Financial Crime World

ALBANIA’S HIDDEN ECONOMY: THE CONSEQUENCES OF FINANCIAL CRIME

The Illicit Financial Flows (IFFs) in the Region

The flow of illicit financial funds (IFFs) has been a longstanding concern for regional authorities in Albania, Kosovo, and North Macedonia. Despite efforts to track these funds, experts warn that the true scale of IFFs remains unknown due to their illicit nature.

Estimating the Scale of IFFs

According to estimates by Global Financial Integrity (GFI), IFFs in the region could be as high as 5.9% of GDP in 2015 - a staggering proportion that far exceeds global estimates of illicit outflows.[^1] While precise figures are difficult to come by, every available indicator suggests that IFFs are significant and on the rise.

Complex Web of Factors

The following factors enable and drive the flow of IFFs in Albania, Kosovo, and North Macedonia:

  • Weak institutions: Inadequate laws and regulations, lack of transparency, and corruption create an environment conducive to financial crime.
  • Limited oversight: Insufficient monitoring and enforcement of financial transactions make it easy for illicit funds to be laundered or hidden.
  • Corruption: Corruption at all levels of government and society facilitates the flow of IFFs.

The trend of IFFs is on the rise, with estimates suggesting that they could continue to increase in the coming years. This has significant implications for regional economic stability and security.

Consequences of Financial Crime

The consequences of financial crime are far-reaching and can have devastating effects on individuals, communities, and economies as a whole. Some of the key consequences include:

  • Economic instability: IFFs can lead to capital flight, reduced economic growth, and increased poverty.
  • Corruption: Financial crime perpetuates corruption, undermining trust in institutions and the rule of law.
  • Security threats: IFFs can be linked to organized crime, terrorism, and other security threats.