In a move that has raised eyebrows across the global financial community, including the European betting and iGaming sectors, Montenegro has enacted amendments to its gambling laws that effectively ban the use of modern electronic payment methods, including Apple Pay, PayPal, mobile banking, IPS, and e-banking
Ironically, the Minister of Finance stated a few days ago that the country has no obligation to comply with EU rules, a paradoxical stance for a nation actively seeking EU membership and aiming to integrate into the world of digital business.
In 2021, the European Commission urged Montenegro to strengthen its efforts to counter money laundering. However, the recent amendments move in the opposite direction, potentially isolating the country from EU practices and global financial community trends.
Since the beginning of 2024, however, Montenegro’s gambling sector has been in turmoil.
The Industry Response
The controversial ban on electronic payments seems designed to curb competition, preventing the growth of foreign-owned companies, including U.S. enterprises. This move contradicts global business practices and undermines the principles of competitive business. A petition calling to halt the change received 25,000 signatures, representing around 5% of the country’s electorate, in just five days. It highlighted the risk of significant job losses in the industry and the potential economic repercussions of such legislative measures.
Montenegro Bet, the country’s nationwide trade association, has submitted the petition to the country’s assembly and initiated a constitutional review, highlighting concerns over the unconstitutionality of the amendments. Additionally, they are working with international institutions to draw attention to the negative impacts of the law changes and their contradictions with EU directives. All those attempts have remained without a single institutional response.
Overview of Breaches of EU Acquis by Article 68f
Much of the backlash to the amendments comes from the view that they conflict with European Union (EU) law. While Montenegro isn’t currently in the EU, it is a candidate for membership and is expected to align its laws with EU standards. The amendments clash with several key EU legal provisions, including the TFEU, Payment Services Directive, which seeks to form an integrated market for electronic payments, and the EU 4 and 5AML Directives, which categorize cash transactions as high risk for money laundering.
Multiple Lawsuits Incoming
The combination of apparent corruptive practices orchestrated by local companies within the same industry and certain individuals within the Ministry of Finance results in an attempt to de facto expel multiple operators, including those based in U.S, clearly denying equal market access.
This has already led to substantial legal challenges. Multiple operators are preparing preliminary steps toward legal action, including a lawsuit before the International Court for Settlement of Investment Disputes.
A Cash and Retail-Loving Law in the Middle of the Digital Age
The amendment to Article 68f of Montenegro’s gambling law has sparked significant concern within the country’s gambling sector. The new law disables various electronic payment methods, such as e-banking and mobile payments, for depositing funds into betting accounts. This leaves bettors in Montenegro with only two options: they must either enter a betting shop to place a cash wager, which then transfers funds into their accounts, or pay via card, but only at a terminal in a betting shop.
This strange move forces players to go to a store just to fund their online accounts, which is inconvenient in a time when digital transfers should be the norm.
Defying Global Trends and AML Standards – What Next?
Montenegro’s move to limit electronic payments is an outlier among global trends. Internationally, there is a clear shift towards reducing cash transactions in favor of electronic payments, as advocated by bodies like Moneyval and the Financial Action Task Force (FATF). The global financial community is embracing digital solutions for their transparency and efficiency.
Montenegro’s stance not only isolates it from EU practices but also contradicts the direction of the global financial community, increasing the risk of money laundering and undermining investor confidence.
The prohibition of the safest and most advanced methods of online payment business, such as Apple Pay and PayPal, in favor of promoting cash transactions, is a troubling development that warrants urgent attention and action from both national and international stakeholders.