Protection against financial crime and fraud is at the core of the legal framework regulating financial transactions. While legal entities are often the primary focus of these regulatory measures, natural persons also require attention in the context of informal financial transactions. Recent amendments to the Law on Public Notaries that came into force on 6 December 2024, introduce new provisions that will significantly impact loan transactions between natural persons. The aim is to enhance security, protection, and control over such financial transactions.
Before the new amendments came into force, natural persons were able to conclude loan agreements without limitations, and their validity was not contingent upon strict formalities. The parties were not required to notarize such agreements or report them to any institution. However, they had the option to have their signatures on a written loan agreement certified by a notary. This was merely an additional security measure for the parties involved in the loan. In that case, the public notary would only confirm the identity of the signatories without delving into the content of the agreement. The only formal requirement existed for loan agreements for amounts exceeding EUR 10,000. For these contracts to be valid, parties had to made the money transfer via bank accounts.
With the entry into force of the amended law, stricter rules will apply.
The latest update of Article 93 of the Law on Public Notaries requires natural persons to solemnize loan agreements before public notaries if the borrowed amount exceeds EUR 10,000. This means the notary will review the content of the loan agreement and will not solemnize it if, generally speaking, its provisions are against the law.
If the public notary solemnizes the loan agreement, they will submit a certified copy to the registry of the Administration for the Prevention of Money Laundering. The notary is also required to fill out a specific form with information on the contracting parties, the loan amount, the repayment term, and the currency. These forms will be filed in a registry established and maintained by the Ministry of Justice, ensuring access to relevant information on these financial transactions.
The solemnization of these agreements should enable the relevant institutions to effectively identify the contracting parties and monitor and analyze financial transactions, leading to more efficient tracking of potentially unlawful activities undertaken by natural persons. For this to happen, proper training for public notaries on the rules and procedures related to money laundering prevention is essential. Ultimately, the implementation of these measures should lead to an increase in trust in the financial system of the Republic of Serbia.
The amendments to the Law were made in accordance with the provisions of the Stabilization and Association Agreement between the European Union and the Republic of Serbia, specifically Chapter VII dedicated to the rule of law. This alignment represents a step toward improving Serbia’s legal system and ensuring economic stability in the country.
Author: Danka Filipović, Associate in cooparation with IVVK Lawyers
For more information please contact us at office@lexquire-ivvk.rs
17/12/2024
