Financial Crime World

Money Laundering in Albania: A Persistent Concern

Albania’s removal from the Financial Action Task Force (FATF) grey list has brought relief, but concerns about money laundering remain a pressing issue. The country’s economy still feels the impact of financial crime, with some experts attributing it to the presence of “black money” and a lack of government action.

History of Money Laundering Concerns

In 2018, Albania was re-included on the FATF grey list due to its inadequate efforts to combat money laundering. However, in recent months, the country has made significant progress in improving its compliance with FATF recommendations. This includes an increase in money laundering cases resulting in indictments.

The Impact of Money Laundering

The value of the euro against the Albanian lek has fluctuated significantly, leading some to suspect foul play. Analyst Neritan Sejamini believes that non-formal economic factors or criminal activity may be to blame, while journalist Gjergi Erebara attributes the issue to the presence of black money in the economy.

Money laundering is also believed to be behind Albania’s housing price boom. Property prices have skyrocketed, with some new developments going for over €6,000 per square meter. Rent has increased, making it difficult to find a rental property in Tirana for under €450, equivalent to the minimum wage.

Construction as a Vehicle for Money Laundering

A report by the Global Initiative against Transnational Organised Crime found that construction is a popular vehicle for money laundering in Albania. The report highlighted cases where companies had no financial capacity to complete projects, yet managed to secure building permits and sell finished buildings.

  • Experts estimate that 60% of the value of these projects was derived from illicit money.
  • Up to €1.6 billion potentially laundered through the Albanian real-estate sector between 2016 and 2019.
  • The size of Albania’s informal economy is estimated at 31.9%, representing approximately $18 billion in GDP PPP levels.

Addressing Money Laundering Concerns

As Albania looks to move forward, it must address these concerns and implement measures to prevent money laundering. The government and Bank of Albania can take steps to:

  • Lower interest rates
  • Increase public spending
  • Raise the level of obligatory banking reserves in the currency

However, some argue that a crackdown on law enforcement and stricter anti-money laundering rules are necessary to tackle this issue effectively.

Conclusion

Money laundering remains a persistent concern in Albania, with significant economic implications. To move forward, the country must take concrete steps to address these concerns and implement effective measures to prevent financial crime.