TIRANA, July 6, 2022 – A plan by Albania’s Socialist prime minister, Edi Rama, to implement a fiscal and legal amnesty for individuals who declare up to 2 million euros in cash assets without having to disclose the origin of the money has both international and domestic stakeholders ringing alarm bells over money-laundering concerns.
Under the proposal, these unreported assets would be taxed ranging from 5 to 10 percent before being allowed into the economy. Those who go through the process would be guaranteed protection from any criminal or administrative penalties related to not having declared the assets and their origin according to existing laws.
Monday, the European Commission chimed in, expressing serious concerns about the proposal and calling it a “substantial reputational risk for the country.”
The EU’s executive arm is worried that the proposal weakens Albania’s control against money laundering — a worry shared by many other domestic and international stakeholders, including the International Monetary Fund and the political opposition in Albania.
“The commission highlighted serious concerns about the current draft law on fiscal amnesty. It would weaken Albania’s anti-money laundering controls while doing little to enhance the tax administration’s ability to improve future compliance with tax requirements,” the EU Commission said in a press release.
Albania’s government was forced to withdraw a similar proposal last year after pressure from the EU and the IMF.
Rama says the amnesty is aimed at releasing into the economy the funds that Albanian migrants have made abroad over the years through hard legal work but that it was done off the books or never reported to tax authorities.
”We are a country of migrants, who are heroes and have a lot of money under the mattresses,” Rama said in a television interview in April. “We will get the fiscal amnesty done because it is also the wish of an important majority.”
He added: “The international community is not the one that will build Albania. Our relations with the international community are of mutual interest and partnership. Gone are the days of a vassal Albania. Here we are in our country, and we have the right to the money of sweat, of the work of all these people.”
The political opposition says the bill is aimed to help criminals launder the proceeds of their illicit operations in a country already suffering from major organized crime and money laundering issues.
“Although he is hiding behind migrant workers, it is already clear that Edi Rama wants fiscal amnesty to save his clients involved in evasion and financial crime from criminal prosecution,” said Agron Shehaj, an opposition Democratic Party MP and successful entrepreneur.
The country’s top business magazine, Monitor, called the proposed amnesty “madness.”
“The law would finally eradicate any kind of illusion that Albanian society can turn into a modern economy, based on equal competition, where work and entrepreneurship are valued, and where children grow up from an early age with healthy models of success,” the magazine wrote in a scathing editorial. “With this law, the economy would create a chronic dependence on dirty money.”
Albania is already under hot water over money laundering and under monitoring by the Council of Europe’s anti-money laundering body MONEYVAL.
In its latest report, MONEYVAL noted some positive steps, but added lack of prosecutions, convictions and deterrents showed Albania still faces issues.
The fears of money laundering have hit the housing market in particular, with new constructions in Tirana — which have seen a massive boom — now priced well beyond the ability of even highly paid professionals to be able to purchase them.
Critics say the inability to afford housing due to money laundering raising prices is one more factor forcing young families to leave the country.
