This chapter reviews Bosnia and Herzegovina’s progress in implementing selected reform measures under its draft 2025 Reform Agenda that aim to strengthen trust, compliance and fairness in the private sector. Specifically, it focuses on initiatives to enhance business integrity and corporate liability, prevent corruption and improve anti-money laundering and counter-terrorism financing frameworks, while also assessing efforts to promote alternative dispute resolution as a tool for greater transparency and accountability in business practices.
Assessing Bosnia and Herzegovina's Reform Agenda for Private Sector Development
Abstract
Transparency and accountability in business practices are essential for fostering a competitive, predictable economic environment. These principles underpin the efficient functioning of markets, attracting investment and enabling sustained economic growth. However, gaps in regulatory frameworks, weak enforcement of anti-corruption measures and limited corporate accountability negatively impact the business environment in Bosnia and Herzegovina.
To address these obstacles, the draft 2025 Reform Agenda foresees several measures under the “Business Environment & Private Sector Development” pillar aimed at enhancing corporate transparency, strengthening regulatory oversight and improving relevant legal frameworks. Additionally, related measures from the “Fight against corruption” component under the “Fundamentals & Rule of Law” pillar serve as a natural extension of this discussion, providing further depth and insight into the broader framework for promoting transparency and accountability.
Table 3.1 delineates these key reforms1 for fostering responsible and transparent corporate behaviour, together with their current status of implementation. Overall, Bosnia and Herzegovina has made some progress in strengthening anti-money laundering (AML) and counter-terrorist financing (CTF) frameworks, as well as in the prevention and repression of conflicts of interest, which are the most advanced areas in terms of implementation. Nevertheless, further efforts are required to achieve reform objectives such as establishing a nationwide register of beneficial ownership, enhancing whistleblower protection and improving alternative dispute resolution frameworks.
Source: Draft Reform Agenda for Bosnia and Herzegovina (shared with the OECD team as of September 2025).
Beyond the measures outlined in the draft Reform Agenda, this chapter also considers complementary areas that are not explicitly addressed. As shown in Table 3.2, several additional priorities merit policy attention and could either be incorporated into the final version of Bosnia and Herzegovina’s Reform Agenda or serve as a foundation for future economic reform planning. In particular, business integrity policies are highlighted as an area requiring more policy focus, while recommendations are made to strengthen the enforcement mechanisms for AML and CTF efforts. Additionally, the chapter emphasises the need to promote alternative dispute resolution mechanisms beyond solely reinforcing the legal framework.
Promoting transparency and accountability in the private sector begins with businesses themselves. At a minimum, firms can support these goals by refraining from illicit activities, but they can also take a more proactive role by implementing internal controls and compliance policies. Strengthening business integrity and corporate liability thus can help create a business environment where rules are upheld, misconduct is penalised and fair competition and trust between public and private actors are reinforced.
Significant gaps in the beneficial ownership registration reveal the need for a unified, transparent approach at all levels of government.
There has been limited progress toward ensuring transparency in company ownership, as a comprehensive, country-wide central register of beneficial ownership information, covering both legal persons/private individuals and legal arrangements, remains absent.
In accordance with the relevant EU directive,2 the state-level Law on Prevention of Money Laundering and Financing of Terrorist Activities defines a “beneficial owner” as a natural person or persons who ultimately own or control the customer, or on whose behalf a transaction is conducted.3 The definition also includes individuals who exert control through other means, such as close family relationships or responsibility for strategic decision-making. Aligned with the EU Directive, the law sets the threshold for beneficial ownership of a legal entity at 25% or more of the business’s stock, voting or other entitlements that confer control over the entity—an increase from the previous threshold of 20% under the former anti-money laundering (AML) legislation of Bosnia and Herzegovina.
Across the country, there is considerable variation in the progress made toward establishing beneficial ownership registers (Table 3.3). The framework of Republika Srpska (RS) is the most developed: its Law on Registration of Business Entities explicitly defines beneficial ownership (albeit using a 20% ownership threshold, which diverges from the 25% threshold in the new state-level AML law) and provides a legal basis for integrating beneficial ownership information into the business register. The law, however, does not specify a time limit for registering the required beneficial owner information once a new business is registered, and limited publicly available data further complicates efforts to evaluate the effectiveness and completeness of the register in practice. Since 2019, the Agency for Intermediary, Information and Financial Services (APIF) has been responsible for collecting beneficial ownership information during the business registration process. While the APIF’s website allows users to search the Register of Business Entities,4 the platform was not accessible outside of Bosnia and Herzegovina at the time of writing. Moreover, no statistics are published on the number of entities for which beneficial ownership is recorded, and authorities reportedly do not actively verify the accuracy and updating of this information (OECD, 2024[1]).
Conversely, in the Federation of Bosnia and Herzegovina (FBiH) and Brčko District, the respective Laws on Registration of Business Entities neither define the concept of beneficial ownership nor require its registration. As a result, no official registers exist in these jurisdictions, undermining the implementation of AML measures and creating opportunities for corrupt or illicit practices by public officials. Officials can exploit opaque corporate structures, using layers of legal entities or nominee shareholders, to conceal their involvement in businesses, potentially profiting from public procurement, influencing policies for personal gain or receiving illicit payments through companies they secretly control. In the absence of official registers, banks have become the primary source of beneficial ownership information in the FBiH, collecting such data when clients open transaction accounts. The Financial Intelligence Agency (FIA) has initiated negotiations with the Banks Association of Bosnia and Herzegovina to facilitate communication with commercial banks and establish a functional, central register of beneficial ownership.
Note: “✓” indicates that a policy exists or has been implemented; “X” indicates its absence; yellow-highlighted areas denote policies that only partially meet the requirements.
Sources: OECD team analysis; (OECD, 2024[1]; UNODC, 2022[2]; World Bank, 2024[3]).
Additionally, in October 2024, a draft roadmap for enhancing beneficial ownership registers across the FBiH, RS and Brčko District was presented to authorities (Council of Europe, 2024[4]). The document offers recommendations for establishing transparent systems and emphasises the need for interconnectivity between the registers via a unified access point. However, the roadmap is not publicly available, and progress towards its implementation was unclear at the time of writing. In June 2025, the Council of Europe held a workshop to help authorities of the Brčko District to implement the roadmap and establish a register at the District level (Council of Europe, 2025[5]).
While a legal framework to hold firms accountable for criminal offenses is in place, it does not fully incentivise compliance.
Bosnia and Herzegovina has established frameworks for holding legal persons accountable for corruption-related offences, both at the state level as well as at the entity/District level. These laws ensure that companies, not just individuals, can be held responsible for crimes such as fraud, corruption and money laundering.
Under the state-level Criminal Code, a company may be held liable for a criminal offence if its managerial or supervisory bodies were involved, failed to prevent the offence or if the company benefitted from illegally obtained property. This liability applies to all criminal offences and is autonomous, meaning that a company can be held liable even if the individual perpetrator is not found guilty (although the offender must still be identified). Sanctions range from fines of BAM 5 000 (EUR 2 560) to BAM 5 million (EUR 2.5 million), confiscation of property and even dissolution of the company if its activities were primarily used for illegal activities. Additional measures can include confiscating tools or profits from the crime, publishing the court judgment or banning certain activities.5 The criminal codes of the FBiH, RS and Brčko District closely mirror these state-level provisions, with only some minor differences (mostly in the law of RS6).
Yet, none of these laws include the implementation of effective anti-corruption compliance systems as a mitigating factor—an omission that limits incentives for companies to adopt stronger compliance practices or reward good corporate conduct.7 Specifically, the corporate liability regime does not provide for the due diligence (compliance) defence, meaning companies cannot seek exemption from or reduction of sanctions based on having implemented appropriate anti-corruption compliance measures.
In practice, most corruption cases concern bribery or abuse of position or authority (Figure 3.1). In 2023 and 2024, a total of 14 such cases were recorded (1 in the FBiH and 13 in RS). Thirteen involved natural persons,8 while the remaining case concerned a legal person (i.e. a company or organisation) prosecuted for abuse of position or authority, which resulted in a fine, the confiscation of property worth BAM 113 438 (EUR 58 000) and prison sentences for two individuals. By comparison, five monetary fines were imposed on legal persons for corruption offences in 2021-22, indicating a decline in cases brought against companies (OECD, 2024[6]).
Percentage of cases
Source: Adapted from data shared by the High Judicial and Prosecutorial Council of Bosnia and Herzegovina.
There is no distinct policy for promoting business integrity in place.
Bosnia and Herzegovina lacks a dedicated policy framework to guide and promote business integrity across the private sector.9 Company laws of the FBiH,10 RS11 and Brčko District12 do not explicitly assign boards the responsibility of overseeing the management of corruption risks. In RS, the board of open joint-stock companies must either adopt a code of conduct or adhere to the corporate governance standards set by the Securities Commission. These standards address, among other things, ethical conduct of directors and board members, and require boards to report annually to shareholders on their compliance to the code, including explanations for any deviations. However, the legal framework offers limited guidance and few incentives for businesses to adopt anti-corruption compliance measures (OECD, 2024[6]).
Way forward
Establish a country-wide central register of beneficial ownership information. If such a nation-wide register is not possible, it is still imperative to ensure consistency and interoperability of beneficial ownership registers between entities. Given the discrepancies between the FBiH, RS and Brčko District, a unified and consistent approach to beneficial ownership registration should be prioritised.
Ensure oversight of the accuracy and completeness of data in beneficial ownership registers. The mere obligation to provide beneficial ownership data will hardly suffice to ensure reliability of the data. Therefore, the respective laws should define a clear mandate of oversight for the relevant oversight bodies and carry out through onsite inquiries and audits to verify the information entered into the register is accurate and up to date.
Introduce due diligence defence. The defence can be presented in various ways – for example, by demonstrating that the company had adequate compliance policies and mechanisms in place and took all possible measures to prevent the offence, or that it maintained an effective system of internal controls and compliance. It is then up to the court or another sanctioning authority to assess each case individually and determine whether the conditions for applying the defence have been met.
Consider practical measures to strengthen enforcement of corporate liability. For example, Bosnia and Herzegovina could prioritise this issue within anti-corruption law enforcement efforts. The management of the State Investigation and Protection Agency and other relevant bodies could start with cases involving legal persons in their policy documents and internal communications. Additionally, the country could step up practical guidance and provide targeted training on such cases for law enforcement agencies and the judiciary. France offers a good practice example of how to use both legal requirements and active oversight to ensure meaningful implementation of corporate anti-corruption measures (Box 3.1).
Recognising that companies might meet legal requirements merely on paper (i.e. producing documents without truly enforcing them), France introduced a robust mechanism to verify the implementation of anti-corruption measures.
In France, large companies (with at least 500 employees and annual turnover exceeding EUR 100 million) must adopt and implement internal anti-corruption compliance measures. These include: i) a code of conduct, ii) an internal whistleblowing system, iii) a risk map, iv) procedures for assessing of customers, first-tier suppliers and intermediaries, v) accounting control procedures, vi) a training system, vii) a disciplinary system and viii) a system for internal monitoring and evaluation.
The French Anti-Corruption Agency (AFA) is responsible for monitoring compliance. It can launch inspections on its own initiative or upon request from authorised public stakeholders defined and approved associations. After each inspection, the AFA issues a report evaluating the quality of the company’s compliance system and providing recommendations. If measures are found to be insufficient or poorly implemented, the AFA may issue a warning or refer the case to its Sanctions Committee, which can impose fines of up to EUR 200 000 for individuals and EUR 1 million for companies, even in the absence of actual corruption.
Between October 2017 and the end of 2023, the AFA launched 119 inspections of large companies on own initiative. To support businesses in meeting their obligations, the AFA has published numerous guides on topics such as the compliance functions, gifts and invitations policies, preventing conflicts of interest and anti-corruption controls in high-risk sectors like construction and public works.
Make the adoption of anti-corruption compliance programmes a mandatory condition for access to public advantages (i.e. large procurement contracts, subsidies, certain licences) in line with the 2021 OECD Anti-Bribery Recommendation. While there may be concerns that companies could treat such programmes as a formality, their existence should not lead to preferential treatment, but rather function as a minimum requirement for access to public advantages. Relevant authorities should also be provided with training and guidance on how to assess these measures, and this guidance should be made publicly available to ensure transparency and accessibility for companies.
Preventing corruption, particularly through effective management of conflicts of interest and protection of whistleblowers, is central to ensuring transparency and accountability in the business environment.
Anti-corruption institutional frameworks at all levels of government reveal gaps in mandate, capacity and scope.
Progress towards establishing functioning and independent anti-corruption bodies remains limited. At the state level, the Agency for Prevention of Corruption and Co-ordination of the Fight against Corruption (APIK) serves as the main prevention body but operates with limited direct powers. Among the subnational levels, the Brčko District stands out with its dedicated Office for Prevention of Corruption and Coordination of Anti-Corruption Activities, offering a structured institutional framework. In contrast, the FBiH relies on a co-ordinating Anti-Corruption Team, which brings together representatives from various authorities but lacks the mandate and operational capacity of a fully-fledged agency (OECD, 2024[6]). The establishment of a new anti-corruption team in September 2024 to oversee efforts across more than 100 institutions signals renewed commitment, yet its capacity to deliver meaningful results remains to be seen. Meanwhile, RS has yet to establish any dedicated corruption prevention body.
Conflict of interest management and oversight remains inconsistent.
Effective prevention of corruption requires addressing situations where personal interests might interfere with public responsibilities. A key risk is conflicts of interest,13 which occur when a public official’s private interests could improperly influence the performance of their official duties (OECD, 2025[11]). Such conflicts can arise in various ways: for instance, when an official participates in decisions benefiting a relative’s business, or sometimes if the official holds another job or position, particularly in the private sector. In either case, problems emerge when the private entity seeks public resources or advantages that the official can influence through their public role: indeed, across South East Europe, evidence shows that companies controlled by politicians tend to make inefficient investment decisions and are at a higher risk of having their assets improperly taken or misused (Bartlett, 2021[12]).
Despite recent legal developments, Bosnia and Herzegovina’s approach to managing conflicts of interest remains fragmented and falls short of international standards. The adoption of the new state-level Law on Preventing Conflict of Interest in March 2024 marks important progress but still failed to fulfil the recommendation of the Group of States against Corruption (GRECO) to harmonise conflict of interest legislation across the country (GRECO, 2024[13]). Instead, multiple legislative frameworks continue to co-exist at different levels of government, resulting in at least four different laws14 with varying rules on managing ad hoc conflicts of interest, positions and activities incompatible with public office, asset declarations and oversight bodies.
The FBiH, RS and Brčko District have adopted markedly different approaches to the content and implementation of their conflict-of-interest legislation (Table 3.4). Brčko District stands out for having a well-developed legal framework, although it lacks clear guidance on how conflicts of interest should be managed once identified, specifically regarding the procedures that apply after an official is disqualified. However, the legislation also defines “financial interest” in an overly narrow way, limiting it to “salary or compensation” and excluding ownership, which undermines its effectiveness.
In contrast, the frameworks in RS and FBiH are significantly weaker. In RS, the law omits basic provisions such as the obligation to disclose conflicts of interest, abstain from decision-making or take steps to resolve a conflict. It also does not restrict companies owned by public officials from doing business with government bodies. In the FBiH, although a law exists, it has not been implemented since 2013 due to the lack of an enforcement authority. While efforts were made to develop a new law, the government withdrew the draft in May 2023 and has since taken no further action to close this regulatory gap (Džaferović, 2024[14]).
Note: “✓” indicates that a policy exists or has been implemented; “X” indicates its absence.
Source: OECD team analysis based on the relevant Laws on Conflict of Interests.
Oversight bodies responsible for addressing conflict of interest do not always exist, although some progress has been made at the state-level.
Regarding oversight bodies, the establishment of the new Commission for Deciding on Conflicts of Interest (CDCI), which held its constituent session in November 2024, represents promising step toward more independent and professional oversight at the state level (APIK, 2024[15]). Unlike the previous Commission, which had members of the Parliamentary Assembly serving, the new CDCI must be comprised of individuals appointed through a public call based on their competence and expertise. Members may not hold public office or be affiliated with political parties. The previous body was largely ineffective: it issued only a few sanctions (primarily small fines) and faced extensive periods of inactivity (OECD, 2024[6]; GRECO, 2023[16]). It also suffered from incomplete membership, irregular meetings and limited financial resources. In one high-profile case, Transparency International BiH (TI-BiH) filed a report in 2022 against a member of the country’s presidency for alleged conflicts of interest involving family business dealings, but no decision had been issued by the end of 2024 (Transparentno, 2025[17]). While the new CDCI shows promise for greater independence and effectiveness than its predecessor, it is still early to assess its performance.
RS and Brčko District have their own oversight bodies responsible for addressing conflicts of interest. As with the legislative framework, Brčko District stands out with the most detailed legal provisions for the competitive and transparent selection of members to its Commission for Deciding on Conflicts of Interest. The CDCI of Brčko District also ensures transparency by publishing its decisions and conclusions online.15
In RS, the Republican Commission for Determining Conflicts of Interest in Public Bodies is operational. However, the legal framework governing its composition is considerably less precise. While Commission members are prohibited from participating in political party activities, the law’s reference to public competition lacks clarity on whether such a process is mandatory and provides no procedures to ensure a transparent, merit-based selection. As good practice, the Commission publishes its conclusions, decisions and opinions online, though it has faced criticism for inconsistencies: for instance, in rulings on whether a local councillor may simultaneously serve as an acting assistant minister (Transparentno, 2024[18]).
As stated previously, in stark contrast to the others, the FBiH has lacked a functioning body to oversee conflicts of interest for over a decade. This lack of institutional oversight has enabled more than 230 officials in the FBiH to hold multiple public sector positions, often leading to conflicts of interest (Transparency International, 2024[19]). Furthermore, public institutions in the FBiH16 continue to engage in contracts with the family businesses of officials or appoint family members to influential roles, without facing accountability.
The whistleblower protection system suffers from a legal narrow scope and procedural hurdles.
Whistleblower protection frameworks across all levels of government in Bosnia and Herzegovina remain limited in both scope and effectiveness and are not aligned with relevant EU standards.17 While some cantons in the FBiH have implemented their own whistleblower protection measures,18 the entity as a whole lacks comprehensive legislation. However, as of September 2025, a whistleblower protection law is currently under review in the FBiH Parliament. Moreover, where laws do exist, they apply only to the reporting of corruption, which is defined narrowly, particularly in RS and Brčko District.
Key shortcomings in whistleblower protection frameworks may discourage individuals from coming forward (Table 3.5). These include insufficient protection for individuals associated with whistleblowers (with the exception of RS), minimal access to support services and the lack of safeguards for anonymous whistleblowers once their identity is revealed. These deficiencies weaken the legal framework and create an environment of uncertainty and fear for potential whistleblowers.
Notes: “✓” indicates that a policy exists or has been implemented; “X” indicates its absence. As the Law on the Protection of Whistleblowers in the Federation of Bosnia and Herzegovina remains in draft form and has not yet been formally adopted, its key provisions are not analysed in this table.
Source: OECD team analysis based on the relevant whistleblower protection legislations.
Adding to these regulatory weaknesses is the requirement that disclosures are to be made in good faith, an inherently subjective standard that can be used to deny protection arbitrarily. In RS, whistleblowers may also be expected to demonstrate a direct causal link between their report and any retaliatory action, an often difficult requirement that further limits access to protection.
Concerns around anonymity and confidentiality also remain. None of the laws currently provide protection for anonymous whistleblowers once their identity becomes known, potentially deterring individuals who initially wish to remain anonymous. At the state level, while the law does not explicitly guarantee the confidentiality of whistleblowers’ identities, internal rules adopted by the APIK do require that both reports and identities be kept confidential.
Finally, procedural obstacles further constrain access to protection. In RS, whistleblowers may only seek legal recourse after first attempting to address the issue internally with the same institution that may have retaliated against them—an approach that significantly undermines trust in the process (Devine and Worth, 2021[20]). In Brčko District, the legal framework does not ensure due process in the granting of protection, leaving whistleblowers vulnerable to arbitrary outcomes.
In practice, whistleblower protection is rare, though data remains fragmented.
Lack of confidence in the whistleblower systems, combined with organisational loyalty and a prevailing culture of reluctance to report misconduct, continues to discourage potential whistleblowers from coming forward (GRECO, 2023[16]). Although data on whistleblower activity remain fragmented and incomplete, persistently low numbers largely reflect the absence of legal protections in parts of the country, especially the FBiH, as well as a broader environment in which public scrutiny, criticism or perceived risks may discourage individuals from reporting corruption..
At the state level, the APIK has supported the development of internal reporting regulations and whistleblower protection mechanisms across public institutions. These efforts have included establishing a toll-free reporting hotline, preparing instructional materials and delivering training sessions. However, despite these initiatives, the number of whistleblower reports remain very low: between 2014 and 2022, APIK granted whistleblower status to only around 10 individuals, representing roughly one third of all requests submitted during that period (Čengić, 2023[21]; GRECO, 2023[16]).19
At the entity level, the situation is similarly limited. In 2024, no requests for protected whistleblower status were submitted in Brčko District (Ured za prevenciju korupcije i koordinaciju aktivnosti na suzbijanju korupcije u Brčko distriktu, 2025[22]). Only three requests were made in RS in 2022, of which at least one resulted in protection being granted. The Ministry of Justice of RS reported that five cases for the protection of whistleblowers were processed in 2023, though the outcomes of these procedures were not disclosed (Odgovorno.st, 2025[23]). In the FBiH, the lack of entity-level legislation complicates efforts to obtain comprehensive data. However, where data is available, such as in the Sarajevo Canton, the outcomes are more encouraging, with 7 out of 8 requests for whistleblower protection approved in 2023 (European Commission, 2023[24]; European Commission, 2024[25]).
Despite these isolated examples, overall whistleblowing activity appears to be declining. In mid-2024, only seven cases were recorded in the first half of the year, compared to 29 during the same period in 2023 (Transparency International u Bosni i Hercegovini, 2024[26]).
Way forward
Ensure that all laws for prevention of conflict of interest include minimum provisions for managing ad hoc conflicts of interest. Legislation should provide a clear and comprehensive definition of a conflict of interest establish key obligations, including the duty to avoid conflicts whenever possible, to abstain from performing official duties in situations of conflict and to promptly notify the relevant authority. Laws should set out procedures for resolving conflicts of interest as well as for imposing sanctions in the case of non-compliance. In developing or amending legislation, authorities should consider the OECD Guidelines for Managing Conflict of Interest in the Public Service, which recommend establishing procedures for identifying, managing and resolving conflicts of interest (Box 3.2). The Guidelines also outline possible strategies such as divestment, duty reassignment, or task restructuring. The FBiH should urgently adopt a new law on conflict of interest in line with these principles.
A conflict-of-interest policy is essential to maintaining integrity in public service. According to OECD Guidelines, a conflict of interest is defined as a situation involving “a conflict between the public duty and private interests of a public official, in which the public official has private-capacity interests which could improperly influence the performance of their official duties and responsibilities.” These conflicts may be actual, apparent or potential.
Any conflict-of-interest policy should be grounded in several core principles, including (i) serving the public interest (by making decisions free from personal gain, eliminating private interests that could compromise impartiality, avoiding situations involving insider information, etc.), (ii) supporting transparency and scrutiny, (iii) promoting individual responsibility and lead by example and (iv) facilitating an organisational culture that does not tolerate conflicts of interest.
A sound policy framework should clearly (and realistically) define circumstances and relationships that may give rise to conflicts of interest and provide guidance on the responsibilities of public officials, including regular identification and disclosure of private interests and prompt notification when circumstances change or when new conflicts emerge.
Options for managing or resolving a conflict of interest can include, for example:
Divestment or liquidation of the interest by the public official;
Recusal of the public official from involvement in an affected decision-making process;
Restriction of access by the affected public official to particular information;
Transfer of the public official to duty in a non-conflicting function;
Re-arrangement of the public official's duties and responsibilities;
Assignment of the conflicting interest in a genuinely 'blind trust' arrangement;
Resignation of the public official from the conflicting private-capacity function; and/or
Resignation of the public official from their public office.
To effectively implement a conflict-of-interest policy, managers must be prepared to exercise sound judgement when responding to disclosures of private interests. Organisations should regularly monitor and evaluate the policy’s effectiveness, while also ensuring that it is widely communicated and clearly understood. “At-risk” areas (e.g. secondary employment, access to insider information, contractual relationships, gifts and benefits, expectations placed on public officials by their families and communities, outside appointments, post-employment activities) should be periodically reviewed. In addition, the policy framework should include clear procedures for defining conflict-of-interest offences, enforcing proportionate consequences for non-compliance and establishing mechanisms to detect and address breaches.
Source: (OECD, 2025[11]).
Introduce a consistent minimum ban against doing business with one’s own public institution. Both state-level and entity-level laws should include at least a clear, uniform prohibition preventing private enterprises, where public officials (or members of their immediate family) are founders, shareholders, board members, holders of executive or administrative positions or have other financial interest from receiving incentives, benefits, contracts or otherwise engaging in business with the public institution in which the public officials hold a position. In specific case of Brčko District, these restrictions should be extended to cover any form of financial interest held by public officials, not limited only to salary or compensation.
Strengthen effective and impartial implementation of rules and oversight in conflict of interest matters at all levels of governance. The state-level CDCI should launch its website as soon as possible and publish decisions made concerning conflict-of-interest cases. In a context where much of the population has low trust in public institutions, transparency in resolving conflicts of interest is essential for rebuilding trust. Oversight bodies of all levels of government should ensure that their practices align with the goals of relevant laws and are applied consistently, regardless the officials’ level or political affiliation.
Amend (state-level, RS) or adopt (FBiH) whistleblower protection laws to fully align with international standards. The country should implement measures to encourage and support the ongoing practice of whistleblowing. The relevant EU Directive envisages the protection of whistleblowers in both public and private sectors and applies protection measures to whistleblowers, their facilitators and physical and legal persons connected with them. In accordance with this Directive, state and entity authorities in Bosnia and Herzegovina should: ensure that information and legal advice on procedures and available remedies are easily accessible to the public and free of charge; provide effective assistance to protect whistleblowers against retaliation; and offer financial and psychological support to reporting persons throughout legal proceedings.
Robust legal and regulatory frameworks to counter money laundering and terrorist financing help detect suspicious activities, trace financial flows and ensure timely reporting and investigation of potential offences. These frameworks ultimately protect businesses from being misused for illicit purposes and reinforcing the overall integrity of the financial system.
The new AML/CFT framework has made strides in addressing emerging risks and modernising compliance measures.
In the broader framework of its EU accession process, Bosnia and Herzegovina has been urged to strengthen its AML/CFT policies and regulations. Indeed, strengthening the fight against corruption and organised crime was identified as a core requirement for the European Commission to open accession negotiations (European Commission, 2024[27]).
In this context, the new Law on Anti-Money Laundering and Counter-Terrorism Financing, adopted in February 2024, marks a shift in the country’s AML/CFT framework. Although entities’ supervisory bodies have adopted many of the related bylaws,20 BiH Council of Minister has yet to adopt several bylaws.21 The law seeks to enhance align with international standards, namely the Financial Action Task Force’s (FATF) standards and relevant EU regulations and directives,22 by expanding obligations and tightening controls to address evolving risks.
A key novelty of the Law relates to cryptocurrency, reflecting the need for regulation of new technologies in the financial sector. Specifically, the law introduces provisions on crypto assets and electronic money, both of which were previously unregulated, and expands the scope of covered entities to include virtual asset service providers (VASPs) under the AML/CFT framework. It also includes several measures to enhance co-operation at both national and international levels. At the domestic level, the framework underscores the importance of improving collaboration among the competent authorities in the entities and Brčko District, while also expanding the powers and responsibilities of the Financial Intelligence Unit (FIU). The FIU is now authorised to exercise greater oversight over obligors and transactions. In addition, the law calls for the creation of a permanent AML co-ordination body, comprising representatives from both entities and Brčko District, as a concrete step toward strengthening institutional co-operation. Across all levels, the law aims to improve the exchange of information with foreign jurisdictions and international bodies to bolster efforts against transnational money laundering.
Nevertheless, despite the progress, the new Law remains not totally compliant with the different FATF recommendations (MONEYVAL, 2024[28]). Notably, some of the issues relate to the absence of enhanced customer due diligence measures related to politically exposed persons, gaps in market entry requirements for securities and insurance sectors, as well as shortcoming in the tipping-off sanction as well as the range of sanctions available to supervisors and competent courts to deal with non-compliance concerning non-financial businesses and professions.
Compliance gaps with international AML/CFT standards persist.
Under its draft Reform Agenda, Bosnia and Herzegovina seeks to align more closely with international standards, including those of the EU and the FATF. As EU standards are based on the FATF’s 40 Recommendations, alignment requires full implementation of these measures. Current performance, however, falls short: of the 40 FATF recommendations, only 4 measures are most recently rated as fully compliant, while 21 are assessed as “largely compliant” (MONEYVAL, 2024[28]). The most critical deficiencies lie in three areas that received the lowest possible rating (“non-compliant”) in FATF’s most recent evaluation: (i) the regulation of non-profit organisations (NPOs), (ii) the treatment of new technologies and (iii) oversight of designated non-financial businesses and professions (DNFBPs).
Regarding NPOs, authorities have not established a risk-based approach to identify which types of organisations are most vulnerable to terrorist financing abuse or how that abuse might occur. There has been no review of whether the current legal framework sufficiently protects higher-risk NPOs, and no targeted supervisory or monitoring efforts, as the subset of vulnerable NPOs has not been identified in the first place. Without this foundation, outreach to NPOs, promotion of best practices and sector-wide awareness of potential risks remain extremely limited.
Weaknesses are also evident in how the country addresses risks associated with new technologies, particularly virtual assets (cryptocurrencies and digital tokens) and VASPs. Although a regulatory framework exists, it does not fully apply to all relevant activities, leaving significant legal and supervisory gaps. Risk assessments have yet to systematically capture the threats posed by new products, business models, or technologies. Meanwhile, sanctions for non-compliance are often missing or disproportionate, oversight powers are fragmented or unclear and there is no operational system in place to ensure adherence to AML/CFT rules. Law enforcement agencies have also not demonstrated the ability to respond effectively and swiftly in cases involving virtual assets.
The regulatory landscape for DNFBPs reflects similar structural challenges. Certain DNFBP activities are not covered under the AML/CFT Law, which leaves parts of the sector entirely outside the scope of regulation. On the preventive side, there are no safeguards to prevent criminals or their associates from owning or managing gambling operators or other DNFBPs. On the enforcement side, there is no evidence that supervisory bodies can apply a proportionate range of sanctions that would allow them to respond appropriately to breaches depending on their severity.
Insufficient investigation and prosecution of both money laundering and terrorist financing offences reveal shortcomings in enforcement.
Although the legal framework governing AML/CFT has been strengthened, practical implementation within the legal system continues to face significant challenges. With respect to money laundering offenses, this is evident in both the volume of investigations as well as the extent to which their outcomes reflect the country’s medium-risk profile (MONEYVAL, 2024[28]). In 2023, there were approximately 62 money laundering investigations, leading to 47 prosecutions and 51 final convictions23 across all levels of government. However, when compared to the number of investigations into predicate offences, namely 202 for corruption-related crimes and 382 for fraud, they appear low. A key reason for this is the absence of a comprehensive policy framework to prioritise the identification, investigation and prosecution of money laundering offences. While some prosecutors have introduced prioritisation mechanisms that target money laundering cases linked to corruption, organised crime and human trafficking, this targeted focus overlooks other related predicate offences, most notably tax-related crimes and fraud, that continue to pose threats of money laundering.
Similarly, efforts to prosecute and convict for crimes related to terrorist financing are limited and do not align with the country’s risk profile. Only one prosecution that ended in an acquittal and one conviction were recorded in recent years, highlighting inconsistencies in the interpretations of the terrorist financing offense, particularly among the judiciary, and, to some extent, among law enforcement agencies and prosecutors. This inconsistency is further underscored by the 48 terrorism-related cases pursued during the period under review, which may suggest that financial support for terrorist activities may be going unaddressed. Moreover, the absence of reliable data on the total number of terrorist financing cases identified and investigated further hampers efforts to assess and mitigate related risks (MONEYVAL, 2024[28]).
Stakeholder consultations further underscored the need to align the criminal legislation at the entity-level with the Council of Europe of Europe Convention.24 For instance, the FBiH Criminal Code still requires that, for the criminal offense of money laundering to be prosecuted, the property must be shown to have originated from another specific criminal offense (rather than from general criminal activity). In practice, this requirement hinders the prosecution of money laundering cases unless the predicate offense is first proven.
Way forward
Accelerate the establishment of a permanent AML co-ordination body composed of representatives from all levels of government with clearly defined roles in AML/CFT. This body would improve communication and collaboration across institutions, promote more coherent policy implementation and support a system-wide view of emerging risks and structural gaps. To support its creation, existing mechanisms, such as the state-level Working Group that developed the AML/CFT Strategy or RS’s Intersectoral Work Group responsible for implementing international AML/CFT obligations, could be leveraged as a foundation.
Enhance risk assessment capabilities by establishing effective mechanisms to identify and evaluate vulnerabilities, especially in key areas like new technologies (including virtual assets) and non-profit organisations. This should involve focused assessments of terrorist financing risks in the NPO sector, alongside comprehensive evaluations of money laundering and terrorist financing risks linked to emerging technologies. Strengthening these processes will improve transparency and integrity within the AML/CFT framework while supporting better compliance with relevant FATF Recommendations. Luxembourg’s targeted national risk assessment on virtual assets and VASPs provides a useful example of how to proactively address these emerging risks (Box 3.3).
Virtual assets (VAs) possess unique characteristics (e.g. anonymity, rapid transferability, global reach) that increase their vulnerability to misuse for money laundering and terrorist financing (ML/TF). Recognising these risks, Luxembourg conducted a dedicated vertical risk assessment of VAs and VASPs in 2020. The aim of this evaluation was to better understand these risks and subsequently strengthen its AML/CFT framework.
The assessment resulted in:
A comprehensive taxonomy outlining eight types of VAs and twelve types of VASPs, along with the main ML/TF threats associated with each.
A risk rating framework assigning inherent risk levels (from very low to very high) to different VA and VASP categories. While most VASP sub-types were assessed as medium risk overall, the assessment underscored the need for tailored mitigation measures.
An evaluation of predicate offences commonly facilitated through VAs, such as drug trafficking, fraud, forgery, and theft.
Based on these findings, Luxembourg issued recommendations for strengthening VASPs’ compliance with AML/CFT obligations, ranging from developing internal risk assessments and promoting strict compliance culture to increasing collaboration with national authorities.
This targeted approach exemplifies how Bosnia and Herzegovina can address emerging financial risks, particularly those linked to new technologies, by identifying vulnerabilities and assessing their implications for the regulatory framework.
Source: (Government of Luxembourg, 2020[29]).
Develop a clear policy that prioritises the identification, investigation and prosecution of money laundering offences in line with the country’s risk profile. This policy should aim to increase the number of cases handled and reduce excessive delays in criminal proceedings. It is essential to ensure a consistent and clear interpretation of the money laundering offence so that the investigative and prosecutorial process can proceed effectively. Additionally, authorities need to improve the collection and reliability of statistical data to better monitor progress and gain a clearer understanding of the current situation.
The use of alternative dispute resolution (ADR) mechanisms, namely arbitration and mediation, can encourage fair and efficient resolution of commercial disputes, reduce the risk of corruption and undue influence in judicial proceedings, and strengthen trust between businesses and public institutions. When conducted with appropriate safeguards, ADR also supports predictability and legal certainty, key factors for fostering a transparent, rules-based business climate.
Increases of court efficiency have not yet sufficiently decreased disposition times and backlog.
Courts remain the main avenue for resolving commercial disputes in Bosnia and Herzegovina, yet they remain both overburdened and under-resourced, resulting in considerable case backlogs. In 2023, the average disposition time for first-instance civil and commercial cases stood at 538 days, one of the highest levels in Europe and above the Western Balkan average. While this figure has remained largely unchanged since 2019, second-instance cases have shown improvement, with the average duration falling by 193 days over the same period to 252 days (CEPEJ, 2024[30]).
Progress in judicial efficiency has been evident in recent years. The number of pending civil and commercial litigious cases declined between 2022 and 2023, and the clearance rate for first-instance cases reached 114%, exceeding the Western Balkan average of 103%. Despite these gains, the backlog remains significant: at the end of 2023, more than 151 500 litigious civil and commercial cases remained unresolved (CEPEJ, 2024[30]).25 Looking more broadly across all case types, official data indicate that nearly 290 000 cases were still pending in the court system, as of 31 December 2024 (VSTV BiH, n.d.[31]).
The World Bank’s 2024 B-READY report indicates that firms are concerned not only about the lengthy court litigation process, estimated at 1 600 days for first instance and appellate courts, but also about the independence and impartiality of courts in resolving commercial disputes (World Bank, 2024[3]). On a positive note, litigation costs are perceived relatively favourably, accounting for 17% of the claim value.
Arbitration procedures are in place, but there are gaps in the legal framework that still must be closed.
Bosnia and Herzegovina's legal framework offers multiple pathways for dispute resolution, including ADR mechanisms. Given the strain on the judicial system, ADR emerges as a viable and potentially more efficient avenue for resolving disputes.
Arbitration procedures are primarily regulated by laws in both entities and the Brčko District (Table 3.6). Although each has its own Code of Civil Procedure, the provisions are largely harmonised and based on the UNCITRAL Model Law,26 ensuring a consistent approach across jurisdictions.27 These domestic regulations are complemented by state-level legislation and international treaties that support the recognition and enforcement of arbitration agreements and foreign arbitral awards. Taken together, this legal framework provides Bosnia and Herzegovina with the core elements necessary for a functioning arbitration system.
Sources: (Government of Bosnia and Herzegovina, n.d.[32]); inputs provided within the framework of the OECD’s Western Balkans Competitiveness Outlook 2024 assessment process.
The arbitration procedures under the civil procedure laws have been designed primarily with ad hoc (rather than institutional) arbitration in view. This orientation leaves certain regulatory gaps that, while partially addressed through the rules of relevant arbitration institutions, point to broader regulatory limitations within the legal framework. Arbitration is permitted in most cases unless the claim is contrary to mandatory legal provisions or falls under the exclusive jurisdiction of the courts. While determining arbitrability on a case-by-case basis can be challenging, the legal framework is not unduly restrictive in this regard.
However, several deficiencies persist that cannot be remedied solely through the internal rules of arbitration institutions. For instance, parties can obstruct the process by refusing to appoint an arbitrator or by nominating someone who is unwilling or unable to perform their duties—an option permitted under the relevant provisions in both entities and Brčko District (Grbo and Halilović, 2025[33]; Osmanović, 2020[34]). Compounding this issue, the laws assign procedural responsibilities (such as appointing arbitrators, handling disqualifications and issuing certificates of enforceability) to the court that would have had jurisdiction if no arbitration had been concluded. While this approach may function in domestic cases, it creates considerable difficulty in cross-border disputes where no domestic court would otherwise be competent.
In addition, the rules for challenging arbitrators mirror those for challenging judges, meaning they do not include critical grounds such as justified doubts over independence or failure to meet agreed qualifications. The challenge procedure itself is ambiguous: for example, it is unclear whether the arbitral tribunal should take part in adjudicating the challenge. Likewise, the grounds for annulling an arbitration award do not fully correspond to international best practice, as they exclude reasons such as incapacity of a party or the inability to present one’s case.
Arbitration institutions in the country attempt to bridge some of these legal gaps. For example, the Court of Arbitration of the Foreign Trade Chamber (FTC) has adopted internal rules that reduce opportunities for obstruction, establish clear procedures for replacing arbitrators and clarify various procedural steps.28 Yet while these rules provide useful safeguards, they cannot fully substitute for a robust and coherent legislative framework. As such, institutional efforts to uphold procedural integrity remain constrained by the broader legal context in which they operate.
The legal framework for mediation is comprehensive but would benefit from further alignment with international standards.
Similarly to arbitration, Bosnia and Herzegovina has several laws and codes in place to govern mediation (Table 3.7). Additionally, the Association of Mediators of Bosnia and Herzegovina has further developed the regulatory environment by adopting rules on the register and list of mediators, referral procedures, mediator liability, disciplinary procedures, fee structures and a Code of Mediator Ethics, creating a generally comprehensive framework.
Source: Inputs provided within the framework of the OECD’s Western Balkans Competitiveness Outlook 2024 assessment process.
The legislative framework on mediation offers several notable strengths. Mediation can be requested at any stage of the judicial process before the closing of the main hearing, and courts may also propose it. While the Law on Mediation Procedure focuses primarily on court-related mediation, it also allows mediation to take place independently of court proceedings. If both parties agree to mediate, courts may suspend civil proceedings for up to 30 days to allow for resolution attempts. The law ensures confidentiality and prohibits the use of statements made during mediation as evidence in other proceedings without both parties’ consent. Settlements reached through mediation are legally binding and enforceable.
Nonetheless, certain challenges remain. For instance, the Law on Mediation Procedure is not fully aligned with key EU legislation.29 One of the main gaps concerns the absence of provisions clarifying the effect of mediation on limitation and prescription periods.30 This omission creates uncertainty, as parties engaging in mediation are not explicitly protected from the expiry of statutory deadlines that could prevent them from pursuing court or arbitration proceedings if mediation fails.
Confidentiality provisions also fall short of EU standards. While the law prohibits the use of parties’ statements as evidence, it does not clearly extend this protection to other types of information, such as written documents or materials disclosed during mediation. In contrast, the relevant EU directive31 offers broader safeguards, covering “information arising out of or in connection with a mediation process.” Similarly, the UNCITRAL Model Law on International Commercial Mediation includes a detailed list of inadmissible evidence.32 This broader approach provides greater legal clarity and more comprehensive protection for the confidentiality of the mediation process.
Other limitations concern the scope of the mediator’s role and the enforceability of settlements. Under the country’s legislation, a mediator may propose solutions only if requested by the parties. In contrast, the UNCITRAL Model Law allows the mediator to offer proposals at any stage, with or without a formal request. Furthermore, while the country’s legislation treats mediated settlements as enforceable without exception, this can potentially lead to problematic outcomes if a settlement violates legal provisions (whereas the EU Directive explicitly denies enforceability in such cases).
The existing legal framework also outlines limited incentives to encourage the use of mediation. Judges have no authority to compel parties to mediate, and there are no sanctions for failing to engage in good faith or for non-attendance. Although the voluntary nature of mediation is a key principle, the complete absence of incentives or accountability mechanisms limits a broader uptake. In this context, it is important to note that the Court of Justice of the European Union recently ruled that national legislation may subject the admissibility of certain actions in civil and commercial matters to compliance by the applicant with the obligation to participate in an information meeting on the benefits of mediation (CJUE, 2024[35]).
Domestic firms continue to favour courts over ADR mechanisms due to a lack of familiarity.
In Bosnia and Herzegovina, there has traditionally been a clear divide in how ADR, and particularly arbitration, is perceived and used by foreign versus domestic parties. Arbitration is reportedly regarded as an effective mechanism for resolving disputes involving foreign parties, who tend to favour it for its perceived neutrality and efficiency (OECD, 2024[6]). This preference is reinforced by Bosnia and Herzegovina’s adoption of a Model Bilateral Investment Treaty in August 2023, which includes a comprehensive investor-state dispute settlement clause. The clause promotes early intervention by relevant authorities to prevent disputes from escalating to international arbitration. It prioritises amicable settlement through negotiations, conciliation or mediation.33
Arbitration clauses tend to be included primarily in contracts involving foreign entities, with domestic parties generally reluctant to initiate arbitration themselves (Cole, 2024[36]). Assessing the actual use of domestic arbitration remains difficult due to the lack of publicly available data. The FTC reported that 71.4% of disputes in its arbitration cases were domestic, which appears to contradict the tendency towards disputes involving foreign partners. Yet, in the absence of absolute case numbers or comparable data on the overall volume of business disputes, no firm conclusions can be drawn. Transparency is further limited by the fact that neither of the two permanent arbitration institutions, the Arbitration Court at the FTC in Sarajevo nor the Foreign Trade Court of Arbitration in Republika Srpska, publishes caseload statistics. Moreover, the operational status of the latter remains uncertain, as no arbitration proceedings were recorded there in 2024 (Привредна комора Републике Српске, 2025[37]).
More data exist on mediation. According to European Commission for the Efficiency of Justice (CEPEJ), the number of new mediation cases in 2023 dropped to 148, of which 120 completed procedures ended in a settlement. The number of court-related mediation cases per 100 inhabitants declined from 0.012 in 2019 to just 0.004 in 2023—well below the Western Balkan average of 0.027. Bosnia and Herzegovina had 202 registered mediators in 2023, translating to 5.9 mediators per 100 000 inhabitants (compared to the regional average of 17.8) (CEPEJ, 2024[30]).
A key factor behind the limited uptake of ADR, especially arbitration, is the widespread lack of awareness about its existence, benefits and practical applications beyond the small circle of arbitration practitioners. Although public trust in the court system is relatively low, many individuals and businesses continue to favour traditional litigation due to its familiarity. Some stakeholders also argue that because the enforcement of arbitration awards ultimately depends on the courts, parties may end up in court regardless, leading them to pursue litigation from the outset.
In some cases, contracts include poorly drafted arbitration clauses, reflecting a weak understanding of arbitration among domestic firms (Meskic, 2025[38]). Among legal professionals, a significant barrier to increasing public awareness of arbitration is the generalist nature of legal practice in the country. Few lawyers specialise in commercial law; most handle a mix of civil, criminal and both commercial and non-commercial matters. As a result, commercial arbitration occupies a minor role in legal practices and is often viewed as less relevant, perpetuating a cycle where a lack of familiarity further perpetuates its underutilisation. Similarly, court-connected mediation remains underutilised. One constraint is the legal provision that prevents appellate courts from proposing mediation to litigants. Additionally, parties can be deterred by the extra cost of mediator fees.
Ongoing initiatives aim to increase the uptake of both arbitration and mediation.
Efforts to align Bosnia and Herzegovina’s ADR framework with the EU and other international standards are underway, although progress remains limited. In 2022, the High Judicial and Prosecutorial Council proposed a strategy for the development of ADR methods. The strategy outlines potential legislative amendments, measures to strengthen the capacity of institutions and professionals involved in ADR and actions to raise awareness among the general public and specific target groups (VSTV BiH, 2022[39]). However, despite this strategic roadmap, there is little evidence of meaningful implementation to date.
In parallel with these policy reforms, domestic efforts to raise awareness and build capacity are gaining traction. Training programmes and academic initiatives have been introduced to promote understanding of ADR’s benefits. Notably, the Public Institution Centres for Judicial and Prosecutorial Training in both the FBiH and RS offer specialised education on arbitration and mediation. The Faculty of Law at the University of Sarajevo also provides a master's level specialisation in ADR and arbitration. In parallel, participation in international initiatives such as the Willem C. Vis Moot Competition reflects growing interest in commercial arbitration among students and legal professionals (Grbo and Halilović, 2025[33]). The association “Arbitri” has contributed to this momentum by hosting the annual Sarajevo Arbitration Days, an international conference that fosters dialogue and knowledge exchange on arbitration practices. These and similar activities indicate that the legal community in Bosnia and Herzegovina remains engaged with ADR and that there is untapped potential for expanding its use.
Way forward
Amend civil procedure laws by removing provisions that allow parties to terminate an arbitration agreement solely by refusing to appoint an arbitrator. The potential amendments should maintain the court’s role in overcoming procedural deadlocks and in appointing arbitrators while still safeguarding the validity of the arbitration agreement. Whether to conclude an arbitration agreement depends on the free will of the parties, but legal certainty will benefit from fewer opportunities to exit the agreement at will.
Supplement civil procedure laws with provisions to ensure better alignment with the UNCITRAL Model Law on International Commercial Arbitration. These should cover areas such as how arbitration proceedings start, how parties and arbitrators communicate, what happens if an arbitrator cannot continue in their role and how to appoint a replacement. They should also include core principles like equal treatment of parties, key procedural steps, how evidence is assessed, use of expert witnesses and interim measures during arbitration. While current laws may appear straightforward, their brevity can create confusion about specific procedures and steps. Alternatively, Bosnia and Herzegovina could adopt a separate comprehensive legislative framework for arbitration (applicable to both entities and Brčko District).
Amend the Law on Mediation Procedure to ensure full alignment with the EU Directive 2008/52/EC on certain aspects of mediation in civil and commercial matters. The law should clearly define how mediation affects limitation and prescription periods and provide stronger protection for the confidentiality of mediation. Although the current law is generally sound, enhancing these aspects could increase the acceptance and use of mediation in Bosnia and Herzegovina.
Promote the domestic use of ADR by launching targeted initiatives to raise awareness about the benefits of ADR, particularly among domestic businesses. This could include public campaigns, workshops and/or incentives for businesses to use arbitration and mediation, which would help reduce the burden on the national court system and address the backlog in courts. Awareness- raising efforts should be accompanied by capacity-building measures for institutions, organisations and professionals who provide ADR services. Some countries, like Italy, have gone further by introducing mandatory mediation for certain types of disputes to boost ADR uptake (Box 3.4).
Mandatory mediation has become a key step in civil and commercial disputes in Italy. Over the years, Italy has introduced various legal measures to mandate and encourage mediation, increasing both participation and its overall effectiveness. The Italian experience demonstrates that mediation can serve not only as an alternative to litigation but often as the preferred route.
In 2010, Italy adopted Legislative Decree No. 28/2010, which introduced mandatory mediation for certain types of cases. Although the Constitutional Court annulled the mechanism in 2012, the government later introduced revised provisions to address the court’s concerns.
Today, parties involved in disputes related to condominiums, property rights, inheritance, family agreements, leases, business leasing, compensation for damages arising from medical/health liability, defamation through the press and various types of financial and commercial contracts must attend an initial mediation session. This session, conducted by a mediator registered with the Ministry of Justice, is designed to restore dialogue and explore the possibility of settlement. However, parties are not required to continue with full mediation process or reach an agreement.
The preliminary session lasts two hours and costs EUR 224. Parties can claim tax credits of up to EUR 600 per procedure (or EUR 2 400 annually for individuals and EUR 24 000 for legal entities) to cover mediation and associated legal expenses. If a party fails to attend without justification, the judge may impose a fine.
This framework has proven highly effective. Annual mediation cases rose from around 60 000 in 2011 to between 150 000 and 200 000 in recent years. Over half of participants proceed beyond the initial session, and the settlement success rate reached 50.1% in 2023.
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[2] UNODC (2022), Annex: Questionnaire on Beneficial Ownership Information, https://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/workinggroup2/2022-November-7-11/Bosnia_and_Herzegovina_Responses_to_Questionnaire_on_BOT_Regimes_EN.pdf (accessed on 18 February 2025).
[43] Ured za borbu protiv korupcije Kantona Sarajevo (2025), Analize antikorupcijskog okruženja u javnom sektoru Kantona Sarajevo za 2024. godinu, https://podaci.anticorrupiks.com/News/File/188?newsId=61.
[22] Ured za prevenciju korupcije i koordinaciju aktivnosti na suzbijanju korupcije u Brčko distriktu (2025), Izvještaj o radu Ureda za period 1.1.-31.12.24. godine, https://aktbd.ba/hr/izvjestaji-ureda/.
[39] VSTV BiH (2022), Strategija razvoja alternativnih načina rješavanja sporova (ARS) u BiH, https://infobiz.komorars.ba/wp-content/uploads/2022/12/Nacrt-Strategije-razvoja-alternativnih-nacina-rjesavanja-sporova-ARS-u-Bosni-i-Hercegovini.pdf.
[31] VSTV BiH (n.d.), Godišnje izvješće za 2024. godinu, https://vstv.pravosudje.ba/vstvfo-api/vijest/download/144916.
[3] World Bank (2024), Business Ready: Bosnia And Herzegovina, https://www.worldbank.org/en/businessready/economy/bosnia-and-herzegovina?topic=DR (accessed on 19 August 2025).
[37] Привредна комора Републике Српске (2025), Извјештај о активностима Привредне коморе Републике Српске за 2024. годину, https://komorars.ba/o-nama/.
← 1. Several measures under the component "Simplify processes to facilitate an enabling business environment" have been excluded from this report as they fall outside its scope. These specific priority areas include mapping and repealing domestic legislation that conflicts with European standards and legislation as well as adopting measures related to regional trade facilitation and harmonisation with international standards.
← 2. The relevant EU Directive is the AML Directive (EU) 2015/849 (as amended).
← 3. This text comes from Article 4, Item p of the Law. For more, see: Zakon o sprečavanju pranja novca i finansiranja terorističkih aktivnosti BiH, "Sl. glasnik BiH", br. 13/2024, https://www.paragraf.ba/propisi/bih/zakon-o-sprecavanju-pranja-novca-i-finansiranja-teroristickih-aktivnosti.html.
← 4. Регистар пословних субјеката, https://www.apif.net/index.php?option=com_content&view=article&id=7:registar-poslovnih-subjekata&catid=9:registri&Itemid=118&lang=sr.
← 5. Krivični Zakon Bosne i Hercegovine, "Sl. glasnik BiH", br. 3/2003, 32/2003 - ispr., 37/2003, 54/2004, 61/2004, 30/2005, 53/2006, 55/2006, 8/2010, 47/2014, 22/2015, 40/2015, 35/2018, 46/2021, 31/2023 i 47/2023, https://www.paragraf.ba/propisi/bih/krivicni-zakon-bosne-i-hercegovine.html.
← 6. For example, the law of RS does not stipulate conditional sentences for legal entities and does not determine relation between the severity of crime and the sanction. On the other hand, it provides stronger possibilities to seize property gain from the legal successor or successors and is the only code to stipulate the seizure from the founder, shareholders or members of the company, if the convicted legal entity has ceased to exist.
← 7. This is recommended in the OECD Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions (2021 Anti-Bribery Recommendation). For more, see: https://legalinstruments.oecd.org/en/instruments/oecd-legal-0378.
← 8. Natural persons are individual human beings who are legally accountable for their actions. Legal persons, by contrast, are entities established under the law, typically companies or organisations, that are not human but can act in ways that have legal consequences for others. For more, see: https://sherloc.unodc.org/cld/ru/education/tertiary/organized-crime/module-4/key-issues/liability-legal-persons.html.
← 9. It is worth noting that in Bosnia and Herzegovina’s Anti-Corruption Strategy 2024-28 and associated action plan, there is one strategic programme related to ethical business practices in the private sector. However, the strategy simply outlines the persistent challenges facing the fight against corruption in the private sector, rather than prescribing any specific policies or compliance systems. For more, see: https://www.apik.ba/zakoni-i-drugi-akti/strategije/default.aspx?id=3232&langTag=bs-BA.
← 10. Zakon o privrednim društvima Federacije BiH, "Službene novine FBiH", br. 81/2015 i 75/2021 od 22.09.2021g, https://advokat-prnjavorac.com/zakoni/Zakon-o-privrednim-drustvima-Federacije-BiH-2015.pdf.
← 11. Zakon o privrednim društvima Republike Srpske, "Službeni glasnik Republike Srpske", br. br. 127/2008, 58/2009, 100/2011, 67/2013, 100/2017, 82/2019 i 17/2023, https://advokat-prnjavorac.com/zakoni/Zakon-o-privrednim-drustvima-RS.pdf.
← 12. Zakon o preduzećima Brčko Distrikta Bosne i Hercegovine, Službeni glasnik Brčko distrikta BiH, brojevi 10/02, 14/02, 1/03, 8/03, 4/04, 19/07 i 34/07, https://skupstinabd.ba/3-zakon/ba/Zakon%20o%20preduzec-ima%20Brc--ko%20Distrikta%20BiH/000%2049-11%20Zakon%20o%20preduzec-ima%20Brc--ko%20distrikta%20BiH,%20prec--is--c-en%20tekst.pdf.
← 13. According to OECD Guidelines for Managing Conflict of Interest in the Public Service, “a 'conflict of interest' involves a conflict between the public duty and private interests of a public official, in which the public official has private-capacity interests which could improperly influence the performance of their official duties and responsibilities.” For more, see: (OECD, 2025[11]).
← 14. The laws of the state level, RS, BD and Kanton Sarajevo.
← 15. Website: https://www.sukobinteresabd.ba.
← 16. One exception within the FBiH is the Sarajevo Canton, which has a functional conflict-of-interest framework under the supervision of the Cantonal Anti-Corruption Office. In the period 1 January 2023 – 1 December 2024, in the Canton 115 persons resigned from public positions due to conflicts of interest (Ured za borbu protiv korupcije Kantona Sarajevo, 2025[43]).
← 17. The most relevant of these is the EU Directive 2019/1937. For more, see: https://eur-lex.europa.eu/eli/dir/2019/1937/oj/eng.
← 18. One illustrative example of a cantonal level effort is observed in the Sarajevo Canton through its Law on Prevention and Suppression of Corruption. See: Zakon o prevenciji i suzbijanju korupcije u Kantonu Sarajevo, Službene novine Kantona Sarajevo, broj 35/22, 44/22 i 55/22, https://advokat-prnjavorac.com/Zakon-o-prevenciji-i-suzbijanju-korupcije-u-Kantonu-Sarajevo.html.
← 19. More recently, between 1 August 2022 and 30 June 2023, the APIK received two such requests: one was granted and the other rejected due to the failure to meet the necessary legal conditions. No additional requests were submitted in the second half of 2023 (APIK, 2023[44]; APIK, 2024[45]).
← 20. For example, the Banking Agency of the FBiH issued several implementing acts and guidelines for banking system entities, including (i) Decision on managing the risk of money laundering and terrorist financing (Official Gazette FBiH No. 79/24), (ii) Guidelines for the analysis and assessment of money laundering and terrorist financing risks (01-6927/24, 23.12.2024), (iii) Guidelines for identifying beneficial owners (01-6928/24, 23.12.2024) and (iv) Guidelines to mitigate negative effects from excessive application of AML/CFT requirements (01-755-1/25, 12.02.2025).
← 21. These by-laws concern i) determining the method of forming, updating, and publishing the list of public functions from Article 4, item s) of the Law, ii) defining the content of data that an obligated entity is required to obtain for the purpose of implementing identification and monitoring measures and informing the FIU (not an obligation, the Law states it "may be adopted"), iii) the content and method of implementing enhanced identification and monitoring measures, iv) establishing factors based on which it is assessed whether a business relationship or transaction is low-risk, v) prescribing the conditions under which an obligated entity is not required to provide the FIU with information on cash, related cash, and non-cash transactions of a specific client in amounts equal to or greater than those defined in Article 43 of the Law (not an obligation, the Law states it "may be adopted"), vi) the content and arrangement of data from Article 46 of the Law, vii) establishing a list of indicators for recognising suspicious transactions, vii) the application of targeted and proportionate measures towards high-risk non-profit organizations to prevent the abuse of non-profit organizations for terrorist financing, viii) establishing lists of high-risk countries with strategic deficiencies in the field of money laundering and terrorist financing prevention, and countries where money laundering and terrorist financing are more likely to occur.
← 22. These specifically include EU regulation 2018/1672 and EU directives 2015/849 and 2018/843.
← 23. These figures refer to the number of cases.
← 24. The full title of the Convention is Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism.
← 25. Many of these cases involved small claims, particularly those related to unpaid utility bills.
← 26. The United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration is designed to guide States in reforming and enhancing their arbitration laws as to address the particular features and needs of international commercial arbitration. It provides a comprehensive framework that spans the entire arbitration process, including the arbitration agreement, the formation and authority of the tribunal, the level of court involvement and the recognition and enforcement of arbitration awards. For more, see: https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration.
← 27. While these legal frameworks are largely aligned with the UNCITRAL Model Law, there are still some gaps. Namely, key procedural elements remain unregulated, including the initiation of proceedings, choice of language and venue, communication rules, treatment of arbitrator incapacity, use of expert witnesses, interim measures, and tribunal authority to rule on its own jurisdiction. In several of these areas, the necessary support from domestic courts is also lacking. For more, see: (Meskic, 2025[38]).
← 28. Book of Rules on the Organization and Operation of the Arbitration Court of the Foreign Trade Chamber of Bosnia and Herzegovina, 2025, https://komorabih.ba/wp-content/uploads/2025/07/BOOK-OF-RULES-ON-THE-ORGANIZATION-AND-OPERATION-OF-THE-ARBITRATION-COURT-OF-THE-FTCBH.pdf.
Book of Rules on the Proceedings Before the Arbitration Court of the Foreign Trade Chamber of Bosnia and Herzegovina (Sarajevo Rules), 2025, https://komorabih.ba/wp-content/uploads/2025/07/Book-of-rules-on-the-proceedings-before-the-Arbitration-Court-of-the-FTCBH-Sarajevo-rules_ANNEX-1-TO-BOOK-OF-RULES-ON-THE-PROCEEDINGS-BEFORE-THE-ARBITRATION-COURT-OF-THE-FTCBH-SARAJEVO-RULES.pdf.
← 29. The relevant EU legislation includes Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008.
← 30. A limitation period is the maximum time after an event within which legal proceedings must be initiated. Once a limitation period expires, the right to bring a claim is typically lost, even if the claim itself is deemed valid. A prescription period refers to the extinguishment of a legal right itself, rather than just the right to sue.
← 31. This refers to the Directive 2008/52/EC. For more, see: https://eur-lex.europa.eu/eli/dir/2008/52/oj/eng.
← 32. This list includes, but is not limited to, invitations to mediate, expressions of willingness to participate, settlement proposals, mediator suggestions and documents prepared solely for the mediation.
← 33. Arbitration is envisaged only as a last resort, triggered if the dispute remains unresolved after two initial phases: Phase I, where a network of foreign investment protection agencies acts as an early grievance mechanism, and Phase II, which involves an intra-governmental co-ordinating body for amicable dispute resolution (Brodlija, 2025[42]).