Financial Crime World

Banks’ Large Exposures: Calculation, Supervision, and Reporting

In an effort to maintain stability in the financial system, the Albanian regulatory authority has established a framework for banks to calculate, supervise, and report large exposures to individuals or groups of individuals related to each other or to the bank.

Regulatory Framework

The regulatory framework is governed by several regulations, including:

  • Regulation 48/2013 on capital adequacy reports
  • Regulation 67/2015 on internal control systems
  • Others

These regulations outline the criteria and rules for calculating the capital adequacy ratio, determining the minimum level of regulatory capital, and ensuring the effective management of liquidity risk.

Risk Management

Banks are required to implement an effective risk management system that:

  • Identifies risks arising from large exposures
  • Assesses these risks
  • Mitigates these risks through internal controls, monitoring transactions, and reporting suspicious activities to the Albanian Financial Intelligence Unit (FIU)

Know Your Customer (KYC) and Customer Due Diligence

Banks are required to conduct Know Your Customer (KYC) procedures to:

  • Identify and verify customer identities
  • Collect relevant information
  • Verify customer data
  • Assess the risk of money laundering and terrorism financing

Reporting Obligations

Banks are obligated to report:

  • Large cash transactions exceeding ALL 1 million or its equivalent in foreign currency to the FIU
  • All suspicious transactions that may be related to money laundering or terrorism financing

AML Compliance Program

Banks are required to have an effective Anti-Money Laundering (AML) compliance program that includes:

  • Policies and procedures for identifying and managing risk exposure
  • Dedicated structures for AML management
  • An AML compliance officer who oversees the AML compliance program and acts as a liaison with financial authorities

Banking Secrecy

The Albanian Banking Law regulates banking secrecy, obliging banks to:

  • Protect their professional secrecy
  • Maintain confidentiality of customer information

In conclusion, the regulatory framework in Albania requires banks to implement effective risk management systems, conduct thorough KYC procedures, and report large cash transactions and suspicious activities. Failure to comply with these regulations can result in penalties and fines from the Bank of Albania or FIU.