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Twinning Project
Support to Regulation of Financial Services
[MN 14 IPA FI 02 17 R]

 

The overall objective of the Project is to ensure more stable, sustainable and efficient financial services in line with the EU best practice in order to support the private sector development and enhance the competitiveness of the economy.

The purpose of this Project is to further align the legislation for financial services with Union acquis and strengthen the regulatory and supervisory capacities.

 

 

Component A: Banking

Component Leaders:  Sanja Petrinić Turković MS, Lidija Beratović BC

Goal: Alignment of the regulatory framework with Union acquis and improvement of CBM‘s capacities.

A 1: Regulatory Framework

  • Regulatory framework analysis
  • Reports and recommendations  for legal alignment
  • Support in drafting manuals and regulations
  • Assessing the alignment of AML and CFT legislation

A 2: Capacity Building CBM

  • 5 training sessions on ICAAP, SREP and RAS prepared by BBK
  • Advanced stress testing approach
  • Workshops and internships will be provided by HNB
  • Improve analytical methods for the assessment of financial stability

 

Component B: Insurance

Component Leaders: Verena Meckel MS, Ivana Šaranović Jovićević BC

Goal: Further harmonization of insurance market legislation and strengthening of the ISA

B 1: Legislation

  • Preparation of an Action Plan based on gap analysis
  • Drafting of an Insurance Law, aligned with EU Directives
  • Preparation of a manual on insurance supervision
  • Plan of activities for transition on Solvency II reporting system

B 2: Strenghtening ISA

  • Support and recommendations to strengthen the acuarial unit
  • Development and introduction in the use of QIS
  • Trainings, internships and study visits in the field of supervisory procedures

 

Component C: Capital Market

Component Leaders:  Dirk Weinmann, Jochen Robert Elsen MS, Aleksandar Đuričković BC

Goal: Alignment of capital market regulations with Union acquis and capacity building in the SECMN

C 1: Regulatory Framework

  • Assessment of the level of harmonization and regulatory gaps
  • Preparation of an Action Plan for further legislative alignment
  • Assistance in drafting of laws to align the capital market regulations

C 2: Training of SECMN staff

  • Support in preparing procedural manuals according to EU best practice
  • Draft of a manual for on-site inspection in the area of AML/CFT
  • Training of SECMN staff including two study-visits

 

This project is intended to provide crucial support for the further alignment of the legislation in the area of financial services in Montenegro with the Union acquis, with strengthening of the regulatory and supervisory capacities, which is defined as a specific objective. This could be verified mainly through the fulfillment of the requirements from the negotiation of Chapter 9 – Financial Services in order to strengthen administrative capacities of regulatory and supervisory authorities, improve regulatory framework and harmonized legislation, thus to continue further alignment of the Montenegrin legislation with the Union acquis in banking, insurance and capital market sector.

Financial services reform strongly depends on the harmonization and integration of the Montenegrin financial market with the European system. Montenegrin financial sector requires further strengthening of the regulatory framework through improvement of the current and adoption of new legal regulations, in accordance with relevant international practice and regulatory standards of the EU, as a prerequisite for the financial stability. In relation to this issue, substantial progress is needed for the reinforcement of the implementation mechanisms and capacity building, which is necessary for the strengthening of the institutional framework.

Key assumptions are related to the full commitment and support to the Project by the Central Bank of Montenegro (CBM), Insurance Supervision Agency (ISA) and Securities and Exchange Commission of Montenegro (SECMN) and the Government, as well as maintaining adequate key staff with appropriate skills in all the beneficiary institutions. Coordination of the efforts among all institutions should be ensured as well.

In the first six months, Twinning project ‘’Support to Regulation of Financial Services’’ in the component of the capital market, six expert missions were performed which referred to drafting the by-laws for the implementation of the Law on Capital Market, and drafting the Law on Investment Funds and the Law on Alternative Investment Funds. Participants of the expert missions were representatives of the Croatian Financial Services Supervisory Agency and Federal Financial Supervisory Authority of Germany, which have shared their experience through activities in missions and suggestions with colleagues from the Capital Market Authority related to improvement and implementation of the regulation for this field.

In addition, in the same period the cooperation with the Nederlandsche bank in the field of prevention of money laundering and terrorism financing.

Component C- Capital market

The process of education in the field of drafting laws and by-laws was finished.

Amended Law on Alternative Investment Funds was drafted, while other laws and by-laws are in final phases of drafting.

Also, study visits of the colleagues from Montenegro to institutions in Croatia and Germany are planned and done regularly.

Three is an ongoing process of drafting relevant documents in the field of AML/TF in cooperation with DNB colleagues.