Albania strengthened transparency and improved regulation and oversight, but not enough to remove it from the gray list

Albania has improved its measures to combat money laundering and the financing of terrorism (AML/CFT), concludes MONEYVAL in a follow-up report published on June 21, 2023[1].

Albania has made progress in addressing the technical compliance gaps identified in the Mutual Evaluation Report, 2018 and subsequent follow up reports.

As a result of this progress, Albania has been reassessed in two recommendations:

Recommendation 25 has been upgraded from “Partly Compliant” to “Mostly Compliant”.

The factors underlying the assessment are:

There is no time limit for real estate agents to provide information at the request of supervisory authorities (c.25.5);
The limitations described in Recommendation 37[2], 40[3] apply to c.25.6.

Recommendation 28 has been upgraded from “Partly Compliant” to “Mostly Compliant”

The factors underlying the assessment are:

Criminal records are not explicitly required for shareholders/indirect beneficiaries of casinos (c.28.1(b));
In relation to lawyers, they can only be held liable for failure to comply with the reporting obligation. It is still not clear which sanctions can be applied to which failures, and therefore it is not clear whether the sanctions are proportionate and convincing. (c.28.4(c));
There is no specific requirement for determining the frequency of supervision of real estate agents. (c.28.5(a));
Internal controls, policies and procedures are considered only in relation to the supervision of notaries and real estate agents (c.28.5(b)).

From June 2022, Albania took additional measures, which addressed significant shortcomings regarding trustees subject to AML/CFT requirements and simplified access to beneficial ownership information for competent authorities.

Here are some of the details of the published report[4]:

Albania improved measures for the regulation and supervision of notaries and real estate agents. The licensing authority for notaries is now empowered to revoke licenses for breaches of anti-money laundering/anti-terrorist financing (AML/CFT) legislation. Albania also introduced risk-based supervision of real estate agents.

The Law on Notaries does not allow individuals convicted of a criminal offense to obtain or hold a notary license (Article 5 of the Law on Notaries). There is no reason to deny a license due to other indications of criminal activity or association.

However, although not explicitly regulated by law, once a license is granted, the Ministry of Justice (MOJ) is informed by the prosecuting authorities when criminal proceedings are initiated against a notary and can decide whether the significance of the criminal offense for which it was initiated the procedure is such that the notary does not exercise his activity until the end of the procedure and consequently the suspension of the license (based on articles 56, 57 and 58 of the Law on Notaries which gives the MJ the opportunity to temporarily limit the license even though up to 2 years). Furthermore, the law provides that if a notary has inappropriate contacts with a criminal element, he or she will be subject to enhanced monitoring procedures.

These procedures provide for the obligation of the notary to undergo a regular inspection no less than once a year, while the normal monitoring procedure provides for the notary to undergo a regular inspection no less than once every four years.
The Law on Notary provides legal liability for violations of legal and bylaw provisions. The Minister of Justice issues an order for the revocation of the notary’s license for a number of reasons, among others, if the notary has previously been given a disciplinary measure, a warning with a warning for the revocation of the license (Article 21(1e)).

Meanwhile, the notary’s license may be revoked after he has been convicted after obtaining the license by a final court decision for a criminal offense committed intentionally or for a criminal offense. Also, it is possible to suspend a notary from his duties when he/she is related to the commission of a criminal offense (Article 56 a).

Law no. 9/2022 “On the profession of real estate agent” entered into force on March 9, 2022, provides for a set of strict conditions that must be met by applicants to obtain a license to practice the profession of real estate agent (Article 3, point 4), including the verification of the judicial status/criminal offenses and of their associates (Article 8, point 3). However, the scope of criminal conduct against which the candidate is screened is limited to Money Laundering, Financing of Terrorism or Weapons of Mass Destruction.

Article 22 of the law “On the profession of real estate broker” includes disciplinary measures for violations of the provisions that regulate the exercise of the profession and their activity, which cover violations of LPP/LFT.

Based on Article 27 of Law No. 9917, the Money Laundering Prevention Directorate (GDPML) implements a series of “administrative offenses“ based on findings of violations during inspections.

Auditors/Accountants: According to articles 8 and 9 of the Regulation “On the organization and operation of the registration commission and updating the public register” auditors are checked regarding the history of criminal records. In addition, applicants are required to submit a self-declaration covering the Public Oversight Board (POB) of audit firms and individual auditors regarding criminal background and association. As in the case of auditors, similar provisions are found in Regulation no. 9 “On the regulation and supervision of the operation of professional organizations and the profession of certified accountant”, including the self-declaration.

The POB is authorized to impose sanctions, including the termination of the profession for accountants (Article 24 of the Regulation “On the investigation and procedures for taking disciplinary measures”) and for auditors (Article 19 of the Regulation “On the investigation and procedures for taking disciplinary measures disciplinary measures”).

Lawyers: According to the National Chamber of Advocacy (NCA), applicants must submit certification from the prosecution and court for any ongoing criminal case. As part of the background check, the NCA requires from all applicants a copy of the judicial status certificate, as well as certifications from the court and the prosecutor’s office to establish that the relevant persons are not subject to a judicial process or investigation.

Law no. 55/2018 enables the NCA to issue sanctions/disciplinary measures (including the revocation of licenses) to lawyers for non-compliance with LPP/LFT obligations; however, Law No. 55/2018 exclusively mentions the reporting obligations under the LPP/LFT legislation (as “Lawyer Duties”). Moreover, it is still not clear which sanctions can be applied to which failures, and thus it is not clear whether the sanctions are proportionate and convincing.

In relation to the requirements for casinos, the evaluators found that measures to prevent criminals from having a significant interest were not comprehensive. The term “unsuitable person” is not defined in the Law on AML/CFT. Law no. 155/2015 (Article 36(6)) “On gambling” which states that companies applying for a license in the casino category must meet a number of criteria and conditions, including a criminal record certificate showing that the applicants/administrators and the shareholders/collaborators are not in court proceedings and have not been convicted. The provisions clearly do not include indirect shareholders.

Notaries, gambling operators and accountants are believed to form the most vulnerable category of money laundering preventers and indeed most of the DPPPP’s supervisory resources in recent years have been focused on these sectors.

Casinos/gambling service providers: The exposure of gambling operators to LPP risks is reviewed in the NRA and the Gambling Supervisory Authority adjusts supervisory measures accordingly and these measures are therefore reflected in supervisory controls.

Notaries: MJ determines the frequency and intensity of LPP/LFT inspections based on risk (Order no. 408). Also, during the drafting of the annual inspection plan, the MoD (Order No. 181) also considers the characteristics of notaries.

Lawyers: Albanian authorities have been provided with detailed evidence regarding the surveillance carried out by AKK on a risk-sensitive basis.

Real estate agents: The risk-based methodology of 2022/05 establishes a requirement for supervisors to carry out a risk assessment, which must be documented. However, there are no specific requirements for determining the frequency of surveillance.

Other professions: Supervision of certified accountants is based on risk factors, including determining their frequency (POB manual on supervisory subjects for the prevention of PP and TF).

Meanwhile, it is estimated that in practice, BoA does not exercise supervision over dealers in precious metals and stones (DPMS). At the same time, it should be noted that, technically, DPMS in Albania do not fall under FATF standards as they cannot perform cash transactions above the threshold of R.22.

Furthermore, the MoJ in practice does not exercise money laundering supervision over real estate agents. While there is evidence that the MoJ covers AML/CFT requirements (or at least reporting obligations) in notary inspections, the Chamber of Advocates and the Public Oversight Board do not appear to have systems in place to monitor compliance with AML/CFT requirements.

Likewise, the legal authority that appoints GDPML supervisors has been assessed as ineffective and clarifications have been requested. Sanctions were not applied proportionately and the results of GDPML inspections and the sanctions applied were susceptible to challenge given the limited supervisory authority of GDPML. The FATF criteria related to this recommendation have not changed. Albania has brought some changes to the AML/CFT law and sectoral laws regarding casinos, notaries, real estate agents, which addressed some of these shortcomings. However, not enough progress has been made to justify a rating upgrade.

Overall, Albania has made progress in addressing most of the technical compliance gaps identified in its 2018 Mutual Evaluation Report. Of the 40 recommendations, Albania currently has:
• 6 recommendations assessed as compliant
• 31 Recommendations rated Mostly Compatible
• 2 recommendations assessed as partially compliant and 1 inapplicable

Albania is expected to report in two years to MONEYVAL on the further progress made towards strengthening its LPP/LFT system. The FATF also said earlier this year that while it made the initial determination that Albania has completed its action plan and appreciates Albania’s work to address its strategic deficiencies, it is not enough to consider taking it off the grey list.

[1] https://www.fatf-gafi.org/en/publications/Mutualevaluations/fur-albania-2023.html
[2] Countries should rapidly, constructively, and effectively provide the widest possible range of mutual legal assistance in relation to money laundering, associated predicate offences and terrorist financing investigations, prosecutions, and related proceedings.
[3] https://www.fatf-gafi.org/content/dam/fatf-gafi/recommendations/FATF%20Standards%20-%2040%20Recommendations%20rc.pdf
[4] https://rm.coe.int/moneyval-2023-2-fur-albania/1680abad5a