ALBANIA
Summary

Sanctions

None

FAFT AML Deficient

No

Higher Risk Areas

 

US Dept of State Money Laundering assessment

Non - Compliance with FATF 40 + 9 Recommendations

Not on EU White list equivalent jurisdictions

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

Medium Risk Areas

 

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

 

 

ANTI-MONEY LAUNDERING

 

FATF status

Albania is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Latest FATF Statement - 27 February 2015

The FATF welcomes Albania’s significant progress in improving its AML/CFT regime and notes that Albania has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in June 2012. Albania is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Albania will work with MONEYVAL as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.

 

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 is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

OVERVIEW

 

Albania is not a regional financial or offshore center. The country remains at significant risk for money laundering due to rampant corruption and weak legal and government institutions.

 

Albania has a large cash economy and informal sector, with significant money inflows from abroad in the form of remittances. Major proceeds-generating crimes in Albania include drug trafficking, tax evasion, smuggling, and human trafficking. Albania has a substantial black market for smuggled goods, and smuggling is facilitated by weak border controls and customs enforcement. Albania produces and exports significant amounts of marijuana, primarily for European use, and is a transit country for Afghan heroin and cocaine, serving as a key gateway for heroin distribution throughout Europe. Albania serves as a base of operations for regional organized crime organizations. Illicit proceeds are easily laundered.

 

VULNERABILITIES AND EXPECTED TYPOLOGIES

 

Real estate (particularly in the coastal areas), business development projects, and gaming are among the most popular methods of hiding illicit proceeds. Law enforcement recognizes the need to combat money laundering but remains largely ineffective in doing so. The Albanian State Police has a dedicated Economic Crime Unit tasked with AML efforts, while police and prosecutors continue to receive training on this subject. Better collaboration between police and prosecutors is needed.

 

KEY AML LAWS AND REGULATIONS

 

In 2016, the Albanian parliament passed several significant constitutional and legal reforms aimed at tackling corruption and organized crime. The reforms, if implemented properly, will result in better enforcement of money laundering and other financial crime laws.

 

In recent years, Albania has made technical improvements to its AML regime. These include increasing predicate crimes covered by the AML law, establishing CDD measures for financial institutions, and improving the powers and processes used by authorities in responding to foreign requests for assistance.

 

Albania and the United States do not have a MLAT, but cooperation is possible through multilateral conventions.

 

AML DEFICIENCIES

 

Albania has a substantial black market for smuggled goods, primarily tobacco, jewelry, stolen cars, and mobile phones. Smuggling is facilitated by weak border controls and customs enforcement.

 

The Albanian court system applies a high burden of proof in money laundering cases. Some, but not all, courts require a simultaneous conviction for a predicate offense before issuing a conviction for money laundering, even though the law specifically states that no predicate offense is necessary. The Supreme Court has not issued a controlling decision, so the law in this area remains in flux. The AML regime also is plagued by numerous technical deficiencies.

 

ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS

 

While the Government of Albania passed criminal code reforms and legislative amendments in 2012, implementation efforts have been weak. Despite a sizeable number of money laundering investigations, the number of money laundering prosecutions remains low. Through mid-year 2016, four money laundering cases were referred to the court for prosecution while seven defendants were convicted of the offense. In 2016 the Prosecutor General’s Office hired a third forensic accountant to assist in the investigation of cases.

 

The government has taken steps to combat official corruption, but it needs to continue to address judicial and prosecutorial corruption. Since the lifting of immunity for judges and high officials in 2012, prosecutors have investigated at least 23 high-level officials, including 14 locally- elected officials, four judges, one court clerk, three prosecutors, and one police officer.

 

Jurisdiction over judicial corruption and high-level corruption was transferred to the Serious Crimes Court in March 2014. Prosecutions led by the related Serious Crimes Prosecution Office have resulted in the convictions of two judges, one prosecutor, and one locally elected mayor on corruption charges. Two other judges and one prosecutor charged with corruption await trial.

 

On July 22, 2016, Albania passed substantial amendments to its Constitution to reform the justice system, including vetting judges and prosecutors for corruption and links to organized crime, and creating an independent, vetted, and monitored court and prosecutorial office for cases of high-level corruption and organized crime, which would include organized narcotics traffickers. Several laws necessary for the implementation of the constitutional changes were passed in October 2016. Albania must implement the laws effectively and continue to develop the effectiveness of its police and prosecutors that focus on corruption, money laundering, and economic crimes.

 

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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

39

World Governance Indicator – Control of Corruption

40

 

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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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