial crimes such as tax evasion, smuggling, financial fraud, insurance fraud, and corruption. Macedonia is a transit country for trafficking in human beings from high migration areas to Western European countries. Domestic and international organized crime groups collaborate, particularly in the illicit trade in narcotics and psychotropic substances, smuggling of persons, smuggling of products, illegal trade in weapons and stolen luxury motor vehicles, and in credit card fraud. There is no evidence that traffickers of weapons or human beings have been involved in money laundering activities using banking or non-banking financial institutions. Money transfers, structuring cash deposits, the purchase of real estate and goods, various trade-based money laundering techniques, and the use of legal entities from offshore countries are frequent money laundering techniques.
Macedonia is not an offshore financial center, and the Law on Banks does not allow the existence of shell banks in Macedonia. Anonymous bank accounts and bearer shares are not permitted. There is no evidence that alternative remittance systems exist in Macedonia; however, exchange offices and non-bank money transfer agents are not prudently supervised. The few free trade zones (FTZs) in Macedonia function as industrial zones. The production facilities enjoying the FTZ benefits are owned by foreign investors. The Government of Macedonia is trying to attract more foreign investment by leasing out several large FTZs throughout the country.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO
KYC covered entities: Banks, savings institutions, exchange offices, and money remittance agents; central securities depository and brokerages; legal entities approving loans, issuing electronic money, and issuing and administering credit cards; financial leasing, factoring, and forfeiting agents; financial consultants and advisors; investment funds, voluntary pension funds, and life insurance companies; auditors, accountants, notaries, and lawyers; the registrar for real estate and real estate agents, consultants, and investment advisors; company service providers; casinos and internet casinos; and auto dealers
Number of STRs received and time frame: 117: January – October, 2014
Number of CTRs received and time frame: 69,817: January – October, 2014
STR covered entities: Banks, savings institutions, exchange offices, and money remittance agents; central securities depository and brokerages; legal entities approving loans, issuing electronic money, and issuing and administering credit cards; financial leasing, factoring, and forfeiting agents; financial consultants and advisors; investment funds, voluntary pension funds, and life insurance companies; auditors, accountants, notaries, and lawyers; the registrar for real estate real estate agents, consultants, and investment advisors; company service providers; casinos and internet casinos; and auto dealers
money laundering criminal Prosecutions/convictions:
Prosecutions: 1: January - October, 2014
Convictions: 4: January - October, 2014
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Macedonia is a member of the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/MK_en.asp
Enforcement and implementation issues and comments:
On September 1, 2014, Parliament passed a new Law on Prevention of Money Laundering and Financing of Terrorism in an attempt to harmonize local legislation with international standards. The 2014 Law changed the title of the financial intelligence unit from the Office for Prevention of Money Laundering and Financing of Terrorism to the Financial Intelligence Office (FIO). Important amendments under the new law include strengthened customer due diligence measures and an improved definition of beneficial owners. More stringency was introduced in the identification of clients in casinos, and the threshold amount above which casinos must perform obligatory identification procedures was lowered from EUR 2,000 (approximately $2,500) to EUR 500 (approximately $560). The record-keeping requirements on transactions, identification data, account files, and business correspondence were cut from ten to five years. With the new law, all reporting entities must apply a risk-based approach.
In 2014, the FIO finished the implementation of a new IT system, enabling all reporting entities to send their STRs directly to a secured platform in real time. The FIO is in the process of implementing a new methodology which would enable it to conduct a national risk assessment of the entire AML/CFT regime. In the period January – November 2014, the FIO submitted to law enforcement authorities 20 reports related to suspected money laundering cases and 154 reports of other suspected crimes. Although active, the FIO maintains low visibility and is often overshadowed by the Financial Police and the regular police (Ministry of Interior). Its responsibilities continue to overlap in many areas with both of these institutions and with the Public Revenue Office and the Customs Administration. Nevertheless, cooperation among all these agencies is good.
The Council on Combating Money Laundering and Financing of Terrorism, consisting of representatives of investigative and prosecuting bodies and 14 reporting institutions, is also involved in the national risk assessment exercise. Based on full completion of this exercise, a new AML/CFT National Strategy is expected to be developed in 2015.
All banks have programs in place that comply with AML/CFT regulations. Savings houses continue to implement AML/CFT programs under the regulation and supervision of the Central Bank. Three former savings houses, which in 2013 were transformed into financial companies, are being supervised by the Ministry of Finance. Other reporting entities supervised by the Public Revenue Office continue to be poorly monitored. The Public Revenue Office is focused mainly on investigating tax evasion. The transparency of wire-transfers has improved, but fully effective application of the legal provisions remains to be demonstrated. Exchange offices and non-bank money transfer agents, as well as all other reporting entities, need further improvements of their AML/CFT programs and practices.
In 2014, the government proposed to the Parliament a constitutional change that would allow creation of an international financial zone (IFZ) within the country’s territory to provide financial services to foreign investors. The government stated that all AML/CFT international standards will be implemented in the IFZ, but provided few details regarding planned supervision of institutions in the zone. It added that separate legislation governing the IFZ will be drafted. International experts have raised concerns about the draft constitutional amendment, indicating the zone could become a haven for criminal proceeds.
AML/CFT reporting by lawyers, accountants, brokers, real estate agents, consultants, casinos, notaries, and other covered entities is slowly improving. The most recent changes in the legislation exclude NGOs and foundations from the list of covered reporting entities and add internet casinos to that list.
It is an improvement that the law now clearly provides for the confiscation of all forms of indirect proceeds, including transformed and co-mingled assets as well as income or other benefits from the proceeds of crime. However, effective implementation is hindered by an overly complicated confiscation regime that remains conviction-based. Macedonia has an agency for management of seized and forfeited assets, but the agency has limited capacity and is minimally active. Human resources and knowledge in the area of terrorism financing need further improvements.
The judicial system is perceived as politicized and at times inefficient. Rule of law is poorly respected, and selective enforcement of justice is an issue.
Macedonia should concentrate on reforms focused on increasing independence of the judiciary and more effective efforts against organized crime, corruption, terrorism, trafficking in human beings, money laundering, and narcotics smuggling. Macedonia should improve its supervision of the non-banking financial sector and provide necessary resources and training to ensure full implementation of laws. The authorities should continue working with covered entities to increase awareness of reporting requirements, and the FIO should engage with newly-added entities to make sure they understand their obligations. The government should provide appropriate resources and training regarding terrorist financing. Should the government continue with its announced plan, the IFZ should be closely monitored for potential money laundering and value transfer opportunities.