The Republic of Srpska Inspectorate, as one of the institutions competent for the control of the Law on Prevention of Money Laundering and Financing of Terrorist Activities of Bosnia and Herzegovina, is actively performing preparations regarding the establishment of prerequisites for the beginning of surveillance under its competence.

Under the control of this authority will come businesses such as audits companies, bookkeeping and accounting services, tax advisors, legal entities which conduct money transferring services for clients, and issuing other forms of payment and managing them. Likewise, a subject of inspection will be the providers of trust services, the post office if it performs services of payment transactions, and business entities who are registered for vehicle trade.

In the competence of this authority are traders of precious metals, precious stones and artistic objects in transactions worth BAM 20.000 and more, as well as mediators in the commerce of real estate including renting, which have the rent at BAM 20.000 and more.

The Law is based on risk management by business entities, who are obliged to nominate an authorized officer and one or more deputies, with the goal of conducting precautionary measures regarding the prevention and detection of money laundering and financing of terrorist activities.

The subject of inspections will precisely be these mandatory activities, i.e. whether the prescribed policies and procedures approved by the highest management authority have been established, whether the authorized person has been nominated, whether the list of indicators for detection of suspicious transactions has been made and sent to the supervisory authority, whether the risk assessment document has been developed and other.

While conducting risk assessment, businesses ought to consider factors which are related to clients, countries or geographical areas, products, services or transactions and distribution channels. Measures for the prevention and detection of money laundering and financing of terrorist activities must be equally implemented in every business unit of the business and subsidiary companies which are majority owned by the business, regardless of the fact whether their business operation is in Bosnia and Herzegovina or in a foreign country.

We especially point out that it is prohibited by law to accept money in the form of cash if the payment for goods or services exceeds BAM 30.000, even when the payment is done in a certain number of connected transactions which are of the total value that exceeds the aforementioned amount. The same prohibition applies to the cases of acceptance and approval of loans.

The law fully prioritizes prevention, in a way that defines series of measures to which the businesses ought to adhere in order to minimize every suspicious business operation. In direct contact with the clients they conduct their business with, the business entities can immediately assess whether there are contradictions or discrepancies which could indicate a possible misuse.

In case they detect suspicious transactions, business entities are obliged to check the background and the purpose of those transactions. Indicators which point to the suspicion are complex transactions, unexpectedly large amount and manner of execution, value or connection of transactions which have no economically or legally founded purpose, that is if they are not harmonised or in disproportion with the normal, expected business operations of the client.

In those instances, the businesses are obliged to report any suspicious activity about every attempted or performed suspicious transaction, suspicious assets regardless of the amount of that transaction and about every suspicious client or person to the Department of Financial Intelligence of the State Investigation and Protection Agency.

Ultimately, the Law defines fines for its violations, which differ depending on the offense, and in the case of court proceedings they can reach up to BAM 200.000.

For the implementation of this Law, the Inspectorate undertook series of legal, procedural and organizational measures. Changes have been made regarding the Law on Inspection Services in the Republic of Srpska which has not prescribed this type of surveillance so far, personnel capacities for the formation of a new inspection sector have been defined and the training of inspectors has been performed. This is a completely new field which is being put into competence of this authority for the first time.

We use this opportunity to invite all businesses to timely familiarize themselves with their new obligations, not to wait for the arrival of an inspector, but to initiate risk assessment activities on their own. The goal of inspection authorities is to offer support businesses and to work together to minimise risks and to suppress negative effects on the economy. On Inspectorate’s webpage, the businesses can find useful documentation and specific examples which can help them in the implementation of legal provisions.