Payment license in Montenegro - requirements and procedural nuances

A payment license in Montenegro provides legal basis for legal entities to provide funds transfer, e-money issuance and payment processing services. Regulation of such operations is aimed at ensuring business transparency, consumer protection and compliance with global financial control regulations. Licensing of payment organizations in Montenegro provides an opportunity to operate within the legal framework, minimizing threats and enhancing reputation in the market.

Montenegro is becoming an attractive jurisdiction for financial companies due to relatively simple requirements for authorization documents and absence of excessive regulation. The country's European vector of development facilitates the adaptation of legislation to EU regulations, which makes the country a convenient platform for cross-border payment operators and fintech companies. Membership in the SEPA zone ensures integration with the European payment system, and a stable banking environment creates favorable conditions for the work of financial institutions. The development of digital technologies and the need for secure transaction services are driving demand for certified financial services companies. An additional plus point is the moderate taxation. The CIT rate is 15% and the same for capital gains. VAT IS 21%. Compulsory levies on interest, dividends and royalties for foreigners are charged at rates of 15% respectively, but for non-residents in the tax zone these taxes are 30% each.

Regulation of licensing of payment services in Montenegro

Obtaining a license for payment institutions in Montenegro is based on a well-defined regulatory framework that defines the procedure for the provision of financial services, requirements for providers and supervision by the state. The legal provisions are aimed at creating a safe and transparent environment for transactional services, excluding illegal transfer schemes and respecting the interests of customers. The main rules governing this sector are set out in legislative as well as bylaws that establish detailed terms and conditions for companies providing services in this segment.

The Law on Payment Transactions defines the status, rights and obligations of organizations that process transfers, issue electronic money and other related services. The application of its norms applies to financial institutions, banks, e-money issuers and other companies providing transfer services. This legal act regulates not only the licensing of payment service operators in Montenegro, but also the requirements for security technologies, transparency of transactions, protection of customer data. Important attention is paid to measures to prevent the use of financial platforms for criminal purposes.

The Decision on Detailed Conditions for the Activities of Agents of Payment Service Providers contains detailed requirements for third parties involved in the processing of transactions and the provision of financial services. The document defines which organizations may be engaged as intermediaries, what conditions must be met in the transfer of authority and what control mechanisms are applied to ensure the transparency of transactions. Separately for holders of the Montenegrin license for payment services are prescribed obligations to organize reporting and the procedure for interaction with supervisory authorities.

The Decision on the regulatory capital of payment institutions establishes the minimum amount of own funds that companies must have in order to obtain a license and conduct business. This regulatory act determines the mechanisms of capital calculation, requirements to the structure of assets and the level of financial reserves necessary to ensure the sustainability of the organization. Emphasis is placed on preventing threats, ensuring the solvency of payment license holders in Montenegro and their ability to meet their obligations to customers.

Role of the regulator - Central Bank (Centralna banka Crne Gore, CBCG)

The Central Bank of the Jurisdiction (Centralna banka Crne Gore, CBCG) plays a key role in regulating the financial sector. It acts as the main supervisory authority, controlling compliance with legal provisions, issuing licenses for payment services in Montenegro and monitoring the activities of operators. The CBCG's powers include conducting inspections, assessing the financial position of legal entities, reviewing complaints and imposing sanctions in the event of offenses. The regulator's specialists examine the business models of applicants, assess their ability to comply with the established regulations and make decisions on the possibility of operating in the country's financial sector. Centralna banka's policy is aimed at developing a competitive environment, enhancing transaction security and safeguarding the interests of consumers.

Payment institutions in Montenegro and requirements for them

Provision of payment services on the territory of Montenegro is possible only with the appropriate authorization issued by the CBCG. The right to implement business projects in this area is granted to legal entities registered in accordance with the established procedure and legal provisions.

Which entities are considered payment institutions

Legal entities that can obtain a license for payment transactions in Montenegro include:

• banks and other credit institutions with an office in the jurisdiction;
• financial institutions with local registration;
• accredited service providers engaged in the provision of bank account information;
• e-money issuers registered in the state;
• representative offices of foreign countries.

Any company planning to obtain a Montenegrin payment license must undergo an approval procedure with the CBCG, which assesses its compliance with the established criteria. The approved organization may offer one or more transactional services to customers, except for certain transactions restricted by local legislation. Operating without a payment license in Montenegro has legal consequences, including a ban on the provision of these services. In case of detection of illegal activities, the regulator has the right to initiate an audit of business operations, examine accounting records and business reports.

Capital investment requirements

The amount of own funds for obtaining a permit for payment transactions in Montenegro depends on the list of services that the legal entity intends to provide. Organizations specializing solely in the transfer of funds are required to have a capital of at least 20,000 EUR. For those offering payment initiation services, there is a threshold of 50,000 EUR. For EMI licenses, the minimum amount is 350,000 EUR.

For firms that are engaged in cash deposits, withdrawals, managing settlement accounts, and executing payment transactions in various forms, including transfers, debits on behalf of the customer and card transactions, the amount of equity cannot be lower than 125,000 EUR. Companies that provide settlements at the expense of credit lines fall into the same category.

An applicant for a payment authorization in Montenegro is obliged to pay the capital in cash. The financial base of the organization must be formed before submitting a request, as the regulator considers this parameter as a key criterion for the sustainability of the business. The absence of the required funds at the time of application excludes the possibility of obtaining a Montenegrin payment license, even if the other conditions are met.

Requirements for owners and administrators

Licensing of payment institutions in Montenegro requires a strict selection of owners and management staff. Legal entities intending to provide these services must have founders and administrators with proven experience in the financial sector. The CBCG evaluates candidates' qualifications, business reputation and compliance with professional competency standards.

The founders of a firm applying for a Montenegrin payment authorization must demonstrate an impeccable financial history, no involvement in bankruptcies and compliance with obligations to counterparties. Persons previously prosecuted for offenses in this area may not participate in the establishment of an institution for the implementation of transactional services. The regulator analyzes the ownership structure, checking the ultimate beneficiaries for openness of ownership and compliance with the conditions to prevent the use of companies in illegal schemes.

Office and infrastructure - local presence requirements

The activities of the payment institution must be carried out in the jurisdiction, subject to the requirements of having a registered office. The firm must have an actual physical location equipped to conduct operational activities. Registration of a legal entity without an actual presence in the country is not allowed.

The infrastructure of the applicant for a payment license in Montenegro must be appropriate to the nature of the services provided. The office must have employees responsible for operational processes, control of financial flows and fulfillment of obligations to customers. The regulator checks whether the applicant's technical equipment meets the requirements of information security and personal data protection. Among the mandatory conditions are the presence of a transaction monitoring system, server equipment and mechanisms to prevent third-party access.

Local legislation requires that key business processes be managed directly from the country. Remote administration without local staff may be a reason for refusal to issue a payment license in Montenegro. It is important that strategic decisions are made by management located in the jurisdiction and that key functions, including auditing, financial controls and threat management, are performed within the local infrastructure.

Internal oversight programs and AML compliance

Companies planning to obtain authorization to process payment transactions in Montenegro must comply with the requirements aimed at preventing financial crimes. These regulations include a set of procedures to ensure customer identification, transaction monitoring and prevention of suspicious transactions.

The development of internal regulations against illicit enrichment is a prerequisite for obtaining a Montenegrin payment license. The institution must implement a KYC system to verify personal information about customers, their sources of income, and the nature of transactions. Automated mechanisms for detecting anomalous financial flows should be integrated into the firm's business processes.

The CBCG shall analyze the measures taken by an applicant for a payment license in Montenegro to minimize threats related to the financing of illegal activities. Internal oversight should include regular audits, analysis of financial flows, and procedures to identify transactions that do not conform to users' standard business profiles. The compliance system should be adapted to global regulations, including the recommendations of the FATF Group.

A designated compliance officer is responsible for compliance in the area of illicit enrichment. He or she monitors the implementation of internal regulations, interacts with regulators and ensures prompt response to identified offenses. Lack of effective AML mechanisms could result in the revocation of Montenegrin payment license, imposition of fines and blocking of the institution's operations.

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Montenegrin payment license algorithm

Licensing of a payment institution in Montenegro is a multi-stage process involving preparation of documentation, compliance with the established conditions and procedural control by the regulator. The CBCG assesses the legal entity's compliance with legal provisions, analyzes its financial stability, qualifications of its managers and the existence of effective internal oversight mechanisms. Successfully obtaining a Montenegrin payment license requires strict adherence to a set algorithm, which includes registration of a legal entity, capital formation, preparation of a business plan, submission of an application and passing a comprehensive inspection by the regulator. Each stage has strictly regulated requirements, non-compliance with which may result in denial of authorization to provide payment services in Montenegro.

Company registration in Montenegro

Registration of a legal entity is the first mandatory step for a firm intending to obtain authorization for payment transactions in Montenegro. The company must be registered in the jurisdiction in accordance with local legislation and have a clearly defined corporate structure that meets the requirements of the regulator. The choice of the legal form depends on the specifics of the business, but payment institutions are usually established as LLCs or JSCs.

The founders are obliged to determine the management structure, appoint the management team and ensure compliance with the minimum capital requirements. As part of the registration procedure, organizational documentation is filed, including articles of association, information on the owners and managing persons, and the registered office. The CBCG analyzes information about the ultimate beneficiaries, verifying their financial reputation and transparency of capital sources.

Establishment of a legal entity for registration of Montenegrin payment license implies the opening of a current account in one of the local banks, to which the required amount of MC is deposited. The funds must be transferred before the application for authorization is submitted, as confirmation of their availability is a prerequisite for its consideration. The money intended for capital formation must be of legal origin, which is confirmed by appropriate documentation.

After submitting the dossier to the Registration Chamber, the firm is assigned a unique identification code, which is used in all official operations. At the next stage, the legal entity is registered with the tax authorities and becomes registered in the social insurance system, if it is planned to hire personnel. Only after the completion of all registration procedures, the company receives a legal status that allows it to initiate the payment licensing process in Montenegro.

Preparation of business plan and organizational documentation

To obtain a payment license it is necessary to submit a detailed business plan reflecting the applicant's business strategy, economic calculations and threat management mechanisms. The CBCG verifies the validity of the stated indicators, the sustainability of the financial model and the compliance of the planned operations with regulatory criteria. The document must contain accurate information on the intended services, target audience, sources of funds and projected transaction volumes. Particular attention is paid to the assessment of liquidity and financial stability, as it is a key factor in deciding whether to authorize payment operations in Montenegro.

The corporate structure of the firm should be clearly laid out, indicating the functions of each division and the distribution of responsibilities among key employees. The regulator evaluates the management system, job descriptions and internal oversight mechanisms. Openness of processes and compliance with international financial management regulations become one of the main criteria when considering a request for a Montenegrin payment license.

The development of organizational documentation requires a detailed description of procedures related to transactions, management of client accounts, fulfillment of obligations to partners and regulators. The package includes a charter, memorandum of incorporation, regulations on interaction with banks and financial intermediaries. Special attention is paid to the documentation regulating the peculiarities of work with personal data, protection of information and prevention of cyber threats. The dossier is thoroughly checked for accuracy, logical consistency and legal correctness.

Submitting a request to the Central Bank

The procedure for licensing a payment institution in Montenegro includes a formal application to the CBCG, accompanied by a set of documentation confirming the applicant's compliance with the established criteria. The request is submitted in the prescribed form and must contain all the information necessary for the regulator to make an informed decision. Acceptance is accompanied by a check of the completeness of the submitted materials, as the presence of an incomplete or incorrect package may lead to suspension of the review or denial of registration.

The dossier shall be submitted in a strictly prescribed manner with the necessary confirmations attached. The regulator examines the origin of the funds formed as a statutory fund, verifying the legality of the sources of funding and the sufficiency of reserves for the stable operation of the financial institution.

Consideration of a request for a Montenegrin payment license involves a comprehensive analysis of the submitted information, including the study of the business model, organizational structure and measures aimed at preventing financial crimes. The CBCG assesses whether the requested authorization is fit for purpose and verifies that internal procedures comply with regulatory standards.

The regulator makes a final decision based on the analysis of all submitted data and the results of the review. If the CBCG confirms that the company meets the established criteria, the organization receives a permit to carry out payment transactions in Montenegro and can start operating in accordance with the license. In case of rejection, the applicant receives an official notification stating the reasons that can be eliminated for reapplication.

Dossier for obtaining a license for payment services in Montenegro

The documentation package submitted to the CBCG to obtain a payment license in Montenegro includes documents of title, management structure, financial statements, descriptions of internal procedures and evidence of compliance with the regulator's criteria. The package submitted should confirm the legitimacy of the origin of capital, the existence of a sustainable business model, compliance with internal oversight standards and readiness to fulfill obligations to customers.

The file shall include:

• Constituent documents including the agreement on the establishment of the company, articles of association and the decision on registration in the Central Register of Business Entities.
• Business program reflecting the list of operations for which a Montenegrin payment license is requested. Includes information on the target markets, anticipated transaction volumes and key business processes.
• A business plan containing projections of financial performance for the first three years of operation, as well as an analysis of the company's sustainability. If the company has been in operation for less than two years, reports for the entire period of operation are provided.
• Proof of contributed capital that meets the requirements for the requested license for payment services in Montenegro. Official statements of the bank account where the funds are deposited.
• Description of measures to protect client funds, including the methodology for calculating reserves to ensure fulfillment of payment obligations. The regulator analyzes the controls over the safeguarding of users' assets.
• Corporate governance structure, including a description of the administrative control system, accounting procedures and threat management mechanisms. The document is assessed for effectiveness and reliability of the implemented mechanisms.
• Incident response programs that regulate the procedure of actions in case of failures in the payment system, cyber threats or user requests related to transaction security.
• Payment data protection protocols that establish measures to monitor access to sensitive information, track unauthorized activities and prevent data breaches.
• Business Continuity Plan of the Montenegrin payment license Holder, including a list of critical processes, procedures for dealing with the consequences of emergency situations and regulations for emergency preparedness testing.
• Statistical collection methodology, which defines the procedure for maintaining reports on the number of transactions, performance indicators and detected fraud cases.
• Security policy containing an analysis of potential threats related to the provision of services under the payment authorization in Montenegro and a description of preventive measures aimed at minimizing them, including cyber protection and protection of personal data.
• Internal Supervision Regulation defining the system of detection and prevention of financial offenses, which complies with the requirements of the legislation on combating illicit enrichment and financing of illegal activities.
• A description of the organizational structure, including how the business is conducted through branches and agents, mechanisms for controlling their work, and plans to outsource some operations.
• Information on persons holding significant stakes in the company, with confirmation of the size of their holdings and evidence of their financial integrity.
• Information on members of the administrative bodies, managers and key decision makers of the company, with information on their qualifications, experience and business reputation. The executive director is required to have a university degree.
• A security clearance analysis of the managers, confirming that they have no criminal record or ties to persons convicted of financial crimes.
• Appointment of an auditor, if applicable. Information is provided on the certified professional or auditing firm that will audit the company's financial statements.
• List of persons who have a close relationship with the holder of the payment license in Montenegro, indicating the nature of their interaction and the degree of influence on the activities of the organization.

CBCG analyzes the completeness and accuracy of the information submitted. Inadequate sections or missing materials may result in the denial of the Montenegro payment authorization request or the need to make adjustments.

Issuance of authorization to provide payment services in Montenegro

The procedure of licensing of a payment institution in Montenegro is completed by the CBCG, which assesses the applicant's compliance with the established requirements. The regulator takes into account not only the correctness of the submitted documentation, but also the degree of readiness of the legal entity to operate in the financial sector. Approval is granted if the organization demonstrates a sustainable operating model, effective management mechanisms and a reliable internal oversight system.

If the applicant is already engaged in activities unrelated to the provision of payment services, the regulator assesses the possible impact of such a combination on the stability of the future institution. In case the combination of several business lines may jeopardize the financial stability or impede the supervision of the company, the CBCG has the right to require the separation of payment operations into a separate legal entity. Such a condition may be motivated by the need to increase operational transparency and facilitate oversight of compliance with regulatory standards.

Before making a final decision on the issuance of a payment license in Montenegro, the regulator may involve other competent authorities, including central banks of foreign jurisdictions or supervisory authorities regulating the financial sector, in the analysis. Such cooperation allows for a comprehensive assessment of the applicant's reliability, identifying possible risks related to its structure or operating history, as well as obtaining additional information about its owners and management.

Based on the results of the review of the request, the CBCG makes a decision on granting payment authorization in Montenegro. Information on the issued license is subject to official publication in the Official Gazette, which confirms the legality of the institution's operation in the country. Publication of data on payment licensing in Montenegro ensures transparency of the market and allows interested parties to get information about newly accredited organizations.

In what cases a payment license in Montenegro can be revoked

A license for payment transactions in Montenegro is granted subject to compliance with established regulatory requirements and maintaining business sustainability. The CBCG has the right to revoke a previously issued authorization in cases where a firm loses compliance with regulatory standards, violates established obligations or poses a threat to the stability of the financial sector. The grounds for revocation of the Montenegrin payment license may be related to both inactivity of the company and identified non-compliances in its operational activities.

Revocation of the authorization document is inevitable if the company that received it has not started providing the declared services within a year after registration. Suspension of operations for more than six months without objective reasons is considered as grounds for termination of the payment license in Montenegro.

A company loses its right to operate if it ceases to meet the requirements on the basis of which it received authorization. Changing key indicators without notifying the CBCG is considered as a serious violation that can affect the reliability of the payment transaction system. The regulator reserves the right to conduct inspections and require disclosure of information related to changes in management structure, financial condition and business model.

CBCG may initiate the procedure for revocation of payment license in Montenegro if a legal entity obstructs supervisory activities. Refusal to provide information, concealment of the real financial situation or obstructing the verification of activities are considered as serious violations leading to the termination of the authorization.

Information on the revocation of the payment transaction license in Montenegro is subject to official publication in the Official Gazette. This step ensures transparency of the regulatory process and allows financial market participants to promptly receive information on the status of financial institutions.

Conclusion

Competent legal support at all stages of processing a payment license in Montenegro helps minimize the risks associated with non-compliance with legal requirements, incorrect paperwork or violation of established procedures. A professional approach to preparing the request, proper structuring of the business model and compliance with regulatory standards ensure a high level of confidence on the part of the regulator, and reduce the time required to process the application. Specialized support is also needed when interacting with the CBCG, especially in cases where clarification of certain provisions of the legislation or amendments to previously submitted materials are required.