Albania Exits FATF Grey List: Progress against Money Laundering or Ongoing Concerns?

Albania has officially left the Financial Action Task Force (FATF) grey list, following a three-year tenure.The country, which has been designated for having inadequate measures to address money laundering and terrorist financing concerns, will now focus on implementing the required reforms.

Albania’s Exit from the Grey List

Finance Minister Ervin Mete welcomed the news, expressing optimism about potential benefits such as a better reputation and reduced costs in financial transactions both domestically and abroad. In February 2020, Albania pledged cooperation and saw an increase in money laundering cases, leading to numerous indictments.

The Council of Europe upgraded Albania’s compliance with FATF recommendations from partially compliant to largely compliant. In the evaluation report, they praised efforts to improve the regulation and supervision of notaries and real estate agents. Nevertheless, Albania was advised to continue reporting on all matters and progress in the following two years.

Concerns Regarding Money Laundering within Albania

Despite this progress, concerns persist regarding the ongoing issue of money laundering within the country. Some manifestations include an oversupply of euros on the local market, causing a considerable decrease in the value of the euro against the lek.

Potential Solutions to Alleviate the Issue

Analyst and political commentator Neritan Sejamini suggested that the government and the Bank of Albania could address this issue by lowering lek interest rates, raising obligatory banking reserves, increasing public spending, and reducing taxes to stabilize the currency. However, these actions have yet to be implemented.

The Role of Real Estate in Money Laundering

Gjergi Erebara, a journalist with Balkan Investigative Reporting Network (BIRN), raised concerns over the role of illicit funds in the economy. With the current housing price boom, properties in new developments sell for over €6,000 per square metre, and affordable rents become challenging to find.

A Global Initiative against Transnational Organised Crime (GITOC) report in 2020 highlighted construction as a popular channel for money laundering in Albania. The estimated discrepancy in 2019 was €600 million, with potentially €1.6 billion of “dirty money” laundered through real estate between 2016 and 2019.

Challenges: The Informal Economy

Despite these concerns, the significant size of Albania’s informal economy at 31.9%, representing approximately $18 billion in GDP PPP levels, remains a major challenge.

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