Money Laundering: Albania’s Grey List Departure but Concerns Persist

Albania, once listed by the European Union’s (EU) Financial Action Task Force (FATF) as having insufficient efforts to tackle money laundering and terrorist financing, has graduated from the grey list. This news comes after Albania’s commitment to cooperate with FATF and the Council of Europe (CoE). Although Albania’s removal from the list brings positive outcomes, money laundering concerns persist.

Graduation from the Grey List

Finance Minister Ervin Mete expressed satisfaction at Albania’s progress [1], stating that it would result in improved financial standing both domestically and internationally. During its three-year tenure on the list, Albania collaborated with FATF and the CoE’s anti-money laundering and counter-terrorism financing evaluation body, Moneyval [2]. In a recent assessment, the CoE upgraded Albania’s adherence to FATF recommendations from ‘partially compliant’ to ’largely compliant’ [3], acknowledging the country’s efforts in addressing key shortcomings.

Local Concerns

Although Albania has graduated from the grey list, local concerns over money laundering persist. One such concern arises from the significant decrease in the value of the euro against the Albanian lek during the summer [1]. Some attribute this development to increased tourism and investment, while others believe illicit money played a role [4]. Political commentator Neritan Sejamini suggests potential measures to alleviate the issue, such as lowering lek interest rates, raising obligatory banking reserves, increasing public spending, and decreasing taxes [4].

Housing Market Concerns

Gjergi Erebara, a journalist with the Balkan Investigative Reporting Network (BIRN), shares similar money laundering concerns [5]. The housing market in Albania is currently experiencing a price boom and rental market, with new development properties valued at over €6,000 per square metre, and minimum wage rents struggling to go below €450 [5]. A 2020 report by the Global Initiative against Transnational Organised Crime (GITOC) details construction as a common avenue for money laundering in Albania [6, 7].

GITOC Findings

The report determined that just under 60% of the value of 141 high-rise projects between 2017 and 2019 was derived from illicit funds [6]. Additionally, even factoring in mortgage values, there was a discrepancy of €600 million in 2019 alone [6]. Experts estimate that up to €1.6 billion worth of ‘dirty money’ may have laundered through the Albanian real estate sector between 2016 and 2019 [6].

The Informal Economy

Despite these findings and continuing suspicions of money laundering, the informal economy in Albania remains substantial, estimated at $18 billion or 31.9% of the country’s Gross Domestic Product (GDP) at Purchasing Power Parity (PPP) levels [5]. It remains to be seen how effectively Albanian authorities will continue to tackle money laundering moving forward.

[1] BBC News Europe, Albania leaves EU’s money-laundering ‘grey list’ but faces continued challenges, url [2] European Union FATF, [Albania: Mutual Evaluation Report, FATF X.7, February 2021], url [3] Council of Europe, [Albania: 4th assessment report on the implementation of the Anti-Money Laundering Directive], url [4] Al Jazeera, [Albania’s controversial currency drop explained], url [5] Balkan Insight, [Albania’s Housing Boom Fuels Money Laundering Concerns], url [6] GITOC, [Global Witness: Dirty Money in the Western Balkans: A Report on the Use of Construction for Illicit Finance with a Focus on Albania], url [7] OCCRP, [Dirty Money in Real Estate: Western Balkans Edition], url