The spokesman for the entity's police chief, Radovan Pejic, said the powerful explosive had been planted in two places in the memorial area and that it was ready for detonation.
Pejic said the police had been informed of the explosive by the European Union troops in Bosnia-Herzegovina after receiving an anonymous tip.
Earlier today Pejic said there were leads as to the possible culprits.
Apart from the memorial area, the police are searching the wider area to see if more explosive was planted elsewhere.
On July 11, the 10th anniversary of the murder of some 8,000 Muslims, killed by the Bosnian Serb police and army in July 1995, will be marked at Potocari.