Obtaining a banking licence in Montenegro is not difficult on formal grounds, but it is critical to pass the regulatory review without errors or delays. Montenegro is a small state with access to the Adriatic Sea, where the euro is applied, although the country is not part of the Eurozone. This rare combination makes the jurisdiction particularly attractive for the location of financial structures.
Those wishing to obtain a banking licence in Montenegro see it as an affordable way to legally enter the European market without having to register within the more stringent legal framework of the European Union. All licensing processes are supervised by the Central Bank, which ensures stability and compliance with the rules.
Although basic information on the procedure is publicly available, the process from application to registration is not easy. To obtain a licence for a bank in Montenegro, it is necessary not only to collect documents but also to convincingly justify the origin of capital, business structure, and qualifications of key persons. When considering the application, the parameters of corporate governance, quality of internal control, and compliance of future activities with international financial standards are assessed. Special attention is paid to IT infrastructure, compliance, and anti-crisis mechanisms. Mistakes at any stage, including inaccurate wording in documents or insufficient openness of funding sources, may result in the denial of a license. The procedure requires time, an understanding of national regulatory practices and active engagement with the Central Bank.
The post aims to provide a clear and structured explanation of how to apply for a banking licence in Montenegro, what steps need to be followed, what barriers lie ahead and how long the whole process takes. Specific questions are raised: what documents should be prepared, what are the conditions for obtaining one, the cost and the processing time. Special attention is paid to the legal side, including penalties for not having a banking licence in Montenegro, as well as the legal status of applicants from other countries.
Banking system and regulation
Before applying for a banking licence in Montenegro, it is necessary to understand how the financial sector of this country is structured. Regulation here is centralised, based on national legislation and bylaws. The most important role is played by the Central Bank, which simultaneously supervises, assesses the sustainability of business models and makes decisions on licensing. All procedures are based on legal acts regulating the way credit organisations operate.
Montenegro's banking system includes several commercial banks, branches of foreign groups and specialised institutions. Most transactions are conducted in euros, and the country is not a member of the eurozone. This specificity allows the country to maintain monetary stability without being dependent on the decisions of the European Central Bank. There are universal banks operating in the segment of retail and corporate lending, as well as structures with investment profile. The legislation allows both residents and foreign legal entities to obtain a licence for a bank in Montenegro.
Central Bank of Montenegro (CBCG): functions and powers
The Central Bank of Montenegro is the main supervisory authority. It monitors the stability of the financial sector, supervises all credit institutions and decides on licensing issues. The CBCG's powers include monitoring liquidity, checking sources of capital, analysing banks' accounts, and auditing internal processes. The bank can revoke a licence if it finds significant violations. It is also authorised to carry out inspections at the time of application, monitor the stages of registration of an international bank in Montenegro and verify compliance with governance standards.
Image caption: Official website of the Central Bank of Montenegro (CBCG)
The Central Bank is authorised to maintain an official register of all active credit institutions. It records not only licensed banks, but also branches of foreign entities, as well as representative offices from EU countries and third jurisdictions.
The Law on Banks of Montenegro: key provisions
The legal basis is the Law on Banks, which regulates the status of credit organisations. The document contains norms on the procedure for establishing a bank, capital requirements and application procedure. The conditions for obtaining a banking licence in Montenegro are described in the sections on registration, internal control and personal composition of management bodies. The law establishes obligations for disclosure of information, verification of founders and sources of funding. If the requirements are violated, registration may be refused. This also applies when applying for a banking licence for foreigners in Montenegro.
Law on the Central Bank of Montenegro (CBCG)
A separate act regulates the activities of the Central Bank. This document establishes the right of the CBCG to set licensing rules, financial reporting standards and market admission parameters. It specifies the control procedure and the procedure for cancellation of a licence. It defines the functions of monitoring the stability of the banking system, managing foreign exchange reserves and controlling international transactions. The law also allows the bank to participate in international exchanges of financial information as part of the fight against money laundering.
Secondary regulations of the CBCG
In addition to the primary legislation, licensing regulation is also based on the internal regulations of the Central Bank of Montenegro. These documents detail the requirements for the composition of the dossier, the structure of strategic and financial plans, as well as the technological and managerial elements of the future bank. They define the parameters of the application, business forecasting standards and the format in which calculations and the organisational model must be presented. Additional conditions for foreign founders are also set out. Special attention is paid to the criteria for the management team: not only experience in the financial sector is assessed, but also the absence of legal restrictions.
The regulations also cover the renewal procedure and possible grounds for refusal. Separate instructions deal with reporting forms, deadlines for submission of information, methodology for calculating capital adequacy. Compliance with them is monitored through regular inspections as part of the procedure for renewal of a banking licence in Montenegro.
Types of activities subject to licensing
Montenegro's legal framework does not strictly classify types of banking licences by model (such as universal, investment or deposit banking). Instead, a case-by-case approach is taken: in each case, a licence is issued for a strictly defined list of operations.
This approach means that each licence is tailored to the specifics of a particular applicant. If a bank plans to expand the range of operations in the future, it must go through an additional approval procedure and obtain a separate banking licence in Montenegro for each new service. Such restrictions are due to the need to comply with the principles of financial stability and risk control.
According to the Law on Banks of Montenegro, the licence covers not only basic deposit and lending operations, but also a wide range of additional banking services. Such operations include:
- The issuance and provision of bank guarantees, as well as other off-balance sheet commitments.
- Purchase, sale and collection of debt, including such forms as factoring and forfeiting.
- Issuance and technical support of payment instruments.
- Domestic and international payment transactions.
- Financial leasing.
- Securities transactions in accordance with the relevant legislation.
- Currency and derivatives trading - both at the bank's expense and on behalf of clients.
- Provision of custody services.
- Analysing clients' activities and advising on creditworthiness, financial condition and investment decisions.
- Safe deposit box hire.
- Other functions directly related to the bank's core business.
If a foreign institution does not plan to provide financial services directly, it may register a representative office in Montenegro. Such a representative office does not have a licence, but operates on the basis of a permit from the regulator. For branches from EU countries, the principle of notification applies.
What happens if you work without a banking licence
Legislation stipulates that no person - natural or legal, resident or foreign - may carry out banking activities in Montenegro without a banking licence. Violation of this rule is considered as illegal banking practice. The Central Bank is authorised in such cases to conduct an unscheduled inspection of all documentation, operational records and business activities of the alleged violator.
The law establishes sanctions for carrying out activities without a licence. The amount of the fine is set between 5,000 and 15,000 euros, and it can be applied to any organisation, regardless of its legal form and country of registration. It is also punishable to use the word ‘bank’ in the name without obtaining the prior consent of the regulator. This rule is aimed at protecting consumers from possible manipulation and unfair practices.
Conditions for obtaining a banking licence in Montenegro
In order to obtain a banking licence in Montenegro, the initiator must submit an application to the Central Bank (CBCG), which is accompanied by an extensive set of documents. A prerequisite is the fulfilment of certain requirements.
Requirements for founders and ownership structure
A bank can only be established as a joint stock company. Participation is allowed for both individuals and legal entities - residents and non-residents. A minimum of one founder is allowed. All persons applying for qualified participation (from 5 per cent of the capital share or voting rights) are required to obtain prior approval of the Central Bank.
For foreign legal entities or financial institutions planning to become founders, it is necessary to attach a permit from their own supervisory authority confirming that there are no restrictions on participation in the Montenegrin banking system.
Minimum authorised capital
The law strictly fixes the minimum capital amount at €5,000,000. This amount must be paid in full before the bank is registered with the Central Register of the Commercial Court (CRCC). A banking licence in Montenegro cannot be issued with partial deposit of funds. The funds must be held in a separate account and be free from encumbrances, including loans, pledges or obligations to third parties.
Operations on formation of the authorised capital are checked by the Central Bank within the framework of financial control. It checks the flow of funds, documents on the sources of origin, and the compliance of participants with compliance procedures. If the capital is contributed with borrowed resources, even from related parties, the regulator may refuse to grant authorisation. This rule applies to all applicants, including those applying for a banking licence for foreigners in Montenegro.
Proof of origin of funds
One of the key requirements for founders to obtain a banking licence in Montenegro is to provide official proof of the sources of origin of the capital. Individuals must provide full identification details and evidence of the legitimacy of the funds. Legal entities - three years' accounts, including an external auditor's opinion, as well as details of affiliated structures and related parties.
Risks, reputation and experience of beneficiaries
When issuing a banking licence in Montenegro, the Central Bank assesses the reputation, business history and experience of the founders, as well as the persons to be appointed to the management bodies. Factors such as involvement in bankruptcies, management experience, and involvement in regulatory violations in other jurisdictions are taken into account. A decision may be refused if at least one of the major participants does not meet the criteria of trustworthiness.
Organisational structure and business plan
The application should include a three-year business plan including strategy, financial performance calculation, cash flow forecast and market model justification. A description of the organisational structure, list of premises, equipment, staffing, IT system structure and internal reporting must also be provided. A capital and risk management strategy is also mandatory, as required by the licence regulations for a financial institution in Montenegro.
Documents for obtaining a banking licence in Montenegro
To obtain a licence for a bank in Montenegro, the founders submit an application to the Central Bank. It is accompanied by a mandatory package of documents:
- Representative Certificate - a document confirming who will officially interact with the Central Bank on behalf of the applicant.
- Draft Articles of Association and Internal Regulations - constituent documents that set out the structure, objectives and rules of operation of the future bank.
- Documents on legal entities with qualified participation - registration data, accounting statements for the last three years with an auditor's report, information on related structures and degree of control.
- Data on individuals with qualified participation - copies of identification documents, information on business and family ties, confirmation of sources of funds.
- Biographies of prospective board members - brief description of education, managerial and professional experience, and business achievements.
- Full three-year business plan - a document containing the bank's strategy, characterisation of the target segment, financial projections for profit, loss and flow of funds.
- Management strategies - descriptions of capital, liquidity and risk management approaches that comply with the Central Bank's requirements.
- Evidence of organisational readiness - information on office location, technical infrastructure, staff structure, accounting system and IT platform.
The Central Bank shall have the right to request additional materials if the submitted documents are insufficient.
Step-by-step procedure for obtaining a bank licence in Montenegro
The procedure for obtaining a banking licence in Montenegro includes several mandatory steps:
The founders initiate a meeting with representatives of the Central Bank. At this meeting, they discuss the expected timing of the project, the strategic goals of the bank, the financing scheme, the structure of the future organisation and the risk management model. Following the meeting, a protocol is drawn up and signed by both parties.
After preliminary agreement with the Central Bank, the preparation of a full set of materials required for obtaining a banking licence in Montenegro begins. At this stage all legal, financial and organisational documents reflecting the structure, objectives and model of the future bank are formed. Special attention is paid to the verification of sources of capital, biographies of participants, business plan and readiness of IT systems. Errors or inaccuracies at this stage may delay the entire procedure.
When the documents are ready, the applicant submits an official application to the Central Bank of Montenegro. Within two working days, the regulator acknowledges receipt of the application. If the dossier is incomplete or doubtful, the Central Bank sends a written notification and sets a deadline of eight to fifteen working days to correct the deficiencies. Only after the correct and complete dossier is submitted, the formal review of the application for a banking licence in Montenegro begins.
From the moment of submission of a complete set of documents, the Central Bank of Montenegro starts the application analysis procedure. It takes up to 180 calendar days to review the application. During this period, the regulator's specialists carry out a detailed check of the business plan, sources of financing, as well as the competence and reputation of all persons involved in the management. The ownership structure, the degree of transparency of the participants and compliance with anti-monopoly principles are assessed. If any information requires clarification, the Central Bank has the right to suspend the procedure until additional data is received, but for no longer than twenty working days.
The Central Bank makes the final decision - to grant or deny a banking licence in Montenegro. The decision is formalised by an official act and can be appealed in court.
After the licence is issued, the applicant is obliged to:
- register the bank with the commercial court within 60 days;
- commence operations no later than 60 days from the date of registration.
If these deadlines are violated - the licence is automatically cancelled.
Fees & charges
According to the legislation, the Central Bank charges fees for:
- Issuing licences to banks in Montenegro and microfinance firms
- Approval of operations not included in the initial licence;
- Supervisory activities - including annual monitoring and inspections.
The total amount of the annual supervision fee may not exceed 0.5% of the bank's assets recorded at the end of the previous year. Specific amounts of fees, including one-off fees for the issuance of a banking licence in Montenegro, are set by special regulations of the Central Bank (internal regulations of the CBCG).
|
Parameter |
Description |
|
Application review |
Up to 180 calendar days |
|
Post-licencing registration |
Up to 60 calendar days |
|
Срок начала деятельности после регистрации |
Up to 60 calendar days |
|
Регуляторная плата за надзор |
Up to 0.5% of the bank's assets for the previous year |
|
Additional fees |
Established by the Central Bank for licence extensions and other procedures |
Terms and fees for bank licensing in Montenegro
Taxation of banking activities
To understand all the costs associated with running a financial business, it is necessary to consider not only the costs of registration and authorisation of banking activities in Montenegro. Special attention should be paid to the fiscal burden, as the taxation system affects the final economy of the bank. The rules of taxation of banking institutions in Montenegro are formed by the general tax regime. They apply to both residents and foreign organisations with a permanent establishment.
Corporate income tax
Corporate income tax in Montenegro is applied according to a progressive system. This means that the rate increases as the financial result increases.
- 9% for profits up to 100,000 euros.
- 12% for profits between €100,000.01 and €1,500,000 (calculated as: €9,000 + 12% of the amount above €100,000).
- 15% for profits above €1,500,000.01 (calculated as: €177,000 + 15% of the amount in excess of €1,500,000).
The tax is paid annually on a reporting basis.
Tax residents pay on worldwide profits. Non-residents are taxed only on income earned in the country or through a permanent establishment (branch). This system makes the fiscal burden predictable and adapted to the scale of the business. For those seeking to apply for a licence for a bank in Montenegro, this is an important argument when assessing cost-effectiveness.
Value Added Tax
VAT in Montenegro is modelled on a model closer to European Union standards. Banks as service providers may be subject to VAT regulations if their annual turnover exceeds €30,000. Rates:
- 21% - standard rate.
- 15% and 7% - reduced rates (not applicable to banking services).
- 0% - export and specific international supplies.
Registration as a VAT payer may be mandatory (if the turnover threshold is exceeded) or voluntary. After registration, a bank must remain a VAT payer for at least 3 years.
This rule also applies to newly established banks that have obtained a banking licence in Montenegro.
Other taxes and mandatory duties
Banks importing equipment (e.g. ATMs, IT infrastructure) are subject to duties depending on tariff code, country of origin and value. Free trade agreements apply (EU, EFTA, CEFTA, Turkey, etc.).
Excise duties. Banks as legal entities do not produce excisable goods, but may pay excise duty indirectly (e.g. through the cost of corporate cars, energy, etc.).
Real estate properties owned by a bank (offices, branches) are subject to property tax ranging from 0.25% to 1% of the market value. The tax is calculated as of 1 January each year and is paid in two stages.
If the bank acquires real estate, a transfer tax of 3% to 6% is applied, calculated on the market value of the property.
Tax incentives and credits
Although banks are not directly eligible for most tax incentives, there are exceptions. For example, tax credits in underdeveloped regions - can be applied if the bank's branch is registered in such municipality. The benefit is up to €200,000 over a period of 8 years.
Proper planning helps to avoid additional costs and to calculate the economics of the project even before starting the procedure of registering an international bank in Montenegro.
Conclusion
A banking licence in Montenegro provides access to a stable European jurisdiction with a liberal currency regime and a transparent regulatory system. The legal framework is based on clear procedures: from application to launching operations. The requirements for capital, ownership structure and sources of funding are high but clear. The law establishes a personalised approach to licensing, as well as strict reporting rules. It is important to take into account the tax burden, registration obligations and deadlines for each stage. Only accurate compliance with all conditions allows you to obtain a banking licence in Montenegro and retain it in the future.
Our team supports projects of any complexity - from preliminary assessment of the business model to full legal registration. We assist in obtaining a licence for a bank in Montenegro, prepare documents, represent clients before the regulator, and liaise with tax and corporate authorities. If you need reliable support in registering an international bank in Montenegro, our specialists are ready to offer comprehensive solutions tailored to the goals of a specific project.