Montenegro’s electronic payments ban raises industry concerns

The amendment to Article 68f of Montenegro’s gambling law will see a variety of electronic payment methods, such as ebanking and mobile payments, disabled when it comes to depositing into betting accounts.

The changes now mean bettors in Montenegro have two options should they wish to bet online. Players can enter a betting shop and place a monetary cash wager which then transfers online funds into their accounts. Alternatively, players can pay via card, but only on a terminal in a betting shop.

The provisions have caused agitation in the Montenegrin industry, with gambling companies concerned over the amendment’s impact on business. A petition calling to halt the change received 25,000 signatures, around 8% of the country’s electorate, in just five days.

Jovana Klisić, a representative of Montenegrin trade association Montenegro Bet, has slammed the potential impact on the job security of those working in the gambling sector, stating the country’s gambling industry is “at a crossroads”.

“With the sector directly and indirectly employing almost 2% of the country’s workforce in a 15% unemployment rate environment, any negative impact on this industry could have very harmful and far-reaching consequences,” Klisić says.

“The removal of ebanking and newsagents for deposits, despite their compliance and transparency, not only affects operational efficiency but also jeopardises jobs, echoing the detrimental effects on the broader economy of Montenegro.”

Contradictions with EU laws

Much of the backlash to the amendments comes from the opposition’s view that they conflict with European Union (EU) law. While Montenegro isn’t currently in the EU, recent polls have shown the population to be largely pro-EU. The country is one of the candidates to be adopted into the EU in the coming years.

Klisić outlined five key EU legal provisions that the amendments clash with. These include Article 72 of the Montenegro-EU Stabilisation and Association Agreement. This mandates that countries looking to join the EU align with the union on certain aspects.

The change also contradicts the Payment Services Directive, according to Klisić. The directive seeks to form an integrated market for electronic payments. The provisions additionally conflict with the EU 4 and 5AML Directive, where cash transactions are categorised as high risk.

Klisić says the law change “inadequately addresses” the threat of money laundering. This is because smaller cash transactions can still be used for money laundering purposes.

Montenegro provisions at odds with EU’s e-IDs introduction

While the amendments in Montenegro seek to ban the use of online methods to fund gambling accounts, the EU is instead looking to introduce a standardised electronic identification method called a “European Digital Identity” (e-ID).

The move would oblige EU states to issue an e-ID to citizens. This would allow them to authenticate their identity for online services such as gambling.

Klisić labelled Montenegro’s move to limit electronic payments an “outlier” among global trends.

“Internationally, there’s a clear shift towards reducing cash transactions in favour of electronic payments, as advocated by bodies like Moneyval and FATF (Financial Action Task Force).

“The global financial community is embracing digital solutions for their transparency and efficiency. Montenegro’s move, therefore, not only isolates it from EU practices but also from the global financial community’s direction.”

In 2021, the European Commission urged Montenegro to enhance its efforts to counter money laundering. This change in course away from online payments could lead to the country being placed in a category of countries with a higher risk of money laundering and terrorism financing.

The provisions also clash with the European Banking Authority’s (EBA) call for every EU citizen, as well as those in countries looking to join the EU, to have access to online banking services. Klisić says the amendments to Article 68f contradict the “EU’s stance on modern financial inclusivity”.

“Looking ahead, we see this communication crisis as an opportunity to bring Montenegro’s financial practices in line with EU standards,” Klisić added. “It’s about more than just rectifying a single law.

“It’s about ensuring that Montenegro’s financial and regulatory frameworks are beneficial for a fair and competitive industry.”

The industry’s response

Montenegro Bet has now submitted the petition to the country’s assembly. The trade association has also initiated a constitutional review, highlighting concerns over the unconstitutionality of the amendments.

Additionally, Montenegro Bet is working with international institutions to draw attention to the negative impacts of the law changes. It is also aiming to highlight the contradictions of the amendments with the EU’s directives on the matter.

Klisić is hoping the public support displayed by the petition will lead to the changes being halted.

“This remarkable show of public backing not only underscores the widespread concern but also highlights the risk of significant job losses in our industry, illustrating the potential economic repercussions of such legislative measures,” Klisić continues.

“Our overarching aim is to realign Montenegro’s regulatory framework with both EU and global financial norms, ensuring a just and transparent environment for the industry.”