Albania is no longer on the Financial Action Task Force ‘grey list’, which names countries where concerns about money laundering and terrorist financing are not adequately addressed by the authorities but stakeholders say the impacts of money laundering are still felt in the economy.
The FATF is a global body responsible for tackling financial crimes, and those who make the grey list are subject to monitoring. Countries on the list often face heightened controls internationally, with financial institutions increasing scrutiny on transactions coming from, or going to them.
“This decision brings a number of positive outcomes, both in terms of reputation and in easing the costs of financial transactions in the banking system at home and abroad,” Finance Minister Ervin Mete said after announcing Albania’s three-year tenure on the list had come to an end.
Albania made a substantial commitment to cooperate with the FATF and the Council of Europe’s anti-money laundering and counter-terrorism financing evaluation body, Moneyval, in February 2020, following its re-inclusion in the grey list. Since then, the country has seen a notable rise in money laundering cases leading to indictments.
In the summer, the Council of Europe upgraded Albania’s compliance with FATF recommendations from partially compliant to largely compliant. They continued that the country took several measures “which addressed important shortcomings” and improved measures for regulating and supervising notaries and real estate agents.
“Overall, Albania has made progress in addressing most of the technical compliance shortcomings identified in its 2018 Mutual Evaluation Report,” the Council of Europe stated, noting Albania must report back in two years on all matters and any further progress.
However, concerns remain, at least locally, over money laundering. During the summer, the value of the euro decreased significantly against the lek due to a glut of the EU currency on the local market. While much was attributed to tourism and increased foreign investment, some remain sceptical and suspect foul play.
“Some strengthening (of the lek) has come from non-formal economic factors or in Albanian: informal or criminal economy,” said analyst and political commentator Neritan Sejamini.
He added the government and the Bank of Albania could help resolve the issue by lowering lek interest rates, raising the level of obligatory banking reserves in the currency, increasing public spending and lowering taxes. But this is not happening.
Gjergi Erebara, a journalist with BIRN, also believes that the presence of black money in the economy is behind the current state of affairs.
In an op-ed, he wrote that there are several possible solutions: a crackdown from law enforcement on money funding construction and enforcement of anti-money laundering rules, but this is unlikely, he writes.
Money laundering is also believed to be partly behind the current housing price boom. Property in Albania is now going for over €6,000 per square metre in some new developments, with prices in the capital starting at €1,000. Rent is also increasing, and it is difficult to find a rental property in Tirana for under €450, equivalent to the minimum wage.
In 2020, the Global Initiative against Transnational Organised Crime published a report that found construction was a popular vehicle for money laundering in Albania.
“It begins with the financing of new residential or commercial construction, continues with financing the construction contracts and undercounting the value of labour in construction, and again with the sale of the finished buildings.”
The report found that out of 141 companies given building permits for high-rises between 2017 and 2019, 59% had no financial capacity to complete them. The balance sheets of the companies in question revealed that they had minimal revenue and no assets or loans that could be used to fund the projects.
GITOC estimated that 60% of the value of projects was derived from illicit money. The report also claims that even when you factor in the value of mortgages, there is a discrepancy of some €600 million in 2019 alone. Findings from the report and an unnamed Albanian money-laundering expert stated that up to €1.6 billion of “dirty money” could have been laundered through the Albanian real-estate sector between 2016 and 2019.
The size of Albania’s informal economy is estimated to be 31.9%, which represents approximately $18 billion at GDP PPP levels.
(Alice Taylor | Euractiv.com)
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