Albania – Know Your Customer (KYC) Rules

 

 

Albania is not an important regional financial or offshore center; however, as a transit country for trafficking in narcotics, arms, contraband, and humans, Albania remains at significant risk for money laundering. Criminal organizations take advantage of corruption and a weak legal system, with real estate and business development projects being the most popular laundering methods.

Albania has a significant black market for certain smuggled goods, mainly tobacco, jewelry, stolen cars, and mobile phones, due to its high level of consumer imports and weak customs controls. Drug traffickers utilize Albania as a transit country and Albanian organized crime groups are known to be involved in European heroin markets. Organized crime groups use Albania as a base of operations for conducting criminal activities in other countries and often return their illicit gains to Albania. The proceeds from these activities are easily laundered in Albania because it is still fundamentally a cash economy and money flows from abroad in the form of remittances are common. Terrorist financing also appears to be a threat in Albania, as during the last decade government officials have taken action in several cases involving individuals and non-profit organizations suspected of financing terrorist activities.

In 2011, the Government of Albania did not appear to make significant improvements in the fight against money laundering, as evidenced by the low number of prosecutions and convictions. Research conducted by the European Commission and other international observers report that corruption in Albania is prevalent in many sectors, including the judiciary; that no steps have been taken to combat judicial corruption (including by limiting or abolishing the immunity of judges); and that corruption plays a major role in the inability of the Albanian government to successfully prosecute criminal activity.

KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: YES

Albania – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Albanian Law:

    • Banks
    • Agricultural credit institutions
    • Life insurance companies
    • Money exchangers
    • Accountants
    • Notaries
    • Lawyers
    • Gaming centers
    • Casinos
    • Auto dealers
    • Postal services
    • Securities dealers
    • Real estate agents
    • Travel agencies

Albania – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: 1,620 from January to November 2011

Number of CTRs received and time frame: 721,828 from January to November 2011

The following is a list of STR covered entities covered by Albanian Law:

    • Commercial Banks
    • Non-banking financial institutions
    • Foreign exchange offices
    • Savings/credit companies and their unions
    • Postal services that perform payment services
    • Issuers or managers of debit and credit cards, checks, traveller‘s checks, payment orders, electronic money, or other similar instruments
    • Stock markets and securities agents and brokers
    • Life insurance or re-insurance companies, agents or intermediaries
    • Pension funds
    • The State Authority Responsible for the Administration and Sale of Public Property and property transfer agents
    • Games of chance, casinos and hippodromes of any form
    • Lawyers, notaries and other legal representatives
    • Real estate agents and appraisers
    • Accountants and financial consultants
    • The Agency of Legalisation, Urbanisation and the Integration of Informal Constructions/Zones

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: Seven from January to December 2011
Convictions: Two from January to December 2011

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Albanian court system applies a difficult burden of proof in money laundering cases. Some, but not all, courts require a simultaneous conviction for the predicate offense before issuing a conviction for money laundering. The Supreme Court has not issued a unified decision, so the law in this area remains in flux. Currently, no law criminalizes negligence by financial institutions in money laundering cases.

The Bank of Albania has established a task force to confirm banks‘ compliance with customer verification rules. It is the responsibility of the licensing authority to supervise intermediaries for compliance. Although regulations also cover nonbank financial institutions, enforcement remains poor in practice. There is an increasing number of STRs coming from banks as that sector matures. A large number of STRs continues to come from tax and customs authorities and foreign counterparts.

Individuals must report to customs authorities all cross-border transactions that exceed approximately $10,000. Albania provides declaration forms at border crossing points; however, customs controls on cross-border transactions lack effectiveness due to a lack of resources, poor training and corruption of customs officials.

The Joint Investigative Unit to Fight Economic Crime and Corruption (JIU) in the Tirana District Prosecution Office focuses efforts and builds expertise in the investigation and prosecution of financial crimes and corruption cases by bringing together members of the General Prosecutors Office, the Albanian State Police Financial Crimes Sector, the Ministry of Finance‘s Customs Service and Tax Police, and the National Intelligence Service. The JIU also has liaisons for cooperation from the FIU, High State Audit, and the High Inspectorate for the Declaration and Audit of Assets. The JIU prosecutes money laundering cases within the District of Tirana. Six additional regional JIUs are in operation and have similar missions. These units have jurisdiction over corruption, money laundering, and other types of economic crime.

Despite efforts to improve Albania‘s capacity to deal with financial crimes and money laundering, Albania‘s AML/CFT regime is plagued by numerous technical deficiencies. The lack of positive results and apparent inability of government officials to adequately address these deficiencies continue to hamper progress.