Serbia’s leader, Aleksandar Vučić, has promoted one of his closest allies and a mastermind of investment deals to the post of finance minister. Siniša Mali, a controversial former mayor of Belgrade, was voted in on May 29 by a parliament that has never disagreed with Vucic’s proposals. His appointment will likely exacerbate existing problems regarding the rule of law and integrity of the financial system – thereby increasing overall political risk.

An experienced power player with strong personal ties inside the very core of Vučić’s increasingly autocratic regime, Mali has played an informal role as the de facto chief architect of the key political-financial projects that underpinned Vučić’s rise to power. That Mali has been put in charge of the government’s coffers can be interpreted as a blatant example of institutional paralysis, but more importantly, it has removed one of the last remaining barriers to the organised accumulation of wealth and political power through the systematic control of every part of the state administration.

Key Impact

  • Serbia has recently been flagged by several international watchdogs and institutions as a jurisdiction that has serious problems with financial integrity, systemic corruption, and the rule of law. This represents a departure from the usual rhetoric of European institutions and non-government actors when relating to Serbia’s leader, Aleksandar Vučić, and is a clear warning that the country is sliding towards state capture.  
  • GRECO, the Council of Europe’s anti-corruption body, stated this April that Serbia has failed to implement any of its recommendations issued in 2015. The recommendations were specifically directed at manipulation of parliamentary procedure, political control over prosecutors and judiciary, administrative intimidation, and financial influence over external private and state actors.
  • Serbia is now a regional leader and among the top 10 highest risk countries in Europe and Central Asia according to the 2017 Basel AML Index of money laundering and terrorist financing. The Basel Index incorporates the revised FATF methodology that assesses actual implementation of laws, which in many cases lag behind technical compliance. The FATF has also placed the country among the five high-risk jurisdictions for money laundering.