European Union warns BiH authorities: You risk being placed on the FATF grey list

In February 2025, Bosnia and Herzegovina entered a one-year observation period by the Financial Action Task Force (FATF) – the global watchdog for preventing money laundering and terrorist financing.

This came about due to a series of deficiencies in Bosnia and Herzegovina's system for preventing money laundering and combating terrorist financing, identified by the Council of Europe's MONEYVAL Committee in its December 2024 mutual evaluation report.

The aforementioned one-year observation period expires in a few weeks. If significant progress is not made in addressing the deficiencies highlighted by MONEYVAL, there is a high probability that the FATF will include Bosnia and Herzegovina on the list of jurisdictions under increased monitoring (the so-called "grey list").

Being placed on the grey list would have immediate and concrete consequences for businesses, banks, payment transactions, investments, and the economic credibility of Bosnia and Herzegovina, and would affect access to international financial markets and transactions, private commercial activities, as well as public fiscal affairs. It could also negatively impact Bosnia and Herzegovina's prospects of joining the Single Euro Payments Area (SEPA).

Therefore, it is necessary for the competent institutions in Bosnia and Herzegovina to act urgently, by adopting two laws at the state level – the Law on Confiscation and Management of Proceeds of Crime, and the Law on Targeted Financial Sanctions for Terrorism, Terrorist Financing, and Weapons of Mass Destruction Proliferation. The establishment of a beneficial ownership register for legal entities in Bosnia and Herzegovina is also long overdue and requires urgent action from the entities and Brčko District.

Bosnia and Herzegovina has already made some progress in strengthening its framework for preventing money laundering and combating terrorist financing, including the adoption of the Law on Prevention of Money Laundering and Terrorist Financing, which was also one of the key laws on the country's European path. We also welcome the establishment of the Permanent Coordination Body for the Prevention of Money Laundering and Terrorist Financing and the Prevention of Weapons of Mass Destruction Proliferation, which brings together representatives of competent institutions from all levels of government in BiH, as well as the recent adoption of the Rulebook on the Implementation of the Law on Prevention of Money Laundering and Terrorist Financing.

Bosnia and Herzegovina has shown that progress is possible when there is political will and effective coordination. Competent institutions in BiH must urgently make additional efforts in the coming weeks, before the expiry of the one-year observation period by the FATF.