Montenegro gambling in turmoil as e-payments ban is authorised 

The government of Montenegro has been urged to explain why it has authorised amendments to impose a ban on electronic payments services for gambling.

Conflicts arise in the Balkans nation as the government has confirmed that it will “enact amendments to Gambling Laws” that will prohibit the use of modern payment systems for gambling.

The controversial amendments contravene EU competition rules by blocking e-banking, IPS, and mobile payment services such as PayPal and Apple Pay.

Controversy surrounds the government of Montenegro’s action plan to strengthen its anti-money-laundering (AML) compliance framework to meet the concerns outlined by MONEYVAL, the financial intelligence monitoring body of the Council of Europe.

Montenegro had been advised to “step up efforts to investigate and effectively prosecute money laundering and strengthen the supervision of high-risk non-financial businesses and professions”.

In response, the Ministry of Finance recommended imposing amendments to Article 68 of Montenegro’s Gambling Law, prohibiting the use of electronic payment systems for gambling businesses.

Causing turmoil in Montenegro’s gambling sector, the amendment will force consumers to transfer funds to their online accounts exclusively through betting shops or by using a card at a betting shop terminal.

Industry Demands Response

The gambling industry in Montenegro has reacted strongly to these amendments. Jovana Klisić, a representative of MontenegroBet, the national trade association, has described the industry as being “at a crossroads”. 

Klisić highlighted that the sector, which directly and indirectly employs nearly 2% of Montenegro’s workforce, is facing severe risks due to these legislative changes. In a country with a 15% unemployment rate, the potential for job losses in the gambling sector could have devastating economic repercussions.

A petition against the amendments, calling for a halt to the changes, garnered 25,000 signatures – representing approximately 8% of the electorate – within just five days. This rapid and widespread support underscores the significant public concern over the potential impact on jobs and the broader economy.

Klisić emphasised: “The removal of e-banking and mobile payment options, despite their compliance and transparency, not only hampers operational efficiency but also jeopardises employment in the sector. The economic effects of such legislative measures could ripple outwards, affecting other areas of the Montenegrin economy.”

Ban destabilises Montenegro’s EU ambitions 

The amendments to Article 68 have broader legal and economic implications, particularly concerning Montenegro’s aspirations to join the European Union. 

Critics argue that these changes conflict with several key EU legal provisions, including the Montenegro-EU Stabilisation and Association Agreement and the Payment Services Directive, which aims to create an integrated market for electronic payments.

Moreover, the amendments contradict the EU’s fourth and fifth Anti-Money Laundering Directives, which categorise cash transactions as high-risk for money laundering. 

By pushing for a cash-based system, the Montenegrin government is seen as inadequately addressing money laundering threats, potentially exacerbating the problem.

Montenegro’s decision is also at odds with recent EU initiatives, such as the introduction of the European Digital Identity (e-ID), aimed at standardising electronic identification across member states. 

This initiative is intended to facilitate secure and efficient online transactions, including gambling, highlighting Montenegro’s divergent approach.

A Pathway Forward

Montenegro Bet has submitted the petition to the National Assembly and initiated a Constitutional Review, questioning the legality of the amendments. 

The association is also collaborating with international institutions to draw attention to the negative impacts of these legislative changes and their inconsistencies with EU directives.

Klisić and other industry representatives hope that the significant public backing and institutional pressure will prompt a reconsideration of the amendments. Klisić stated: “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.”

The Montenegrin government’s stance has isolated the country not only from EU practices but also from the broader global financial community, which is increasingly embracing digital payment solutions for transparency and efficiency. 

Organisations like Moneyval and the Financial Action Task Force (FATF) advocate for reduced cash transactions to mitigate money laundering risks and enhance financial transparency.

The amendments to Montenegro’s gambling laws have sparked significant concern within the industry and beyond. The move to ban electronic payments is seen as a step backward, contradicting EU standards and global trends. The public and industry response has been swift and robust, with widespread calls for the government to reconsider its position.

The outcome of this legislative battle will have far-reaching implications for Montenegro’s gambling sector, its economy, and its future relationship with the EU.

As Montenegro navigates this complex issue, the overarching aim remains clear: to ensure that the country’s financial and regulatory frameworks support a fair, competitive, and transparent gambling industry, aligned with international best practices. 

Klisić concluded: “This is 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.”