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Albania Top Destination For “Suspicious Transfers” From Italy

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Albania was a top destination for the receipt of “suspicious transactions” from Italy in the first half of 2021, according to the Italian Financial Intelligence Unit (UIF).

In the first half of the year, the UIF received some 70,157 reports of suspicious transfers, increasing 32.5% from the previous year. The most significant increase noted was money transfers which tripled.

Out of all the countries in the world, the majority went to Albania, Morocco, Romania, and Senegal. These accounted for almost 40% of all reports.

Most of these transfers came from Lombardy, Lazio, Emilia-Romagna, and Sicily.

It’s estimated that up to EUR 700 million in illicit funds enter Albania every year. This is channeled into the country through predominantly criminal activity, corruption, and tax fraud. Over the last three years, it’s estimated that some EUR 1.6 billion has been laundered into Albania’s construction sector.

New constructions have flourished in Tirana, especially after 2015. Comparing the numbers for 2015 and 2020,  a 5-fold increase in the overall surface area constructed and local and central authorities have issued permits can be noted.

A similar increase was seen in 2020, even though all other sectors of the economy suffered losses. Only the construction and real estate sectors reported growth during the pandemic.

The increase in the overall area ceased construction projects, and the sector’s overall growth does not reflect the country’s economic development and housing demand.

Due to money being laundered into the construction sector, apartment prices have increased by 70% over the last four years, putting the sector at risk of crashing. The construction bubble will likely burst, bringing apartment prices down by around 50% in approximately 10 years.

The Council of Europe’s MONEYVAL found that the authorities have taken no significant measures to combat money laundering and terrorist financing. They found that a few positive steps had been taken, but there were still a significant number of limitations, including a lack of prosecutions, convictions, and deterrents.

“Limited steps have been taken to improve compliance with the other Recommendations, but gaps remain. Albania is encouraged to continue its efforts to address the remaining deficiencies.”

The US State Department had similar findings in its International Narcotics Control Strategy Report published this year. It noted that while the government was increasing efforts to combat drug cultivation and trafficking, a weak rule of law and corruption were hampering efforts. Additionally, criminal gangs continued to launder drug money in the country.

It also found that Albania was a “major money laundering destination” in 2020. The State Department said that the Albanian government has made “no significant progress toward thwarting money laundering and financial crimes in 2020.”

This means the country remains vulnerable to money laundering because of corruption, weak legal and governmental institutions, and the prevalence of organized crime networks.

The country’s informal economy and significant remittances from abroad also contribute to the issue.

In 2020, Albania was downgraded to the Financial Action Task Force grey list. The list includes countries that have failed, despite warnings, to tackle money laundering and financial crime in any meaningful way.

A review of the list took place at the start of the summer, yet Albania failed to be upgraded.

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