Ownership in banks in Montenegro must be fully transparent, with credit institutions legally required to disclose the ultimate beneficial owners—individuals who profit from that ownership—according to the non-governmental organization Action for Social Justice (ASP).
ASP believes that their recommendation, made during a public consultation by the Ministry of Finance on amendments to the Law on Credit Institutions, would enhance transparency in bank ownership and improve the oversight of money sources.
The organization noted that there are currently instances in Montenegro where ultimate owners are concealed behind companies registered in offshore zones or custodial accounts, while others are more transparent and known.
“For example, Adriatic Bank reports ownership linked to a company registered in an offshore location, specifically Adriatic Capital LLC based in Delaware. It has since been revealed that one of the owners of this company is Canadian businessman of Russian origin, Alex Schneider,” ASP stated.
They emphasized that offshore zones facilitate the concealment of true ownership and the origins of money, allowing frequent changes in ownership and offering numerous tax advantages, leading to their designation as tax havens in economic circles.
Additionally, ASP pointed out that official records show that the third, fourth, and fifth largest shareholders at Prva Bank are hidden behind custodial accounts, collectively holding about 11% ownership. At Hipotekarna Bank, the largest individual shareholder, with 34.4% ownership, is also concealed behind a custodial account.
The organization also mentioned that some banks report ownership through foreign banking groups, where state capital partially appears as the ultimate owner, and through special companies, whose ultimate ownership can be more or less verified, as well as by listing individual physical persons as owners.
In Montenegro’s banking system, besides a small amount of domestic capital, there is also Eastern European, Western European and Turkish capital present.
ASP argued that establishing legal frameworks to ensure the disclosure of ultimate beneficial owners who derive income from bank ownership would be beneficial. They stressed that the ongoing amendments to the Law on Credit Institutions, one of the most critical systemic laws in this area, present a valuable opportunity to improve the legal framework regarding ownership transparency in banks.
