Bosnia and Herzegovina is once again facing the possibility of being placed on the grey list of FATF, the international body responsible for combating money laundering and terrorist financing, due to delays in fulfilling key obligations.
The final decision is expected in mid-June. In order to avoid being grey-listed, the country must urgently adopt the Law on Confiscation of Property at the state level and establish registers of beneficial owners in the Federation of Bosnia and Herzegovina and the Brčko District.
Although the chances are slim, there is still hope that Bosnia and Herzegovina will avoid joining countries currently on the grey list, including Haiti, Yemen, Syria, Venezuela and South Sudan.
While terms such as MONEYVAL and FATF may seem distant to ordinary citizens, the consequences of being placed on the grey list are very real and directly affect everyday life and the economy.
According to Jasmina Selimović, Governor of the Central Bank of Bosnia and Herzegovina, inclusion on the grey list would significantly slow cross-border financial transactions and increase their cost.
“That means slower money transactions and more expensive international transfers. Capital flows would slow down. Foreign correspondent banks could cut ties with banks in Bosnia and Herzegovina. Foreign direct investment would become more difficult, and unfortunately, we already cannot boast about the level of foreign investment in the country,” Selimović warned.
Economic experts emphasize that being placed on the grey list would send a damaging message about the country’s financial oversight and political system.
Adisa Omerbegović Arapović, professor of economics and finance, said the grey list reflects concerns about the country’s ability to prevent illicit financial flows.
“It means that there are serious problems in preventing illegal money flows that can ultimately finance terrorism and enable money laundering, giving the country the reputation of a banana state,” she stated.
The banking sector is expected to be among the first to feel the consequences. More expensive international transactions would likely lead to higher borrowing costs for both citizens and businesses.
Edis Ražanica, Director of the Association of Banks of Bosnia and Herzegovina, stressed that the issue is primarily one of reputation.
“Transactions would certainly become more expensive if Bosnia and Herzegovina returns to the grey list. This is fundamentally a reputational problem for the country and especially for its financial sector,” Ražanica said.
The impact could also be severe for citizens who depend on remittances from abroad. Each year, the Bosnian diaspora sends more than 4 billion convertible marks (KM) back home, making remittances a vital source of income for many families.
Economic analyst Zoran Pavlović explained that transfers to grey-listed countries face much stricter controls.
“Banks will require additional documentation about who sent the money, for what purpose, and why. Transactions that usually take one or two days could take up to fifteen days,” Pavlović said.
Business leaders warn that the country’s competitiveness could suffer as well.
Goran Račić, president of the Chamber of Commerce of the Republika Srpska, noted that countries which implemented FATF recommendations now enjoy more favorable domestic and international financial transactions.
Meanwhile, political leaders continue blaming one another for the failure to pass the necessary legislation.
Srđan Amidžić, Minister of Finance and Treasury of Bosnia and Herzegovina, argued that political disagreements have delayed reforms, while insisting there is no justification for the country to end up on the grey list.
“The professional requirements have been addressed and there is no reason for Bosnia and Herzegovina to be placed on the grey list,” Amidžić said.
Although analysts agree that grey-listing would not trigger an economic collapse, they warn that the burden would ultimately fall on ordinary citizens through slower banking services, more expensive transactions, and reduced investment opportunities.
In the end, as many experts note, citizens are likely to pay the highest price for political inaction.
