Report: Illegal gains in Montenegro laundered through real estate

26/03/2007

The authorities in Podgorica say they are implementing measures to track the market more closely.

By Nedjeljko Rudovic for Southeast European Times in Podgorica – 26/03/07

The real estate market in Montenegro has become a haven for money launderers. [Getty Images]

The head of the government's office for terrorism financing and money laundering, Predrag Mitrovic, said earlier this month that his office is going to reinforce its control over the real estate market as part of the fight against money laundering.

Real estate is big business in Montenegro. Around the capital, Podgorica, construction and restoration of commercial buildings -- with offices, flats and luxury shops -- is a common sight, as is the remodeling and upgrading of personal residences.

According to a US State Department report, however, this sector is also a favoured venue for money laundering.

"Investment by foreign individuals and businesses in expensive real estate along the Montenegro coast has raised prices and generated concerns about the source of funds used for these investments," says the International Narcotics Control Report 2007, released on March 1st.

Police and prosecutors are not encouraged to investigate real estate moves because the court system is not prepared to deal with the fallout, the document said.

It urges Montenegro to "strengthen its legislation to establish more robust asset seizure and forfeiture regimes, as well as upgrade its capacity to strengthen its criminal intelligence and investigative techniques".

According to the State Department, Montenegro continues to have a significant black market for smuggling goods. Illegal income also comes from the drug trade, corruption, tax evasion, organised crime and other types of financial crime.

Mitrovic says the government plans to devote special attention to tracking real estate deals. "Beside the [legal] obligation to follow and analyse reports that come to our database, we are forming an additional database [which will] contain copies of real estate trade contracts," he told local media.

He hinted at a new initiative for obtaining competencies in order to scrutinise real estate trading, as well as to help identify the real owners of companies that are engaged in trade in Montenegro.

According to official data, in 2005, 14 cases suspected of money laundering were submitted to the department in charge. In 2006, 29 cases were submitted, while this year has seen eight so far.

Opposition parties say that too little is being done and at too slow a pace. "The problem cannot be hidden anymore," said Nebojsa Medojevic, leader of the opposition Movement for Changes party.

The report's findings will deter prominent foreign investors from coming to Montenegro, Medojevic warned. He said the three biggest investors in the region -- the United States, Germany and Italy, have a negligible role in Montenegro.