Bosnia-Herzegovina Country Summary

FATF Status

Bosnia & Herzegovina is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies.

Latest FATF Statement - 23 February 2018

The FATF welcomes Bosnia and Herzegovina’s significant progress in improving its AML/CFT regime and notes that Bosnia and Herzegovina has established the legal and regulatory framework to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2015. Bosnia and Herzegovina is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Bosnia and Herzegovina will work with MONEYVAL to improve its AML/CFT framework.

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Bosnia and Herzegovina was undertaken in 2024. According to that Evaluation, Bosnia and Herzegovina was deemed Compliant for 4 and Largely Compliant for 21 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness ratings.

Corruption is a significant issue in Bosnia and Herzegovina (BiH), affecting both political and economic institutions, and leading to high costs and risks for businesses. Despite having laws against corruption, enforcement is weak, and public officials often act with impunity, contributing to a lack of transparency in business practices. The country's complex regulatory environment and ineffective anti-corruption measures deter foreign investment and hinder economic growth, while efforts to combat corruption face political pressures and limited results.

Bosnia and Herzegovina (BiH) faces significant economic challenges, including endemic corruption, a complex legal framework, and a weak judicial system, which deter foreign investment despite a liberal trade regime and low tax rates. The economy is characterized by low levels of foreign direct investment and a bloated public sector, with over 550 government-owned enterprises that crowd out private sector growth. Although real GDP is projected to grow modestly, the economy is hindered by high inflation, workforce out-migration, and a lack of necessary reforms to improve the business environment.

Bosnia and Herzegovina (BiH) presents a challenging investment climate for foreign investors due to endemic corruption, complex legal frameworks, and a weak judicial system influenced by political patronage. Despite having a liberal trade regime and low corporate tax rates, the country struggles to attract foreign direct investment, which is hindered by political instability and a lack of adequate incentives. Investors are advised to conduct thorough due diligence to navigate the legal ambiguities and potential risks associated with investing in BiH.