FATF Status

Macedonia is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in North Macedonia was undertaken in 2023. According to that Evaluation, North Macedonia was deemed Compliant for 6 and Largely Compliant for 22 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective 1 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

US Department of State Money Laundering assessment (INCSR)

Macedonia was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

Macedonia is a middle income country with a fairly developed financial system. It is not a regional financial center. While most financial transactions are done through the well regulated and supervised banking system, cash transactions of considerable amounts occasionally take place outside the banking system. Money laundering in Macedonia is most often linked to financial crimes such as tax evasion, smuggling, financial fraud, insurance fraud, and corruption. Most of the laundered proceeds come from domestic criminal activities. A small portion of money laundering activity is connected to narcotics trafficking. There is no evidence that narcotics trafficking organizations or terrorist groups control money laundering.  Also, there is no evidence that human or weapons traffickers have been involved in money laundering activities using banking or non-banking financial institutions. Money transfers, structuring cash deposits, the purchase of real estate and goods, and the use of legal entities in offshore jurisdictions are frequent money laundering techniques.

Macedonia is not an offshore financial center, and the Law on Banks does not allow the existence of shell banks in Macedonia. Anonymous bank accounts and bearer shares are not permitted.  There is no evidence that alternative remittance systems exist in Macedonia. However, exchange offices and non-bank money transfer agents need more prudent supervision.

There are 14 free trade zones (FTZs) in Macedonia, operating as industrial zones.  The production facilities enjoying the FTZ benefits are exclusively owned by foreign investors. The Government of Macedonia established the zones to attract more foreign investment. Business operations in the zones are adequately regulated, and there is no evidence of money laundering or terrorism financing activities in the zones. The Government screens companies to determine their eligibility to operate in the FTZs, and companies are subject to standard disclosure rules and criminal laws.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           42

World Governance Indicator – Control of Corruption             44

Corruption and inefficient bureaucracy are challenges companies may face when doing business in Macedonia. Many cumbersome regulatory procedures have been eliminated over the past decade, but bureaucratic red tape remains a problem throughout the public administration. Private businesses frequently complain about burdensome administrative processes that create operational delays and opportunities for corruption. Public procurement, the customs administration, and the building and construction sectors are areas where corruption and bribery are most prevalent. The primary legal framework regulating corruption and bribery in Macedonia is contained in the Law on Prevention of Corruption and the Criminal Code, which make individuals and companies criminally liable for corrupt practices. Facilitation payments are prohibited, and gifts may be considered illegal depending on their value or intent. Progress has been made in law enforcement and corruption-prevention initiatives, yet public officials continue to act with impunity. Insufficient implementation of legislation and ineffective law enforcement continue to impede the fight against corruption. For further information - GAN Integrity Business Anti-Corruption Portal

The Republic of North Macedonia, an EU candidate country and a NATO member since March 2020, continues to be receptive to U.S. commercial investments. Higher energy prices, inflation, and a disrupted supply chain due to uncertainty created by Russia’s invasion of Ukraine hampered 2022 GDP growth. Despite government stimulus measures to assist recovery, GDP in 2022 only grew by 2.1 percent, 1.1 percentage points less than projected.  Government support also cushioned the impact of the crisis on the labor market, with unemployment falling to 14 percent in 2022.  In its Growth Acceleration Plan, the government set targets to double the average annual GDP growth rate from 2.5 percent to 5 percent in the period 2022-2026, create 156,000 new jobs, and reduce unemployment to 8.6 percent.  It also committed to “green growth” by accelerating the energy transition to carbon neutrality and reducing greenhouse gas emissions in accordance with the Declaration on Green Agenda signed November 2020.

While North Macedonia’s investment climate is generally attractive and the legal framework is largely in line with international standards, corruption is a consistent challenge. Large foreign companies operating in the Technological Industrial Development Zones (TIDZ) generally report positive investment experiences and maintain good relations with government officials. However, the country’s overall regulatory environment remains complex, and frequent regulatory and legislative changes, coupled with inconsistent interpretation of the rules, create an unpredictable business environment conducive to corruption. The government generally enforces laws, but there are numerous reports that some officials remain engaged in corrupt activities. Transparency International ranked North Macedonia 85th out of 180 countries in its Corruption Perceptions Index in 2022, one spot higher from the prior year, with a score of 40/100 in absolute terms.

The Office of the Deputy Prime Minister for Economic Affairs continues to coordinate government activities related to foreign investments.  The government made some efforts in 2022 to attract new investment in the midst of mitigating the effects of the energy crisis and inflation, including courting foreign companies and investors for public projects in transportation and energy infrastructure.  The State Commission for the Prevention of Corruption has opened several corruption-related inquiries, including several involving high-level officials, and the Deputy Prime Minister for Good Governance has focused on structural and procedural changes to reduce opportunities for corruption.

Fitch Ratings has reaffirmed North Macedonia’s previous credit rating of BB+ with a negative outlook, and Standard & Poor’s reaffirmed its credit rating at BB- with a stable outlook.

There are several areas to watch in 2023. In 2021, Embassy Skopje identified digitalization and green energy as areas ripe for U.S. investment due to the government’s growing commitment to invest in these strategic sectors. North Macedonia’s location at the crossroads of pan-European transport corridors VIII and X may facilitate “near-shoring” production in proximity to consumption centers in Europe as fallout from the pandemic and Russia’s invasion of Ukraine continue to snarl global supply chains.

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Country Links

National Bank of the Republic of Macedonia