Know Your Customer (KYC) Procedures for Financial Institutions in Albania
Introduction
The Albanian government has implemented a set of regulations to combat money laundering and terrorism financing through the adoption of the Anti-Money Laundering (AML) Law in 2008. The law requires financial institutions to implement know your customer or know your client procedures, which involve verifying the identity, suitability, and risks involved with maintaining a business relationship.
Enforcing AML Regulations
The General Directorate on Prevention of Money Laundering is responsible for enforcing AML regulations in Albania. Financial institutions are required to conduct a thorough due diligence process when establishing a business relationship with a new customer.
Due Diligence Process
The due diligence process involves collecting identification data such as:
- Business name
- Date of incorporation
- Legal representative
- Taxpayer identification number
Additionally, financial institutions must collect information about the ultimate beneficiaries of the business relationship, including their identity data. The AML Law also requires financial institutions to maintain records of all transactions, including:
- Transaction value
- Currency
- Execution date
- Form of execution
Types of Transactions Requiring Due Diligence
The due diligence process is required for certain types of transactions, including those exceeding 100,000 Lek or its equivalent in foreign currencies, as well as transactions involving:
- Money transfers
- Foreign exchange
- Gaming services
Financial institutions are also required to perform due diligence if there are doubts about the veracity of previously obtained identification data.
Outourcing Due Diligence
Financial institutions are allowed to outsource certain components of the due diligence process to third parties who are obliged by law to comply with AML regulations, such as:
- Notaries
- Attorneys
However, this does not relieve the financial institution of its responsibility for ensuring that due diligence is properly performed.
Third-Party Providers of AML Services
The Albanian government has established a list of entities that can be relied upon specifically by law as third-party providers of AML services, including:
- Credit institutions
- Financial institutions
- Auditors
- External accountants
- Tax advisors
- Notaries
- Independent legal professionals
Other types of businesses, such as estate agents and providers of high-value goods, are not included on this list.
Summary
In summary, the know your customer procedures for financial institutions in Albania require a thorough due diligence process to verify the identity, suitability, and risks involved with maintaining a business relationship. Financial institutions must collect identification data, maintain records of transactions, and perform due diligence for certain types of transactions. While outsourcing certain components of the due diligence process is allowed, financial institutions remain responsible for ensuring that due diligence is properly performed.