Albania: 1.6 billion illicit financial flows

Tirana Times
By Tirana Times August 28, 2020 12:47

Albania: 1.6 billion illicit financial flows

TIRANA, Aug. 27 - A significant portion of Illicit Financial Flows in Albania run on the illicit proceeds of corruption and drug trafficking, according to Global Initiative's latest report.

The report highlights corruption as a widespread phenomenon in Albania, which has become a source for money laundering, especially as regards public procurement contracts. According to the OECD, 57 percent of foreign bribes are paid for to secure public procurement contracts, and 20–30 percent of the value of procurement contracts is lost to corruption.

The report refers to other sources in Albania, according to which and consistent with the OECD estimate, up to 30 percent of the bid value of procurement contracts is paid in bribes. In 2018/19, the government issued €679 million worth of public contracts, which would indicate bribery in the region of €200 million, which could be even higher.

A second source of IFFs in Albania is drug trafficking. According to one expert interviewed by the Global Initiative, 70–90 percent of IFFs in Albania are generated through drug trafficking. Furthermore, the report states that, based on a MONEYVAL assessment, drug trafficking is the main source of laundered money in Albania, accounting for 42 percent of all money-laundering cases.

According to the report, the cannabis industry in the country has generated illicit profits for a large part of society, ranging from villagers who cultivate the crops to organized criminal groups who smuggle it abroad and sell it across the EU. During the peak cultivation period 2016–2017, it is estimated that the cannabis economy generated €2.2 billion.

Proceeds from cannabis production provided the capital for Albanian and North Macedonian criminal groups to get involved in cocaine trafficking. The European Monitoring Centre on Drugs and Drug Addiction reports that Albanian organized-crime groups are increasingly present across European drug markets, and have moved up the cocaine-trafficking hierarchy from being foot soldiers and low-level distributors to now actively organizing shipments, thereby achieving a greater margin and undivided profits.

The report further notes that the construction sector in Albania is also susceptible to money laundering, as is in North Macedonia and Kosovo. Following the sudden boom in the construction sector in 2016, experts attributed it to criminal investment of the proceeds of crime. Sixty-five per cent of all new residential construction permits were issued in Tirana, with a total investment value of €400 million. Of the 141 companies that received building permits for buildings higher than six floors between 2017 and 2019, 59 percent did not have the financial capacities to complete them.

Additionally, a money-laundering expert in Albania estimated that approximately €500 million was laundered through the real estate sector in 2019 in this manner. This adds up to a total estimate of €1.6 billion worth of dirty money laundered through the Albanian real estate sector during 2017-2019.

Tirana Times
By Tirana Times August 28, 2020 12:47