Montenegro Ministry Bans PayPal and Mobile Banking in Betting Law Amendments, Defying EU Regulations

Montenegro Ministry Bans PayPal and Mobile Banking in Betting Law Amendments, Defying EU Regulations

In a move that has raised eyebrows across the global financial community, including the European betting and iGaming sectors, in January 2024, Montenegro has enacted amendments to its gambling laws that effectively ban the use of modern electronic payment methods, including Apple Pay, PayPal, mobile banking, IPS, and e-banking.

Given public outcry and industry backlash, the next version of the law is allegedly expected in August.
Country has no obligation to comply with EU rules
Ironically, the Minister of Finance stated a few days ago that the country has no obligation to comply with EU rules, a paradoxical stance for a nation actively seeking EU membership and aiming to integrate into the world of digital business.

In 2021, the European Commission urged Montenegro to strengthen its efforts to counter money laundering. However, the recent amendments move in the opposite direction, potentially isolating the country from EU practices and global financial community trends.

Since the beginning of 2024, however, Montenegro’s gambling sector has been in turmoil.

Here is the story about it:

Industry Response

The controversial ban on electronic payments seems designed to curb competition, preventing the growth of foreign-owned companies, including U.S. enterprises. This move contradicts global business practices and undermines the principles of competitive business.

A petition calling to halt the change received 25,000 signatures, representing around 5% of the country’s electorate, in just five days. It highlighted the risk of significant job losses in the industry and the potential economic repercussions of such legislative measures.

Montenegro Bet, the country’s nationwide trade association, has submitted the petition to the country’s assembly and initiated a constitutional review, highlighting concerns over the unconstitutionality of the amendments. Additionally, they are working with international institutions to draw attention to the negative impacts of the law changes and their contradictions with EU directives. All those attempts have remained without a single institutional response.

Overview of Breaches of EU Acquis by Article 68f

Much of the backlash to the amendments comes from the view that they conflict with European Union (EU) law.

While Montenegro isn’t currently in the EU, it is a candidate for membership and is expected to align its laws with EU standards. The amendments clash with several key EU legal provisions, including the TFEU, Payment Services Directive, which seeks to form an integrated market for electronic payments, and the EU 4 and 5AML Directives, which categorize cash transactions as high risk for money laundering.

Multiple Lawsuits Incoming

The combination of apparent corruptive practices orchestrated by local companies within the same industry and certain individuals within the Ministry of Finance results in an attempt to de facto expel multiple operators, including those based in U.S, clearly denying equal market access. This has already led to substantial legal challenges. Multiple operators are preparing preliminary steps toward legal action, including a lawsuit before the International Court for Settlement of Investment Disputes.

A Cash and Retail-Loving Law in the Middle of the Digital Age

The amendment to Article 68f of Montenegro’s gambling law has sparked significant concern within the country’s gambling sector. The new law disables various electronic payment methods, such as e-banking and mobile payments, for depositing funds into betting accounts.

This leaves bettors in Montenegro with only two options: they must either enter a betting shop to place a cash wager, which then transfers funds into their accounts, or pay via card, but only at a terminal in a betting shop.

This strange move forces players to go to a store just to fund their online accounts, which is inconvenient in a time when digital transfers should be the norm.

Defying Global Trends and AML Standards – What Next?

Montenegro’s move to limit electronic payments is an outlier among global trends. Internationally, there is a clear shift towards reducing cash transactions in favor of electronic payments, as advocated by bodies like Moneyval and the Financial Action Task Force (FATF).

The global financial community is embracing digital solutions for their transparency and efficiency.

Montenegro’s stance not only isolates it from EU practices but also contradicts the direction of the global financial community, increasing the risk of money laundering and undermining investor confidence.

The prohibition of the safest and most advanced methods of online payment business, such as Apple Pay and PayPal, in favor of promoting cash transactions, is a troubling development that warrants urgent attention and action from both national and international stakeholders.

Olivia Richardson

Olivia has worked as an editor and writer for major brands across multiple niches. She now focuses on the iGaming and sports betting industries.

In a controversial move that has sparked debate and criticism, the Montenegro Ministry of Finance has recently announced amendments to the country’s betting laws that effectively ban the use of PayPal and mobile banking for online gambling transactions. This decision has raised concerns about Montenegro’s compliance with European Union regulations and its commitment to fostering a competitive and innovative digital economy.

The new regulations, which were introduced as part of the Law on Games of Chance and Entertainment Games, prohibit online betting operators from accepting payments through PayPal or other mobile banking platforms. Instead, players will be required to use traditional payment methods such as credit cards or bank transfers. The Ministry of Finance justified this decision by citing concerns about money laundering and the need to protect consumers from excessive gambling.

However, critics argue that the ban on PayPal and mobile banking is a regressive and anti-competitive measure that will stifle innovation in the online gambling industry. They point out that many players prefer to use these convenient and secure payment methods, and that restricting their use could drive customers to unregulated or offshore betting sites. In addition, the ban could put Montenegro at odds with EU regulations, which aim to promote a single digital market and ensure fair competition among member states.

The European Gaming and Betting Association (EGBA) has expressed concern about Montenegro’s decision, warning that it could harm the country’s reputation as a business-friendly destination for online gambling operators. The EGBA has called on the Montenegro government to reconsider the ban on PayPal and mobile banking, and to work with industry stakeholders to find a more balanced approach that protects consumers while also supporting innovation and competition.

It remains to be seen how the Montenegro Ministry of Finance will respond to these criticisms and whether they will reconsider their decision to ban PayPal and mobile banking in online gambling transactions. In the meantime, players and operators in Montenegro will need to adapt to the new regulations and explore alternative payment options for their online betting activities.