Money Laundering and Terrorism Financing in Bosnia and Herzegovina: A Review of the Legislative Framework and Current Situation

Abstract

According to the latest report from the Global Initiative on illicit financial flows, it is estimated that money laundering in Bosnia and Herzegovina ranges from 400 million to one billion euros. While the components of illicit financial flows are influenced by various factors, the primary focus is on money laundering through the financial system. Widespread corruption, as empha- sized in international reports, calls for a more decisive response to both corruption and organ- ized crime, especially in the context of money laundering. Criminal laws at the state, entity, and Brčko District levels define the offense of money laundering. The Law on the Prevention of Money Laundering and Financing of Terrorism in Bosnia and Herzegovina clearly stipulates actions for preventing and detecting money laundering, identifying obligated entities and their duties, the competencies of the Financial Intelligence Department (FID), and inter-institutional cooperation, all aimed at preventing money laundering and financing terrorist activities. Ac- cording to various assessments and expert opinions, amendments to this law are necessary for Bosnia and Herzegovina to be more effective in addressing this issue. Risk assessments of mon- ey laundering and the threat of organized crime in Bosnia and Herzegovina identify methods of money laundering and practical deficiencies that need to be identified. The State Investigation and Protection Agency published statistical data and typologies of money laundering for the year 2021, identifying ways in which money obtained through criminal activities is attempted to be legally introduced into the financial system, as well as legalized through the purchase of real estate, luxury vehicles, and the use of cryptocurrencies.