Law on the prevention of Money Laundering and Financing of Terrorism

Law No.03/L-196 on the Prevention of Money Laundering and Financing of Terrorism from year 2010 contained many restrictive provisions which were considered as an excessive burden on NGOs. With the old law, NGOs were the only sector requiring prior authorization for receiving more than 1,000 Euro from a single sender or payment in excess of 5,000 Euro for a single recipient within a day. To make or receive payments that exceed the amounts mentioned above, NGOs had to request from the Kosovo Financial Intelligence Unit (FIU) a one-off or repeated exception of these obligations. In the written request submitted by NGOs to the FIU, the reasons for this exception should be stated, while the FIU had to respond to this request within 30 days. The answers to the FIU could be: 1) Allowed; 2) Allowed on condition or 3) or exception is rejected. However, the entire claim and response process was not related to the criteria that should be taken into account by the FIU when making a decision. This created a basis for different interpretations or arbitrary decisions. These conditions were difficult for CSOs as they created problems in receiving donor funds or paying grants by local donors to their beneficiaries.

In addition, the penalties for violating these restrictions were problematic in three respects: first, the violation of the established limitations was considered a criminal offense and sanctioned with imprisonment, including high monetary penalties; secondly, they were not proportionate to the degree of violation, as they anticipated even the dissolution of the NGO, which was not in accordance with the provisions of the Law on the freedom of association of NGOs. Thirdly, the Department for NGOs had the authority to disband the NGO, which is not in compliance with the provisions of the Law on the Freedom of Association of NGOs.

Since 2013, KCSF has raise concerns on restrictive provisions and asked the competent authorities to initiate the amendment process in order to remove these provisions. In addition to policy analysis and recommendations, KCSF was also involved in the global civil society initiatives of this field, gaining good experiences but also contributing to the discussions of various international forums.

In 2015, a concept paper was finally adopted that paved the way for amending and supplementing the law of 2010, while during 2015 and 2016 KCSF was an active part of the Working Group for drafting the new law. The new Law 05/L-096 on the Prevention of Money Laundering and Combating the Financing of Terrorism was adopted on May 16, 2016. As a result of KCSF intensive engagement, with the support of a large number of civil society organizations and the European Centre for Non-Profit Law (ECNL), most of the restrictive provisions from the previous law were abolished. However, some remaining provisions for NGOs are not in line with international standards, including restrictions on accepting cash donations and obligations to fund training programs against money laundering and performing a regular professional analysis. As standard measures for banks and durable entities, these obligations can hardly be implemented by the majority of registered NGOs, which are small and community-based organizations.