Banks in Bosnia have seen their accounts blocked or closed by foreign counterparts since the Balkan state became the only European country to be put on an EU list of countries that pose a high risk to the financial system, bankers said on Monday.
Bosnia joined Afghanistan, Iraq, Syria and Yemen on the list after its authorities failed to bring forward measures tackling money laundering and terrorist financing risks. The list was published in the EU Official Journal in September.
“(This)… has put in jeopardy the operation of banks and clients, regardless of whether they are firms or individuals,” Bosnia's Bank Association (UBBiH) warned in a statement.
UBBiH said that some foreign banks have been rejecting on a daily basis transactions initiated by Bosnian banks, cancelling business operations or closing Bosnian banks’ accounts.
“This process has begun, it will escalate unless we stop it,” UBBiH Secretary General Mijo Misic told Reuters on Monday.
The EU's list is based on the findings of its Financial Action Task Force (FATF), which had identified Bosnia as a high-risk country.
In talks with FATF last year, Bosnia pledged to make an action plan to address strategic flaws in its legislation regulating anti-money laundering and combating terrorist financing, and to implement it by mid-2017.
But the implementation has been dragging and the bankers now hope that Bosnian governmental bodies will take measures to offset dangers for the economy.
“This will affect banks, clients and investors. The biggest price will be paid by citizens and firms,” Misic said.
He added that diaspora remittances, which account for 11 percent of Bosnia's GDP, may also be affected, while payments for exports would be delayed and the price of transactions raised.
The European Union delegation in Bosnia said foreign banks will conduct extra checks on bank transactions to prevent and disrupt suspicious transactions, but that the measures do not entail any type of sanctions, termination of business relationship or restrictions of trade relations.
“The EU will continue to engage across all relevant policy areas with the concerned jurisdictions … the ultimate goal being their compliance and removal from the list,” an EU delegation's spokeswoman said in a statement to Reuters.