ALBANIA
Summary

Sanctions

None

FAFT AML Deficient

Yes

Higher Risk Areas

 

Non - Compliance with FATF 40 + 9 Recommendations

Not on EU White list equivalent jurisdictions

Corruption Index (Transparency International & W.G.I.)

Medium Risk Areas

 

US Dept of State Money Laundering Assessment

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

 

 

ANTI-MONEY LAUNDERING

 

FATF status

Albania is on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Latest FATF Statement - 24 October 2014

Since June 2012, when Albania made a high-level political commitment to work with the FATF and MONEYVAL to address its strategic AML/CFT deficiencies, Albania has made significant progress to improve its AML/CFT regime. Albania has substantially addressed its action plan at a technical level, including by: establishing adequate customer due diligence provisions; establishing an adequate legal framework for identifying, tracing and freezing terrorist assets; and enhancing the framework for international co-operation. The FATF will conduct an on-site visit to confirm that the process of implementing the required reforms and actions is underway to address deficiencies previously identified by the FATF.

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Albania was undertaken by the Financial Action Task Force (FATF) in 2010. According to that Evaluation, Albania was deemed Compliant for3 and Largely Compliant for 11 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

Albania was deemed a Jurisdiction of Concern by the US Department of State 2014 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

 

Perceived Risks:

Albania is not an important regional financial or offshore center; however, the country remains at significant risk for money laundering due to rampant corruption and weak legal and government institutions. Albania also has a large cash economy and significant money flows from abroad in the form of remittances.

Albania has a significant black market for certain smuggled goods, mainly tobacco, jewelry, stolen cars, and mobile phones, fostered by weak customs controls. Albania is a transit country for Afghan heroin and serves as a key gateway for heroin distribution throughout Europe. Local production of marijuana is also on the rise for domestic and European use. Albania serves as a base of operations for regional organized crime organizations, as illicit proceeds are easily laundered, with real estate and business development projects being the most popular methods.

 

Terrorism financing remains a threat in Albania. During the last decade government officials have taken action in several cases involving individuals and non-profit organizations suspected of financing terrorist activities.

 

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SANCTIONS

 

There are no international sanctions currently in force against this country.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

31

World Governance Indicator – Control of Corruption

27

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Albania is a relatively small country with a population of approximately three million people and a landmass the size of Maryland. Albania largely was spared from the severe fallout of the 2008 financial crisis as its economy was not heavily integrated into the Euro-Atlantic system. Nonetheless, the prolonged European crisis, coupled with a challenging fiscal and budgetary environment, has caused economic output to slow since 2009. With the help of a 300-million euro International Monetary Fund (IMF) package, the government hopes to reduce its mounting budget deficit and to stimulate economic growth in 2014. Albania’s GDP increased by approximately 1.7 percent in 2013 and the IMF expects the economy to continue to grow by two percent in 2014. Canada is the largest source of Albanian FDI, representing 19 percent of Albania’s $4.5 billion foreign investment stock, mostly in the hydrocarbon and mining sectors.

Albania has implemented a liberal foreign investment regime with the goal of increasing foreign direct investment. In recent years, the government has implemented reforms to improve the overall business climate in the country by streamlining business procedures through e-government reforms and improved legislation in a variety of sectors. Furthermore, the government that took office in September 2013 has stated that promoting foreign investment is a key part of its economic development plans. Opportunities for U.S. investors in Albania likely will increase in the coming years. The government plans to auction 13 oil and gas exploration licenses in 2014 and the beginning of construction on the Trans-Adriatic Pipeline (TAP), which will bring Azeri gas through Greece and Albania to Italy, both represent significant opportunities for U.S. investors.

The Albanian legal system does not discriminate against foreign investors and the “Law on Foreign Investment” allows 100 percent foreign ownership of companies and outlines specific protections for foreign investors. Albanian tax policy also does not distinguish between domestic and foreign investments. The U.S. - Albania bilateral investment treaty entered into force in 1998 and ensures that U.S. investors receive most-favored-nation treatment. Albania’s banking system is well-capitalized and is a ready source for business financing.

Despite a legal framework designed to promote investment and significant emerging opportunities in the natural resources and energy sectors, major challenges remain for U.S. investors. Recent changes in political leadership have raised questions about the legal certainty of licensing and concession agreements signed by previous governments. Investors also cite endemic corruption, weak law enforcement, insufficiently defined property rights, government red tape, lack of developed infrastructure, and frequent changes in the legal framework as other major obstacles to investing in Albania.

 

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FURTHER REPORTS

 

Group of States against Corruption (GRECO) publishes compliance report on Albania  -  
Conclusions (April 2011)

In view of the above, GRECO concludes that Albania has implemented satisfactorily seven of the twelve recommendations contained in the Third Round Evaluation Report. With respect to Theme I – Incriminations, recommendation iv has been implemented satisfactorily and recommendations i, ii, iii and v have been partly implemented. With respect to Theme II – Transparency of Party Funding, recommendations i, ii, iii, v and vi have been implemented satisfactorily, recommendation vii has been dealt with in a satisfactory manner and recommendation iv has been partly implemented.

In particular, concerning incriminations, Albania is in the process of preparing substantial amendments to the Criminal Law which, if adopted, will meet the concerns of most of GRECO’s recommendations. GRECO regrets, however, that some ambiguities remain in the draft amendments as regards jurisdiction over bribery and trading in influence offences committed abroad and urges the Albanian authorities to take determined action to remove these ambiguities.

Insofar as the transparency of political funding is concerned, significant efforts have been carried out to comply with nearly all the recommendations. New legislation is already in place to enhance the transparency of general party funding, including as regards donations and donors, to ensure comprehensive monitoring by the Central Electoral Commission over both the routine activities and the campaign funding of political parties and to define sanctions for the infringements of the financing rules contained in the law on political parties. GRECO expects that additional financial and personnel resources will soon be provided to the Central Electoral Commission to allow it to fulfil its new mandate. Some measures were also adopted to give effect to the provisions on campaign funding contained in the 2008 Electoral Code and to assess their efficiency. The preparation of a standardised format for political parties’ audit reports is also well under way and GRECO is confident that this format will be adopted in due course in order to fully implement the remaining recommendation.

In the light of what has been stated in above, GRECO commends Albania for the substantial reforms carried out with regard to both themes under evaluation, and which show that, already at this stage, Albania complies with more than half of the recommendations issued in the Third Round Evaluation Report. It encourages Albania to pursue its efforts in order to implement the pending recommendations within the next 18 months. GRECO invites the Head of the delegation of Albania to submit additional information regarding the implementation of recommendations i-iii and v (Theme I – Incriminations) and recommendation iv (Theme II – Transparency of Party Funding) by 31 October 2012 at the latest.

Read Compliance Report (pdf file)

 

 

 

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