Mutual Evaluation Report Summary – North Macedonia

1 October 20233 Minute Read

North Macedonia is a member of MOVEYVAL, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism - a permanent monitoring body of the Council of Europe.

The country was first evaluated in 2008 and its new Mutual Evaluation Report was published in May 2023. It is not on the FATF List of Countries that have been identified as having strategic AML deficiencies. However, in 2016 Macedonia was deemed to be a ‘monitored’ jurisdiction by the US State Department in its International Narcotics Control Strategy Report (INCSR).

North Macedonia has a fairly developed financial system but is now a financial centre, as it has a low level of assets when compared to the wider global financial system. Most financial transactions go through a well-regulated banking system but there are still considerable amounts of cash transactions happening outside of this.

The primary legal framework regulating corruption and bribery in Macedonia makes individuals and companies criminally liable for corrupt practices. There has been progress in law enforcement and corruption-prevention initiatives, but public officials are still able to act with impunity due to inefficient implementation of legislation.

Overall Ratings and Effectiveness

North Macedonia introduced major amendments to its Anti–Money Laundering and Terrorism Financing Law (AMLTFL) in July 2022 and has established an appropriate institutional framework to investigate and prosecute money laundering since its last mutual evaluation. The country has laid the foundations for a sound regime to tackle financial crime but need to improve implementation measures in various areas.

Money laundering is often linked to financial crimes including tax evasion, smuggling, financial fraud, insurance fraud, and corruption. Most of the laundered proceeds come from domestic criminal activities. A small portion of money laundering activity is connected to drug trafficking but there is no evidence that narcotics trafficking organizations or terrorist groups control money laundering. Frequent money laundering techniques involve money transfers, structuring cash deposits, the purchase of real estate and goods, and the use of legal entities in offshore jurisdictions.

North Macedonia was deemed by assessors as technically Compliant for 6 and Largely Compliant for 22 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective 1 regarding the 11 areas of Effectiveness of its AML/CFT Regime.

Main Deficiencies and Recommendations

MONEYVAL has called on North Macedonia to further strengthen its anti-financial crime regime, particularly in the investigation and prosecution fields. The country to ensure that the judiciary’s interpretation and understanding of money laundering offences are aligned with the international standards, and that the existence of a conviction for the predicate offence is not a pre-condition for bringing money laundering charges before the court.

North Macedonia should ensure that LEAs and prosecutors use financial intelligence, including the FIUs disseminations more actively to develop evidence and launch investigations in relation to money laundering/terrorist financing and underlying predicate offences.

Legislative and technical deficiencies concerning the length of seizing/freezing measures in pre-investigative phase should be addressed to limit the possibility of assets being released early. In addition, there should be clearer policy objectives for the Ministry of Justice and law enforcement agencies to ensure proactive seeking and providing foreign assistance. According to assessors, North Macedonia should establish a clear procedure to streamline cases with a foreign nexus and introduce an integrated case registration and management system.

Regarding Beneficia ownership information, the country should include:

Verification of all information provided at the stage of registration of a legal person.
Timely detection and registration of changes to basic and BO information.
Supervision of the accuracy and timely update of information registered.

North Macedonia should also focus on taking a risk-based approach to supervision or monitoring of the NPO sector at higher risk of TF abuse, without hampering legitimate NPO activity and preventing misuse of the standards. To this aim, the country should focus on updating the NPO sector risk assessment to further strengthen the understanding of those NPOs at higher risk of TF abuse and ensure that proportionate measures are applied.