In a bid to sidestep US sanctions that have left sanctioned individuals and companies in Republika Srpska without bank accounts, the Bosnian Serb assembly has revised its banking regulations. The National Assembly of Bosnia’s Serb-majority entity, Republika Srpska, has urgently amended the Law on the Investment-Development Bank (IDB) among several other laws to counter the impacts of the US-imposed sanctions.
These legislative changes enable the IDB to open bank accounts for individuals and companies, conduct domestic payment transactions, and accept deposits. Additionally, amendments to the Law on Banks of Republika Srpska and the Law on Domestic Payment Transactions were passed to support the changes in the IDB law.
Srdjan Mazalica, a Member of Parliament for the ruling Alliance of Independent Social Democrats (SNSD), stated that the legal adjustments were meant to “strengthen the position of Republika Srpska.” However, opposition MPs criticized the move. Nebojsa Vukanovic, an opposition MP, described it as a “forced and poor move by the [RS] government, following the US sanctions,” sarcastically suggesting the law should be named after the family of RS leader Milorad Dodik.
In response to media inquiries, the US embassy in Sarajevo reiterated that sanctions could be applied to any institution, including banks, that provide material support to sanctioned individuals or entities. This warning came after the US Treasury’s Office of Foreign Assets Control (OFAC) added three individuals and entities to its blacklist on March 13, cautioning that financial institutions engaging with sanctioned entities could face penalties themselves.
The sanctions have led to the closure of numerous bank accounts for sanctioned individuals and companies across both entities in Bosnia and Herzegovina, including the Federation of Bosnia and Herzegovina and Republika Srpska.
On June 18, OFAC also sanctioned two individuals and seven entities allegedly involved in a network of private companies overseen by Republika Srpska President Milorad Dodik and his son, Igor. OFAC accused Dodik of leveraging his presidential position to channel RS government contracts to these firms. According to an analysis by the Balkan Investigative Reporting Network (BIRN), three of the seven companies sanctioned by the US have secured public contracts worth over 250 million euros, serving as significant revenue sources for Dodik and his family.