Ministries of Security and Justice Have Not Yet Proposed Two Laws, Threatening BiH with FATF Grey List

(Patria) – The agenda for the next session of the Council of Ministers of BiH on February 9th includes no new laws or those requested from the authorities of Bosnia and Herzegovina to prevent our country from ending up on the FATF grey list.

The Council of Ministers of BiH adopted an information note with an action plan at its session on December 29th, but warnings from the European Union should be taken seriously as the one-year observation period is expiring.

On January 14th, the European Union warned BiH authorities that BiH is threatened with the FATF grey list if it does not proceed with the adoption of two state-level laws – the Law on Confiscation and Management of Property, and the Law on Targeted Financial Sanctions for Terrorism, Financing of Terrorism, and Proliferation of Weapons of Mass Destruction.

Establishing a register of beneficial owners of legal entities in Bosnia and Herzegovina is also something that has been long awaited and requires urgent action from the entities and Brčko District.

The Ministry of Security of BiH is in the final stages of drafting the Law on Targeted Financial Sanctions, while the Law on Confiscation and Management of Property, which the Ministry of Justice of BiH is supposed to propose for adoption by the Council of Ministers of BiH, has not yet been completed.

The Republika Srpska entity and Brčko District have almost completed their registers of beneficial owners of legal entities, while the Federal Minister of Justice, Vedran Škobić (HDZ BiH), has not yet completed the register.

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

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

If significant progress is not made in addressing the deficiencies highlighted by MONEYVAL, there is a high probability that FATF will include Bosnia and Herzegovina on the list of jurisdictions under increased monitoring (the so-called “grey list”).

Inclusion on the grey list would have direct 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), for which activities have intensified.

Bosnia and Herzegovina has already made certain progress in strengthening its framework for preventing money laundering and combating the financing of terrorism, including the adoption of the Law on Prevention of Money Laundering and Financing of Terrorism, which was also one of the key laws on the country's European path.

A deadline of several weeks is fast approaching, marking the end of the one-year observation period by FATF.

Banks have intensified transaction checks based on the Law on Prevention of Money Laundering and Financing of Terrorism, but BiH authorities have not yet fulfilled their obligations, which could lead to the country being placed on the grey list, further burdening BiH's already fragile economy.