Albania
Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism
Author: International Monetary Fund
Publication Date:
19 Jul 2011
eISBN:
9781462345601
Language:
English
Keywords:
ISCR; CR; CFT law; criminal offence; judicial police; cash transaction; criminal activity; central bank; due diligence; parent company; risk assessment; CFT obligation
Download PDF (9.5 MB)

In this study, antimoney laundering and counterterrorist financing measures (AML/CFT) were summarized. The measures taken to strengthen the financing system are analyzed. Albania’s level of compliance with financial action task force (FATF) is assessed. Legal systems and related institutional measures are also explained. The preventive measures for financial institutions and nonfinancial businesses have also been ascribed. Finally, national and international cooperation has been discussed. The relevant issues related to AML/CFT measures have been analyzed in this paper.

Abstract

In this study, antimoney laundering and counterterrorist financing measures (AML/CFT) were summarized. The measures taken to strengthen the financing system are analyzed. Albania’s level of compliance with financial action task force (FATF) is assessed. Legal systems and related institutional measures are also explained. The preventive measures for financial institutions and nonfinancial businesses have also been ascribed. Finally, national and international cooperation has been discussed. The relevant issues related to AML/CFT measures have been analyzed in this paper.

1. GENERAL

1.1. General Information on Albania

33. Albania is a parliamentary democracy. The Council of Ministers is proposed by the prime minister, nominated by the president and approved by parliament. Its legislative branch consists of a unicameral Assembly (the Kuvendi). Its Constitution was promulgated on November 28, 1998. Albania has a civil law system and has accepted the jurisdiction of the International Criminal Court of its citizens.

34. Albania borders the Adriatic Sea to the West across which is Italy. It shares land borders with Montenegro, Kosovo, Macedonia and Greece. The capital and seat of government is Tirana. Albania is a smaller European country with 3 million citizens living on 28,748 sq km. Albania joined NATO in 2009. European integration continues to be a priority of the Albanian Government with the harmonization of legislation, institutional developments as well as economic reforms being implemented to this end. The official currency of Albania is the Lek.

35. Although Albania’s economy continues to grow, the country is still one of the poorest in Europe, hampered by a large informal economy. According to Albanian estimates, the informal economy represents over 30% of the economy of the country. Only 25-30% of transactions pass through the formal banking system.

36. Albania had a Gross National Product of US$23.12 billion in 2009. Macroeconomic growth in Albania averaged around 6% between 2004-08, but declined to about 4% in 2009. Inflation is low and stable and the government has recently adopted a fiscal reform package aimed at reducing the large gray economy and attracting foreign investment.

37. Private sector activity benefited from strong, albeit slowing, credit growth, and from improved stability of the energy supply. The international financial and economic crisis has resulted in lower demand for Albanian exports, a fall in net inflows of monetary transfers in the form of remittances, and a marked slowdown in credit growth. Per capita GDP in purchasing power parities was estimated at 25% of the EU-27 average in 2008, up from 24% in 2007. Overall, the Albanian economy continued to grow, albeit at a slower pace.

38. The current account deficit widened in 2008 to 14.5% of GDP, up from 10.5% of GDP in 2007, reflecting a further deterioration of the trade deficit and a decline of remittances. The trade deficit in 2008 increased to 27.2% of GDP from 26.5% of GDP in 2007. Partly due to the massive public road works, imports of capital goods increased by 29% as compared to 2007. Consumption goods imports decreased by 6% in 2008. Albanian exports continued to show strong dependency on apparel industries, which accounted for 43% of total exports.

39. Remittances were down by 16% in 2008 compared to 2007, amounting to 9.2% of GDP, partly reflecting the impact of the global financial crisis as well as the declining trend observed over the past years. Latest data for the second quarter 2009 point to a further decrease of remittances of 4% compared to the same period in 2008.

1.2. General Situation of Money Laundering and Financing of Terrorism

1.2.1. Predicate offences

40. Albanian authorities indicate that drugs trafficking, human being and arms trafficking, and corruption are the main predicate offences that generate proceeds in Albania. Albania has also a history of organized crime, with clan-based and hierarchically organized networks which make them difficult to infiltrate3. Organized criminal groups use Albania as a base of operations to conduct criminal activities in other countries4 (predominantly in the United States and also, according to Albanian criminal investigators, in European countries, such as Greece, Italy, Spain and the United Kingdom). Anecdotal evidence suggests that trafficking in stolen cars is another common proceeds-generating offence.

41. Due to its geographic position, Albania continues to be used by drug traffickers as a transit country. Albania is also a producer of cannabis. Despite eradication programs that have resulted in a reduction of cannabis cultivation, such cultivation persists in various regions of the country. According to the authorities, no laboratories for the production of synthetic drugs have ever been discovered in Albania, and the trade in synthetic drugs remains virtually non-existent. In 2005, the Albanian Government outlawed the circulation of speedboats and several other varieties of water vessels on all Albanian territorial coastal waters for a period of three years. This has has slowed the movement of drugs by smaller waterborne vessels.

42. Albanian organized crime networks are involved in several European heroin markets especially those based in Greece, Italy and Switzerland. According to World Customs Organization seizure statistics, between 2000 and 2008, Albanians made up the single largest group (32%) of all arrestees for heroin trafficking in Italy which according to the UNODC is one of the most important heroin markets in Europe. Albania ranks 87th in Transparency International’s 2010 Corruption Perception Index. Corruption is a major problem that Albanian authorities confront. Anecdotal evidence and an assessment by the European Commission5 suggest that corruption of the judiciary hinders the ability to successfully prosecute criminal activity.

43. The table below contains statistics provided by the authorities on the offences that are major sources of illegal proceeds in Albania:

Offences that are Major Sources of Illegal Proceeds

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1.2.2. Money Laundering

44. The major vulnerabilities to ML in Albania are the large, cash-based informal economy (which facilitates the laundering and integration of proceeds of crime, especially in the real estate sector and in commercial undertakings) and the cross border transportation of cash and its further assimilation into the economy and Albania’s financial system). Despite authorities’ efforts and the existence of licensing/registration requirements, there remain a number of sectors that are identified with illegal businesses or practices, such as the “cambiste” (illegal exchange bureaus). The national casino is seen as being particularly vulnerable to money laundering. It has historically low compliance levels with AML/CFT requirements and the FIU recommended that its license be revoked. The high risk assessment for this sector is also due to a concern expressed by the authorities that underground casinos and games of chance operate within Albania. Criminal organization involvement in the operating gaming halls has also been documented.

45. Albania’s ports on the Adriatic and its rugged borders make it an attractive stop on the smuggling route for traffickers that are moving shipments into Western Europe. The digitization of border crossing points through installation of a Total Information Management System (TIMS) has led to improved surveillance and information management and has enhanced considerably the work of the Border and Migration Police. However, despite improvements in the implementation of the SR IX-related requirements, crossborder transportation of cash remains high and poses asignificant risk of ML.

46. Albanian authorities reported that methods actually used by criminal organizations for ML, as revealed by investigations are:

  • Transactions within the financial sector;

  • Opening of bank accounts in the name of social and family ties;

  • Purchasing or entering into partnerships in legal businesses (commercial companies, construction, services, transportation etc);

  • Opening of offshore companies;

  • Purchasing immovable properties (land, apartments, hotels, restaurants, gas stations etc);

  • Commission of criminal activity outside of the territory of Albania, and laundering some of the proceeds obtained from this activity in Albania.

47. Authorities also report that, based upon their analysis of ML trends and techniques, the most common ML schemes are:

  • Injection of illicit income into business activities;

  • Purchase of real estate;

  • Acquisition of luxurious goods; and

  • Structured transactions, where the purpose is to conceal the source of funds and the actual beneficiaries.

48. As for the types of financial institutions, DNFBP or other businesses that are used in ML activities, authorities indicated that the ML schemes are realized mainly through the banking system. There are also attempts to use gatekeepers such as notaries, lawyers and accountants to conceal the illegal origin of funds.

49. Real estate agents and the use of business undertakings are also identified as potentially vulnerable to attempts to launder illegal proceeds. Anecdotal evidence draws a link between new construction activity and proceeds of crime. Industry representatives have expressed concerns that some jewelers operate in the black market. It is believed that the use of cash in these black market operations is prevalent and that these operations are more vulnerable to ML.

50. The following are statistics provided by the Prosecutor’s Office on ML penal proceedings at the investigative and trial stages:

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51. Although the number of investigations for ML is increasing (for instance, in 2009, 50 such investigations were opened), actual results thus far are quite limited. The Prosecutor’s Office has reported that for matters under the basic ML criminal provision (Article 287), since 2006 only four cases have been sent to court. A conviction was obtained in each case – one in each year 2007 through 2010. There have been 20 defendants convicted in 13 cases that were initiated under Article 287/b which relates to acquisition, possession or use of stolen goods. This is a very low number, particularly considering the stolen cars black market.

52. The statistics above are low also considering the fact that organized criminal groups are active in Albania and that Albanian nationals that are part of such groups but operate elsewhere return proceeds to Albania. In addition, the risk for the laundering of proceeds is enhanced because of the relatively high levels of drug transit and considerable level of production, corruption and trafficking in human beings that occur in Albania.

1.2.3. Terrorism and Terrorist Financing

53. There have been no cases of FT since the last mutual evaluation. There has been one case relating to the concealment of funds. In January 2008, a criminal trial commenced in Albania against Hamzeh Abu Rayyan on charges of concealing funds used to finance terrorism. In 2009 he was convicted of violating Article 230/b of the Criminal Code for his activities in administering funds for a person on the UNSCR list, Yassin al-Kadi. Authorities await a decision of the High Court in order to execute the decision of the Court of Appeals in this case. The sentence imposed was four years imprisonment and a fine of lek 600,000.

54. Statistics provided by the prosecutor’s office indicate there have been only a few investigations in the period 2007 – 2009 as set forth in the chart below, and one conviction.

Prosecutorial-Led FT Investigations and Court Proceedings under Criminal Code 230 and 230/a -2007 - 2009

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2007 – Three investigations transferred from 2006. One of those was dismissed.

2008 – Includes two investigations transferred from 2007. All three investigations closed without charging (dismissed).

2009 – Includes one proceeding transferred from 2008.

55. However, with a history in the first half of the 2000s of the government freezing assets of terrorist financiers, curtailing activities of suspect Islamic NPOs, and expelling individuals suspected of having links to terrorism and the historical backdrop after the 1991 fall of the Communist regime of in-country activities by some Al Qaeda operatives and the presence of Islamic non-governmental organizations (some of them fronts for Al Qaeda-linked activities), Albania remains at risk regarding possible financing of terrorism activities.

56. The authorities appear vigilant regarding the presence of these risks, but they have thus far not been able to develop actionable criminal cases relating to terrorism other than the one indicated above.

57. In this context, the lack of progress in the area of NPO and the shortcomings identified with regard to NPOs, constitute a potential vulnerability for terrorism and terrorist financing.

1.3. Overview of the Financial Sector

58. The Albanian financial system comprises of 16 banks (with 530 branches), 17 non-bank financial instititions including leasing companies and money remitters (two of which operate money transfer services affiliated to Western Union and Money Gram) and 283 bureaux de change. There are also two Savings and Credit Associations and 135 Savings and Credit Unions. All of these insititutions are licensed by Bank of Albania (BoA).

59. Although Tirana has a stock exhange, it is not currently operational as there are no companies listed on it. There is an over-the-counter market in govenment bonds, where prices in both the primary and secondary markets are set by the Government Securities Retail market platform. The main market participants are the larger banks.

60. The insurance sector in Albania is dominated by general insurance, with estimates of less than 10% of business by premium being in the life/investment sector. There are ten insurance companies operating, of which seven are non-life insurance companies, two are life insurance companies, and one is a combined life and non-life insurance company. Companies in both the insurance and securities industries are regulated by the Financial Supervisory Authority.

61. The following table sets out the types of financial institutions that can engage in the financial activities that are within the definition of “financial institutions” in the FATF 40+9:

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62. The following table contains the list of subjects licensed by Bank of Albania since 2005:

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63. The banking sector dominates financial activity in Albania. At the end of 2009, the total number of branches and agencies (within and outside the territory of the Republic of Albania) reached 530, as represented individually for each bank in the table below:

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64. The size of banks in terms of balance sheets, shareholder’s equity, loans, investments in state obligations and securities as well as total deposits is shown in the following table:

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65. None of the banks in Albania are wholly funded by Albanian capital, with Austria, Italy, France, and Greece being the countries where the largest shareholders are based.

66. Albania continues to be a largely cash-based economy, with the financial sector growing slowly.

1.4. Overview of the DNFBP Sector

67. All DNFBP categories outlined by the standard have AML/CFT obligations in Albania. The categories of DNFBPs, as defined in the AML/CFT Law are real estate agents and evaluators of immovable property; public notaries, attorneys, and other legal representatives; independent public accountants, independent certified accountants and financial consulting offices; dealers in precious metals and stones; entities engaged in the administration of third parties’ assets, and gaming, casinos and hippodromes, of any kind.

68. The following table outlines the number of entities identified by authorities in each DNFBP sector.

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Although the GDPML has not been specifically designated as the supervisory authority for these sectors it has undertaken examinations in these sectors. Refer to Recommendation 24 for a detailed analysis of DNFBP supervision.

69. Trust and Company Services Providers – Trusts do not currently exist in Albania however some company formation services such as acting as the formation agent of legal persons, providing a registered office, business address or accommodation for companies are offered by lawyers, notaries and accountants. The AML/CFT Law does extend obligations to individuals or legal entities that engage in the administration of third parties’ assets/managing the activities related to them in the event that TCSP activities are undertaken in Albania. Based on meetings with industry and the authorities the provision of company formation services is not prevalent in Albania. The limited use of these services and the requirement to register with the National Registration Centre limits the ML risk of these activities.

70. Casinos, games of chance – Currently there is one casino operating in the territory of the Republic of Albania and 12 operators of games of chance that provide access to slot machines. All of the entities are licensed and supervised by the SUGC. The money laundering risk of the gambling industry is considered high by the FIU. The national casino is seen as being particularly vulnerable to money laundering with historically low compliance levels with AML/CFT requirements resulting in the FIU recommending that the casino’s license be revoked. This high risk assessment is also due to concerns by the authorities that underground casinos and games of chance are operating in Albania. Criminal organization involvement in the running of gaming halls has also been documented.

71. Real Estate Agents – The AML Law covers the residential and commercial real estate sectors as well a construction companies. Less than 8% of real estate transactions are conducted through real estate agents as the majority are private transactions. All real estate transactions must be notarized and subsequently registered with the Central Office for the Registration of Immovable Property that performs the registration of property rights in the Republic of Albania. The GDPML is responsible for AML/CFT supervision of the real estate sector. Many industry representatives consider the real estate sector as high risk for ML. Use of cash is very common in real estate transactions. Anecdotal evidence draws a link between new construction activity and proceeds of crime.

72. Compared to what appears to be higher risks in the overall real estate industry, transactions facilitated by real estate agents may be of slightly lower risk. Real estate representatives met during the assessment indicated that the value of most real estate transactions was below the non-cash reporting threshold of lek 6,000,000 and that most real estate transactions are not facilitated by real estate agents. It should be noted that given the recent economic downturn, growth in the number of real estate agents could be stagnating given difficulties in facilitating sales in the current market and the relatively modest commissions (1-3% of sale price). The GDPML considers both the real estate agents and construction companies at medium risk of being used for ML.

73. Accountants, accounting, and auditing firms – There are currently 131 certified accountants, six foreign auditors and 20 accounting firms. There are also more than 2000 independent accountants that provide various accounting services to domestic and foreign companies operating in Albania. The AML/CFT Law specifically applies to public accountants, independent certified accountants as well as financial consulting offices. The GDPML supervises the accounting sector for AML/CFT purposes. Accountants and auditors are covered for all their activities including activities that are not outlined in Recommendation 12. The entities met during the assessment provided a wide range of services including auditing, accounting and book keeping services, tax consultation as well as involvement in facilitating mergers and acquisitions. More limited activities were conducted related to company formation and management of assets. The GDPML considers their activity as low to medium risk.

74. Lawyers – Advocates are organized in Chambers which are established by the National Chamber of Advocates. The detailed rules on the legal profession practice in accordance with the law are determined in the Charter and “Ethics Code of Advocates” approved by the General Council of the National Chamber of Advocates. The National Chamber of Advocates and the Ministry of Justice keep the register of all advocates and administer the relevant documentation concerning the right to practice the legal profession. The Ministry of Justice is responsible for ensuring that the legal profession is exercised normally and in compliance with the law. The National Chamber of Advocates is a legal entity that carries out its activity independently from the state and is responsible for the regulation and control of the exercise of legal professions in the Republic of Albania. The total number of lawyers is approximately 4000. The Chamber of Advocates supervises advocates for AML/CFT purposes.

75. Attorneys, public notaries, and other legal representatives trigger AML/CFT obligations when they prepare for or carry out transactions for a client in relation to the following activities (for values equal or above to lek 1.5 million or ~ US$15,000):

  • - transfer of immovable properties, administration of money, securities and other assets;

  • - administration of bank accounts;

  • - administration of capital shares to be used for the foundation, operation or administration of commercial companies;

  • - foundation, functioning or administration of legal entities;

  • - legal agreements, securities or capital shares transactions and the transfer of commercial activities.

76. Lawyers are involved in the creation and operation of companies and legal persons, the buying and selling of business entities, and providing a registered office and business address for newly established companies. They are also at times involved in real estate transactions and management of client’s assets. The GDPML considers the sector medium risk of being used for ML.

77. Notaries – Notaries are professionally organized at the local level through the notary chambers functioning in one or more judicial districts and at the national level through the National Chamber of Notary. The local notary chamber comprises all the notaries appointed to exercise their activity under its jurisdiction. The general number of notaries exercising their activity in the Republic of Albania is proportionate to the general number of population. The Minister of Justice determines every two years the general number of notaries for each judicial district and the relative coverage for each municipality and nearby commune. The Ministry of Justice and the National Chamber of Notary, separately, keep registers for notaries and assistants and administer the documentation related to the granting and revoking of the license of exercising the notary activity, their transfer, the compliance with the legal obligations and the disciplinary continuity of notaries and assistants. The total number of notaries is 308. The Minister of Justice supervises notaries for AML/CFT purposes.

78. Notaries are involved in notarizing all transactions related to the sale of moveable and immoveable property including real estate, securities and goods such as cars. This provides notaries with a unique vantage point to observe a large amount of transactions conducted within the Albanian economy. Information reported by notaries also provides an important source of intelligence for the GDPML. Given the wide range of transactions notarized by the profession the sector is considered by the GDPML as highly vulnerable to money laundering.

79. Dealers in precious metals and stones (DPMS) – Individuals or legal entities engaged in the business of precious metals and precious stones have obligations under the AML/CFT Law. The GDMPL has been designated as the supervisory agency for AML/CFT purposes. The exact number of entities in this sector has not been determined. Retail outlets covered by the legislation do not appear to undertake transactions over the US$15, 000 threshold (both cash and non-cash transactions) established by the standard. ML risk in the formal precious metals and stones sector would appear to be low. Industry representatives have expressed concerns that some jewelers operate in the black market. It is believed that the use of cash in these black market operations is prevalent and that these operations would more vulnerable to money laundering. The GDPML considers that the money laundering vulnerability of the sector as being low but additional information on black market activities is required to fully ascertain the level of risk in the sector. Overview of commercial laws and mechanisms governing legal persons and arrangements.

80. This section should contain a description of the types of legal persons and legal arrangements (referred to here as “entities”) that can be established or created, or can own property, in the country. Use tables as appropriate. It should provide information on the basic characteristics of such entities e.g. who has ownership (for example shareholders, which could be legal or natural persons) and control (e.g. directors) and whether and where they are registered and/or require a registered office or agent. Please provide information on the extent to which such entities are prevalent, statistics on numbers and information on their significance, if available, within the financial sector.

1.5. Overview of Strategy to Prevent Money Laundering and Terrorist Financing

AML/CFT Strategies and Priorities

81. The Council of Ministers approved on October 27th the National Strategic Document “On the investigation of financial crime”. The formulation of this strategic document was based on a thoughtful analysis of the following factors:

  • Organized crime activities, the risks that they represent for the Albanian economy, modus operandi, their specific knowledge and forms of organization;

  • Capacities and means that are available to state institutions (human resources as well as mechanisms of internal control);

  • The actual environment in which those two groups of factors interact.

82. The strategic document seeks to create a long term strategic platform and establish a sustainable equilibrium among effective prevention of crime and investigations in the economic and financial domain and is based on the following principles:

  • Effectiveness – by maintaining and strengthening the control systems;

  • Proportionality – by means of concentrating the efforts in areas of priority;

  • Commitment/broad based inclusion – continuous and effective communication with state institutions, law enforcement agencies and civil society.

83. The State institutions involved in the implementation of this strategy will establish standards based on reverence for values such as: Integrity, Commitment and Professionalism.

84. This strategic document sets out medium and long term objectives which serve as the basis for a detailed action plan that outlines activities from 2009-2015. The objectives are as follows:

  • Formulation and harmonization of the legislation with the international standards and recommendations of the international organizations;

  • Further enhancement of the effectiveness of the control and oversight in the money laundering and financing of terrorism area;

  • Increase the professional level and human capabilities of the state institutions involved in the investigation of financial crime;

  • Effective evidencing and documentation of the financial crime investigation;

  • Enhance inter-institutional and international cooperation;

  • Enhancement of the public’s awareness regarding the importance of the fight against financial crime as well as the role of the institutions;

  • Strengthening of the preventive capabilities of the law enforcement agencies and the establishment of the appropriate mechanisms to this end.

85. To ensure the implementation of the objectives of this strategy and the enhancement of the effectiveness of the fight against economic and financial crime, the strengthening and increase of cooperation among law enforcement agencies and state institutions such as: the Interior Ministry, GPO, GDT, GDC, GDPML, SIS, HIDAA and AAASC is of paramount importance. The cooperation with financial supervisory authorities such as the Bank of Albania, Financial Supervisory Authority and private sector groups such as the Albanian Banker’s Association, CPAI, Bar Association, and National Chamber of Notaries is also seen as key to the success of the strategy.

86. The document also outlines the importance of international cooperation and the need for continued collaboration with international organizations such as Interpol, Europol, Moneyval, the Egmont Group, the Group of Countries against Corruption (GRECO), and the Southeast European Cooperation Initiative. Regional cooperation is also cited as vital to the development and strengthening of financial crime investigations.

87. The guidance and coordination of the strategy is undertaken by an Inter-Institutional Technical Group which is comprised of General Directorate for the Prevention of Money Laundering (GDPML), General Prosecutor’s Office, the General Directorate of Customs, the General Directorate of State Police, State Information Service, the Ministry of Justice, the Central Office for the Registration of Immovable Property, the Agency for the Administration of Seized and Confiscated Assets, High Inspectorate for the Declaration and Control of Assets and the Bank of Albania. The Inter-Institutional Committee will be responsible to monitor the implementation of the action plan will also be a forum where operational issues can be discussed.

88. Progress has been realized in all areas of the strategy. Amendments to the AML/CFT Law have addressed some of the concerns outlined in the 2006 MER. The development of a National Risk Assessment is at an initial stage and is slated to be completed by 2011. Most organizations have participated in training programs destined to increase their capacity in the ML/FT fields. Inter-institutional cooperation has been improving with the creation of the Joint Investigation Units, the establishment of the Inter-Institutional Committee and the signing of Memoranda of Understanding to exchange information. The Organized Crime Law was enacted in 2009 and provides a promising mechanism to enhance asset recovery activities.

89. Despite the efforts made in the fight against ML/FT a number of areas outlined in the strategy still remain to be implemented. The strategy has a six year implementation timeframe from 2009 to 2015. In many instances timelines identified within the action plan should be accelerated to enhance the effectiveness of the regime in a more timely fashion. Initiatives to reduce cash usage have been implemented but the prevalence of cash in the economy remains an issue. Staff knowledge and capacity still requires improvement. Enhancements in evidencing and documentation remain at the initial stages of implementation. Inter-agency cooperation could benefit from strengthening in some instances particularly with respect to the relationship between the GDPML and other supervisory bodies. Public awareness initiatives are limited and many reporting entity sectors only have a partial understanding of their obligations. Asset recovery activities are nascent. The strategy has minimal focus on the judiciary (limited to training on international practices concerning financial investigations) which has been identified as one of the impediments to securing ML convictions.

90. Overall the strategy provides a blueprint to address most of the shortcomings identified during the 2006 MER. Although progress has been made in key areas, implementation shouldbe accelerated to address remaining deficiencies.

The Institutional Framework for Combating Money Laundering and Terrorist Financing

91. There are several institutions that are involved in the fight against economic and financial crime whose responsibilities, duties and legal framework are summarized hereunder.

Committee for the Coordination of the Fight against Money Laundering.

92. The Coordination Committee for the Fight against Money Laundering is a policy making body that is responsible for planning the directing the general state policy in the area of the prevention and fight against money laundering and terrorism financing.

93. The committee is chaired by the Prime Minister and consists of the Minister of Finances, the Minister of Foreign Affairs, the Minister of Defense, the Minister of Justice, the General Prosecutor, the Governor of the Bank of Albania, the Director of the State Information Service, and the General Inspector of High Inspectorate for the Assets Declaration and Auditing.

94. The Committee convenes periodically to review and analyze the reports on the activities performed by the GDPML and the reports on the documents drafted by the institutions and international organizations, which operate in the field of the fight against money laundering and terrorism financing.

Ministry of Finance

95. The Ministry of Finance (MoF) formulates and implements the policy of the Albanian Government regarding the state income formation and the management of public funds. Its primary functions related to AML/CFT include membership in the Committee for the Coordination of the Fight Against Money Laundering and the licensing and supervision of activities of private auditing companies, legal persons conducting audit activities, operators of prize gaming, lotteries and casinos. The MoF, through the Supervision Unit of the Games of Chance (SUGC), undertakes the licensing and supervision with respect to the casino activities and operators of prize gaming and lotteries.

Ministry of Justice

96. The Ministry of Justice (MoJ) is organized and functions in compliance with the Constitution of the Republic of Albania, legal provisions on the organization and functioning of the Council of Ministers, the Law on the organization and functioning of the MoJ (Law no. 8678, dated May 14, 2001, as amended) and the legislation in force on the civil service. The Ministry of Justice, based on this legal basis is empowered with drafting and following policies, preparing legal and sub-legal acts and exercising necessary services related to the judiciary, the system of enforcement of judicial decisions, the system of free legal professions, international judicial cooperation and other areas of justice. It is also competent for harmonization and improvement of Albanian legislation through cooperation with other institutions.

97. The MoJ is responsible, inter alia, for the performance of the general state policy in the area of justice, for drafting legislation in this area and for issuing specialized legal opinion on legislation drafted by other line ministries according to their area of competence. The MoJ follows the processes of returning and compensation of property, of registration of immoveable property, of enforcement of civil and criminal judicial decisions, of the publication of the Official Gazette, and of the compensation of the formerly politically sentenced. In so doing it coordinates the work of the following 10 subordinated institutions:

  • Agency for Return and Compensation of Property;

  • Office of Registration of Immoveable Property;

  • State Advocate Office;

  • General Directorate of Prisons;

  • Probation Service;

  • Legal Medicine Institute;

  • General Bailiff’s Directorate;

  • Albanian Adoption Committee;

  • Official Publication Center;

  • Institute for the Integration of the Formerly Politically Sentenced

98. The MoJ through its General Codification Directorate, General Directorate on Justice Matters, and Directorate of Jurisdictional Relations with Foreign Authorities, performs its responsibilities respectively on legislation drafting, supporting the judiciary, and acting as a Central Authority in international judicial cooperation on criminal matters. The MoJ is also responsible for licensing and supervision of Notaries.

Ministry of Foreign Affairs

99. The Ministry of Foreign Affairs (MoFA), formulates and implements the policy of the Albanian Government in the area of foreign affairs, as well as organizes and administers consular services, as so designated. The role of the MoFA in the field of AML/CFT is performed through its membership of the Committee for the Coordination of the Fight against Money Laundering.

100. The MoFA coordinates the signing and implementation of international treaties of the Republic of Albania in the field of AML/CFT, facilitates the membership of Albania within existing international organizations in the area of AML/CFT, and presents the UN Security Council Resolutions in connection with the terrorist financing, that shall be enforced, to the authorized bodies.

Financial Intelligence Unit

101. The General Directorate for the Prevention of Money Laundering (GDPML) is the Financial Intelligence Unit. Its mission is the fight against and prevention of money laundering and terrorism financing through the collection, verification, evaluation, control, and dissemination of information to law enforcement agencies; safeguarding of the information obtained from obliged entities; and overseeing the suspension and freezing of transactions aimed at preventing the transfer, conversion or change of ownership of the property and products generated from criminal activities.

102. GDPML cooperates with other law enforcement institutions such as Interior Ministry, General Prosecutor’s Office, State Information Service, supervisory agencies as well as international partner institutions. It prepares cooperation and mutual assistance programs aimed at preventing money laundering, with other countries, based on ratified international conventions.

103. In order to implement the standards and proper mechanisms for the fight against money laundering and terrorism financing, the General Directorate for the Prevention of Money Laundering has signed memorandums of understanding with several law enforcement agencies in the country as well as with Financial Intelligence Units in other countries.

Albanian State Police

104. Albanian State Police is responsible for ensuring order, fighting organized crime, and guaranteeing the integrity of the borders. The Law on State Police (Law no. 9749, dated June 4, 2007) guarantees the career development and rights in the police as well as prescribes responsibilities among which the prevention, discovery and investigation of crime in line with the criminal code and criminal procedural code, penal offences and their authors.

105. The State Police is equipped with a number of legal and sublegal instruments regarding the organization of police surveillance, application of special investigating techniques, controls, confiscations, flagrant apprehensions, searches, and other penal procedural actions attributed legally and delegated through the prosecutorial institutions. It is the state authority with human and technical capabilities for the implementation of the law.

106. The structures of the State Police is comprised of several departments such as the Department of the Crime Investigation; Department against the Financial Crime; Department against Organized Crime; Department against Serious Crimes; Department for the Protection of Witnesses; Directorate for the Criminal Analysis, Interpol, Europol, Border and Migration Directorate; as well as other supporting and special operation structures.

107. The Directorate against the Financial Crime, which identifies, uncovers, prevents, strikes, and investigates cases of financial crime, money laundering and financing of terrorism, identifies assets obtained through crime and acts to ensure their seizing and confiscation and as such has special importance in the fight against ML and TF.

108. The Albanian State Police formulates and implements the policy of the Albanian Government in the field of fight against crime and infringement of the law, safeguarding public order and security. The Albanian State Police is empowered to perform operative intelligence functions, pursuant to the above mentioned legislation hence it may also deal with ML/TF cases. The Albanian State Police and the Albanian FIU have a Memorandum of Understanding (MoU) in place governing the respective responsibilities of the two bodies in relation to AML and CFT.

General Prosecutor’s Office

109. The Prosecutor’s Office is a centralized constitutional institution that operates in accordance with the organization of the judicial system. The Constitution of the Republic of Albania states that the General Prosecutor is independent and empowered to pursue penal proceedings and represents State’s case in court.

110. The General Prosecutor is nominated by the President of the Republic with the approval of Parliament, while prosecutors are nominated by the President of the Republic based on the proposals of the General Prosecutor.

111. The General Prosecutor approves the structure personnel and functioning guidelines for prosecutors in First Instance Courts, Courts of Appeal as well as General Prosecutor’s Office. It does also issue orders and guidelines for the implementation of duties by the prosecutors.

112. The General Prosecutor’s Office in the Republic of Albania is a unified system empowered to:

  • to initiate criminal proceedings;

  • to ensure the legitimacy with respect to investigation and preliminary examination;

  • to pursue charges in the court;

  • to lodge claims with the courts for the sake of public interests;

  • to dispute court orders, judgments and decisions;

  • to ensure the legitimacy of execution of punishments and other compulsory measures.

113. The prosecution authority is involved in AML/CFT through its membership in the Committee for the Coordination of the Fight against Money Laundering. To this end GPO provides oversight in relation to the legitimacy of investigation and preliminary examination of the ML/TF cases; and the pursuit of criminal charges against the crimes that involve ML/TF in the court.

114. In 2004, a section for the Prosecution of the Serious Crimes was created in order to investigate penal offenses committed by structured groups and criminal organizations. In 2007, the Joint Investigation Unit was created in Tirana’s Prosecutor’s Office, as a specialized structure for the investigation of economic and financial crime, corruption, money laundering and the financing of terrorism. Six additional units similar to the initial one were created in Durrës, Shkodrër, Vlorë, Fier, Gjirokastrër and Korçë. They count among their members’ officers of the Judicial Police, State Police, Customs and Tax authorities as well as contact points in High Inspectorate for the Declaration and Auditing of Assets, State Supreme Audit, General Directorate for the Prevention of Money Laundering and State Information Service.

General Directorate of Customs

115. The Sector for the Prevention of Money Laundering in the Anti-Trafficking Directorate serves as a central unit which gathers, analyzes and reports on the information received from customs branches on cases of transportation of monetary values at the border and suspicious activity. This sector is part of the anti-traffic Directorate and is comprised of on Head of Sector and two specialists. It cooperates with contact points appointed by the Order of General Director of Customs.

116. The information received from customs officers in various branches that serve as points of contact is entered into the sector’s database and is then forwarded to the General Directorate for the Prevention of Money Laundering. In accomplishing its fiscal, economic and preventive mission the Customs Service co-operates with a number of other institutions, in particular with the Border and Migration Police.

117. Custom’s Authority conducts searches regarding transportation of cash and other valuables across national border of the Republic of Albania. This means that if any unusual cross-border movement of gold, precious metals or stones is detected the Customs authorities are notified. The customs authorities based on the collaboration they have with the Border and Migration Police arrange all the measures needed to evaluate, control and prevent this phenomenon.

118. Customs Service conducts searches for cash transit at the border. Citizens submit a completed standard form providing information on their identity (the commercial entity that they represent, as applicable), the amount transferred and currency, the reason for transfer, etc. The data collected is recorded in respective data bases; copies of the declaration forms for cash transit at the border are sent to GDPML. The legal threshold for the declaration of cash at the border is lek 1,000,000 or the equivalent in foreign currency.

119. In order to improve the overall performance as well as ensure a unified implementation of rules regarding the declaration in the border crossing points, a number of contact points were appointed by the Director General. Customs are also a subject of the AML/CFT Law and report to the FIU, regarding the cross border declaration of the monetary values as well as other valuables for terrorism financing related cases.

General Tax Directorate

120. General Directorate of Taxation (GDT) is vested with the authority to apply tax legislation in the Republic of Albania. At the same time GDT has the authority to administer national taxes, and tariffs, as prescribed in the relevant laws.

121. The main goal of the General Taxation Directorate is to assist the taxpayers to pay their tax obligation in accordance with the existing tax legislation and to ensure that the income obtained through those obligations will be disbursed in the state budget while offering the taxpayers an efficient and effective system.

122. The tax administration cooperates closely with the Customs, the Treasury, Regional Transportation Directorate, Interior Ministry, banks, the Chamber of Commerce, business associations as well as the partner administrations abroad.

123. The Directorate of Investigation and Internal Auditing (anti-corruption) created recently is aimed at striking at economic crime and the phenomenon of corruption. The mission of the Tax Investigation Directorate is to pursue and implement the penal legislation in the domain of taxation, in order to encourage and carry out, directly or indirectly the fulfillment of obligations by taxpayers in accordance with the tax legislation. The establishment in 2009 of a Tax Investigation Directorate has further strengthened the capabilities of GDT vis à vis the investigation of financial crime in general and money laundering in particular.

State Information Service

124. State Informative Service (SIS) is created based on the known principle that a country needs an effective, professional, and able institutions that provide intelligence, in accordance with the legal obligation, to state agencies and institutions that serves the national security. In order to fulfill this constitutional obligation and guarantee the national security as well as the political and economic interests, State Informative Service collects intelligence within Albania and outside.

125. State Informative Service does not carry out activities that have a police or military character. The activities of this institution are performed in accordance with the fundamental principles of legality, objectivity, and secrecy. The organization of its internal structures are in compliance with the requirements for the fulfillment of its mission, especially that of the protection of national security.

126. The SIS is engaged in the prevention of the laundering of proceeds derived from organized crime and particularly in the fight against the financing of terrorism. The Director of the State Information Service is also a member of the Committee for the Coordination of the Fight against Money Laundering.

High Inspectorate for the Declaration and Control of Assets

127. The High Inspectorate for the Declaration and Control of Assets became operational based on the Law on the Declaration and control of assets, financial obligations of elected and public officials (Law no. 9049, dated April 10, 2003). The High Inspectorate under the guidance of the General Inspector, administers the declaration of assets, financial obligations, conducts auditing controls directly, collects data, performs investigations and administrative inquiries regarding the declarations of persons that are legally obliged to disclose their private interests. HIDAA cooperates with auditing as well as other institutions responsible for fighting corruption and economic crimes.

Bank of Albania

128. The Bank of Albania performs the function of a Central Bank. The objectives of BoA are:

  • to achieve and maintain price stability;

  • to formulate, adopt, and execute the monetary policy of Albania, which shall be consistent with its primary objective;

  • to formulate, adopt, and execute the exchange arrangement and the exchange rate policy of Albania;

  • to license or revoke and supervise banks that engage in the banking business in order to secure the banking system stability;

  • to hold and manage its official foreign reserves;

  • to act as banker and adviser to, and as fiscal agent of, the Government of Republic of Albania; andto promote the smooth operation of payments systems.

129. The Bank of Albania is the supervisor responsible for monitoring and ensuring AML/CFT compliance by banks, foreign exchange bureaus, and money remittance businesses.

Financial Supervision Authority (FSA)

130. The Albanian Financial Supervisory Authority (FSA) was established in 2006 and is an independent public institution. The FSA is responsible for the regulation and supervision of non-banking financial system and the operators of the sector. The FSA reports to the Albanian Parliament.

131. The main areas of activity are regulation and supervision:

  • of insurance market and its operators;

  • of securities market and its operators;

  • of private supplementary pensions market and its operators;

  • of other non-banking financial activities.

132. The primary goals are the protection of consumers’ interests, the promotion of sustainability, transparency and reliability in insurance area, securities and private supplementary pensions’ area. Their activity is characterized by professionalism, transparency, and high standard services for all interested parties.

133. The FSA is also a supervisory authority for companies involved in life insurance or re-insurance, their agents and intermediaries as well as retirement funds. In order to accomplish its supervisory role, FSA carries out on site inspections to verify the compliance of the above mentioned entities with the obligations set forth in the provisions of the law, reports to the responsible authority about any suspicion, information or data related to money laundering or financing of terrorism for the activities falling under their jurisdiction. The FSA also takes the necessary measures to prevent an ineligible person from possessing, controlling and directly or indirectly participating in the management, administration or operation of an entity. It also cooperates and provides expert assistance in the identification and investigation of money laundering and terrorism financing, in compliance with the requests of the GDPML. It cooperates in the drafting and distribution of training programs in the field of money laundering and terrorism financing.

Supervision Unit of the Games of Chance

134. The Supervision Unit of the Games of Chance (SUGC) is subordinate to the Minister of Finance and is responsible for the control and monitoring of games of chance in Albania. The Supervision Unit of the Games of Chance exercises the following functions:

  • supervises and controls the activities of entities that organize games of chance in Albania;

  • decides the amount of the fine in cases when violations of the provisions are noticed;

  • checks and verifies whether the equipment of games of chance are certified by accredited authorities, in accordance with rules established. It certifies the equipment of bets, according to technical specifications set forth by instruction of the Minister of Finance;

  • supervises and controls entities authorized by the Minister of Finance to play the promotional games of chance;

  • maintains the register of entities that exercise this activity and of halls opened bythem throughout the territory of the country, the number of machines / equipment for any game hall and their specific characteristics, the number of employees and their relevant qualification, the number of national lottery tickets for sale and sold, the number of lots drawn by the organizer of the national lottery and organizers of television bingo;

  • checks and verifies income and profit of entities licensed for games of chance, and settlement of tax liabilities from them, reconciled in cooperation with the Directorate General of Taxation and its branches in the districts.

135. The SUGC is also responsible to notify the Director General of Taxation of all data related to taxes. The SUGC also sets fines, stops the activity and confiscates the equipment when a natural or legal person undertakes unlicensed gaming activities.

136. The structure and the personnel of the SUGC are approved by the Prime Minister on the proposal of the Minister of Finance. The Director of the SUGC is appointed by the Minister of Finance. The SUGC is composed of control inspectors, inspectors for the certification of games equipment and inspectors for implementation of coercive measures. The SUGC is responsible for ensuring compliance with the AML/CFT Law for the gaming industry.

The National Chamber of Advocates

137. The National Chamber of Advocates is responsible for regulating and controlling the legal profession in Albania. The Chamber is responsible, inter alia, for adopting a Code of Ethics for the legal profession; determining which lawyers can practice their profession; analyzing the activities of chambers of lawyers and determine whether it is in accordance with the Law on Legal Profession; coordinating the activities of chambers of lawyers, in order to guarantee the protection of the rights and interests of lawyers, and lawyers chambers; and adopting general rules for the development of the qualification exam to practice the profession of lawyer. The Chamber of Advocates is responsible for ensuring compliance with AML/CFT requirements in the legal profession but does not undertake AML/CFT examinations.

Agency for the Administration of the Seized and Confiscated Assets (AASCA)

138. The Agency for the Administration of the Seized and Confiscated Assets is subordinated to the Minister of Finance. Its main activity is the administration of seized and confiscated assets. The Agency exercises its activity in cooperation with other institutions involved in the process of administration of the seized confiscated assets, such as the courts, prosecutor’s office, banks, local government units as well as the local offices for the registration of the immovable properties, where the seized and confiscates assets are located. A civil confiscation involves the confiscation of assets that belong to persons suspected of participation in organized crime activities and their relatives or persons related to them.

139. A special fund is established for the prevention of criminality and legal education, which is administered by the Minister of Finance, relying on the supporting documentation provided by the Advisory Committee on the Measures against Organized Crime. The Agency is responsible for the verification and the preparation of the documentation regarding the requests for funding of projects from the special fund for the prevention of prevention of criminality as well as oversees their implementation.

Ministry Responsible for the Law Relating to Legal Persons and Arrangements

140. Based on the Law on the National Registration Center (NCR) (Law no.9723, dated May 3, 2007) the Ministry of Energy, Trade and Economy is responsible for the establishment and supervision of the Registration Center. The NRC is responsible for maintaining the Commercial Register in Albania. It performs registration functions for fiscal, social insurance, healthcare, and labor purposes. It is also responsible for disclosing the registered data to the public.

Central Office for the Registration of Immovable Property

141. The Central Office for the Registration of Immovable Property is an institution within the Ministry of Justice that performs its activity in accordance with the Law on the Registration of real estate (Law No.7843, dated July 13, 1994) and is responsible for the real estate registration process in Albania.

Approach Concerning Risk

142. There has been a limited application of the risk based approach to combating money laundering and terrorist financing in Albania by the GDPML and the BoA. Albania has not yet undertaken a systemic review of the ML and TF threats and risks that exist within the financial sector and other sectors operating in the country thus minimizing the impact of risk in policy development. The GDPML is spearheading the development of a National Risk Assessment through the Committee for the Coordination of the Fight against Money Laundering which is slated for completion in 2011. The model for the development of the risk assessment has not yet been established.

143. The AML Law requires obliged entities to conduct a risk assessment by specifying categories of clients and transactions against whom they will apply enhanced due diligence including for higher-risk countries, transactions and customers. Limited emphasis is being placed on ensuring compliance with the risk assessment requirement and obliged entities understanding of this obligation is very limited. There are no mechanisms by which obliged entities can apply reduced customer due diligence standards.

144. Elements of a risk-based supervisory approach are being incorporated by the Bank of Albania and the GDPML. Prior to 2010 the BoA incorporated AML/CFT risk in its prudential risk assessment. In 2010 it created a unit to monitor entities’ AML/CFT risk and drafted an AML/CFT supervisory manual that incorporates a risk based approach. Information provided by the GDPML is currently insufficient to conduct a comprehensive AML/CFT risk assessment thus impeding the implementation of a risk based supervisory approach.

145. The GDPML has also started to undertake a risk based approach to determine where their supervisory resources are focused. The GDPML’s annual examination plan is based on an assessment of AML/CFT risk, the size of the entity, the type of activities performed, the exposure to and occurrence of cash transactions, sector related risks, vulnerabilities associated with particular products offered and prevalence of business relations with Politically Exposed Persons (PEPs). This has resulted in the GDPML focusing its supervisory activities on particular sectors such as travel agencies and NGOs in 2006; commercial banks, car dealers, notaries and exchange bureaux in 2007; notaries in 2008; real estate and construction companies in 2009; and construction companies and exchange bureaux in 2010. This early stage of implementation of a risk based supervisory approach will be supplemented by the recent administration of self assessment questionnaires that will allow for a more comprehensive risk analysis of entities.

Progress since the Last IMF/WB Assessment or Mutual Evaluation

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2. LEGAL SYSTEM AND RELATED INSTITUTIONAL MEASURES

Laws and Regulations

2.1. Criminalization of Money Laundering (R. 1 – rated PC and R. 2 rated LC in the 2006 MER)

2.1.1 Description and Analysis9

Summary of 2006 MER Factors Underlying the Ratings and Recommendations

146. In the previous assessment report, the assessors concluded that, although the ML offence was largely in line with the UN Conventions, there were a number of flaws in the provision and its implementation. It was not clear that there was jurisdiction to undertake cases when the predicate offence occurred outside Albania if the offender was not an Albanian citizen. Legal persons did not yet have liability because secondary legislation had not been adopted. There was concern that a conviction on the predicate offence might be necessary in order to prove that property was the proceeds of crime. In addition, questions were raised concerning coverage of self-laundering and the ability to infer knowledge, intent or purpose from objective factual circumstances. The assessors noted that Article 287’s ancillary offence provision did not include assistance. Finally the authorities had only demonstrated modest use of the ML provisions and were not maintaining all relevant statistics.

Legal Framework:

  • Criminal Code Articles 287 and 287/b (hereinafter CC).

  • Law No.9754 of June 14, 2007 “On the criminal liability of legal persons” (Legal Persons Liability Law).

Criminalization of Money Laundering (c. 1.1—Physical and Material Elements of the Offense):

147. Article 287, para 1 of the CC criminalizes as “laundering of the proceeds of the criminal offence” the following conducts:

Laundering of the proceeds of the criminal offence committed through:

  • a) the conversion or transfer of an asset that is known to be a product of a criminal offence with the purpose of hiding, concealing the origin of the asset or aiding to avoid legal consequences related to the commission of the criminal offence;

  • b) the concealment or disguise of the true nature, source, location, disposition, movement or ownership of an asset or rights that are the proceeds of a criminal offence;

  • c) performance of financial activities and fragmented/structured transactions to avoid reporting according to the money laundering law;

  • d) advice, encouragement, or public call for the commission of any of the offences described above;

  • dh) the use and investment in economic or financial activities of money or objects that are the proceeds of a criminal offence.10

148. A different provision of the CC, Article 287/b criminalizes “whoever purchases, receives, hides or, in any other way, appropriates for himself or a third party, or assists in purchasing, taking, hiding of money or other goods, knowing that another person has obtained these money or goods, as a result of a criminal offence”.

149. Article 287 para 3 provides for the application of the Article “in cases where the person that has committed the offence the proceeds derive from, cannot be a defendant, cannot be convicted or there is a cause that wipes out the offence or one of the conditions for criminal proceedings of such an offence is missing.” A similar provision is also found in Article 287/b, which states that “the lack of responsibility of the person or the barrier for the prosecution of the related criminal offence does not exclude the responsibility of the person that committed the criminal offence of appropriation of stolen money or goods in the meaning of this article”.

150. ML is adequately criminalized on the basis of the Vienna and Palermo Conventions. This extends to both the conversion or transfer of property knowing it is proceeds as required, for instance, by Vienna Convention Article 3(1)-(b) (i), and to the concealment or disguise of such property as required by Vienna Convention Article 3(1)-(b) (ii).

151. However, these Conventions also require that, subject to constitutional principles and basic concepts of the legal system, States criminalize acquisition, possession or use of property knowing at the time of receipt that it was derived from an offence. See, e.g., Article 3(1)-(c) (i), Vienna Convention. Article 287/b applies only to acquisition and, in the prosecutor’s view, only to stolen goods not all proceeds. Representatives of the judiciary did not share the view that it was limited to application in the case of stolen goods. Article 287 para 1 (dh) covers one aspect of use, that is “use and investment in an economic or financial activity.”

152. Until 2007—when it was repealed through Law No. 9686 of February 26, 2007—Article 287 had a subsection (subsection c) which had criminalized acquisition, possession and use of any proceed (“gaining, possession or use of an asset when it is known that it is a crime proceed”). As discussed later on, the repealed provision did not limit its application, as Article 287/b does, to situations where “another person” has obtained the property as a result of a criminal offence.

Type and Kind of Property that may be Laundered (c. 1.2):

153. Meaning of Asset. The CC does not provide a definition of “asset” or “goods” that applies to criminal offence provisions. However, from a grammatical perspective, the Albanian word translated as “asset” used in the statute has a very broad meaning. It includes the concept of wealth which is anything of value. It was explained that it is the general practice not to have definitions in the CC. Rather, statutory terms are considered by looking to grammatical meaning, the meaning in the context of the specific CC chapter and the purpose of the legislation. Combining the latter two, the context and a legislative purpose of implementing obligations under international conventions, the meaning of terms as contemplated by the international instruments to which Albania is a party would apply. There is no monetary threshold and thus assets regardless of value are included.

154. Property Derived Indirectly. Article 287 covers “assets derived from criminal offence.” Article 287/b covers “money or other goods, knowing that another person has obtained these money or goods, as a result of a criminal offence.” Although no definition of these terms is provided that would indicate they extend to property derived indirectly from the offence, the prosecutors take the position that these terms are broad and include property derived indirectly. They cite Article 36 para 1 (b) of the CC which identifies the assets to be confiscated upon conviction. That provision defines criminal offence proceeds as “including all property as well as documents or legal instruments that prove title or other interests in the property that is derived or acquired directly or indirectly from the commission of the penal offence.” There is neither a judicial decision nor relevant practice on coverage of indirect proceeds.

Proving Property is the Proceeds of Crime (c. 1.2.1):

155. The criminal provisions on ML do not provide that a conviction for the predicate offence is required. The prosecutors confirmed that, in principle, a conviction on the predicate offence is not necessary to prove that property is the proceeds of crime. However, the courts require that prosecutors prove in full and with specificity the predicate offence activity in the course of a criminal prosecution for ML.

156. The authorities explained that, in practice, the proof requirements to establish in a ML prosecution that a predicate criminal offence occurred and that the offence produced proceeds are significant. The prosecutor must establish a specific crime not just a criminal offence and the specific acts that constituted a criminal offence (for instance the specific drug trafficking transactions) as well as the specific proceeds that resulted from the activity.

157. It is worth noting that in a civil confiscation case involving the 2004 Organized Crime Law (the law, as discussed later in the report, was replaced with a new law in 2009), a Supreme Court decision raised uncertainty within the Albanian law enforcement community whether in order to seize/confiscate assets, a specific link between each proceed and a specific episode of illegal activity would need to be established. A new Organized Crime Law was enacted in part to address this issue. In any event, judicial practice as it has developed in Albania, involves a high degree of specificity in the establishment of the predicate offence.

158. In addition, when the predicate offence is committed abroad, the prosecutors indicated that, although they could also try to prove the occurrence by establishing in full the elements of the predicate offence as in the case of a predicate offence committed domestically, a conviction in the foreign jurisdiction for the predicate offence, if one existed, would be preferred by the courts. In practice, it is difficult to prove an event occurring in a foreign jurisdiction.

159. Prosecutors indicated that in general courts would be very conservative, also with regard to the exceptions stipulated by Article 287 and 287/b. As mentioned earlier, Article 287 para. 3 provides that the ML offence applies even when the predicate offender “cannot be a defendant, cannot be convicted or there is a cause that wipes out the offence or one of the conditions for criminal proceedings of such an offence is lacking.” A similar provision exists also in the case of Article 287/b. These provisions are meant to allow a prosecution for ML offences even if there are circumstances that would have precluded a criminal responsibility for the offender of the predicate activity. This would be the case, for instance, if the predicate offender has died or legally lacked competence to face charges or the statute of limitations barred the action. Even in such situations the prosecutor must still establish the elements of the criminal activity with specificity including in matters where the predicate activity occurred in the distant past. It is often difficult to proceed in such situations because establishing the predicate activity is difficult with the passage of time.

160. Because of the need to establish in full the predicate offences, in practice prosecutors tend to prosecute the predicate activity and the ML together, and do not pursue stand-alone ML criminal cases.

The Scope of the Predicate Offences (c. 1.3):

161. The ML provision provides for an “all-offences” approach. By the reference in the ML provision to “criminal offences”, every criminal offence provided for in the CC constitutes a ML predicate. The CC covers the FATF designated categories as follows:

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162. As is apparent from the chart above, provisions exist for all designated categories except for insider trading and market manipulation.

Threshold Approach for Predicate Offenses (c. 1.4):

163. As noted above, Albania does not use a threshold approach but covers all offences under its criminal law.

Extraterritorially-Committed Predicate Offenses (c. 1.5):

164. The authorities confirmed that in applying the phrase “proceeds of a criminal offence” that appears in Articles 287 and 287/b, the reference to “criminal offence” includes not only domestic conduct but applies also to extraterritorially--committed predicate offences if the same conduct would be an offence under Albanian law. It is only necessary that the same conduct be established as a criminal offence in both countries. It is not necessary that Albanian criminal jurisdiction extend to the conduct that constitutes the predicate activity for the Albanian ML offence to apply to the laundering of the proceeds of the foreign predicate conduct. However, in the instances set forth in Articles 6 (applicable to conduct by Albania citizens abroad) and 7 (applicable to specifically defined conduct of foreigners abroad) of the CC, Albanian criminal jurisdiction does extend to such extra-territorial predicate conduct and it is possible for such conduct to be the subject of an Albanian prosecution. In these instances, dual criminality does not apply.

165. Although the predicate activity in the Albanian ML prosecution can occur outside Albania, the predicate activity must be proven with the same high degree of specificity as is required in domestic prosecutions, and, as it is a criminal prosecution, beyond a reasonable doubt. In these circumstances, where the predicate activity has occurred outside of Albania, it can be difficult in practice to establish it with this specificity and to the required standard in the absence of a foreign conviction and sentence.

Laundering One’s Own Illicit Funds (c. 1.6):

166. The language of Article 287 is all encompassing. It makes no exception in the case of a person laundering his or her own proceeds. Jurisprudence has confirmed that there can be prosecutions for self-laundering.

167. In 2007, the First Instance Court of Fier issued a decision that punished a person for self-laundering of the proceeds of the crime of “exploitation of prostitution.” Law enforcement authorities continue to develop cases that involve only self-laundering.

168. The second ML offence provision, Article 287/b, however, by its terms does not apply to self-laundering. It requires that a person know that “another person” obtained goods as a result of a criminal offence.

Ancillary Offenses (c. 1.7):

169. The CC provides criminal responsibility for attempts (Articles 22 - 23), and for collaboration which under Albanian law involves an agreement between two or more persons to commit a criminal act (Articles 25 - 28). There are a number of kinds of collaboration under the CC – organizers, executors, helpers, and instigators.

170. Helpers are those who “through advice, instructions, concrete means, abolitions of obstacles or promises to hide collaborators tracks or things relevant to the criminal act, help to carry it out.” Instigators are persons who instigate other collaborators to commit a criminal act. For a helper or instigator to be criminally responsible, there must be an agreement between two or more persons, although that agreement need not be formal. Simple acts to aid and abet or facilitate or to counsel commission do not appear to be encompassed under the CC provisions that deal with collaboration generally.

171. In addition to these general CC provisions under Chapter IV on collaboration, the ML offences themselves incorporate directly some ancillary conduct. Article 287 para. 1(d) criminalizes the “advice, encouragement or public call” for the ML offences that are specified in Article 287 (1) (a)-(c). In the case of Article 287/b offences, the provision provides that persons are liable if they assist in the conduct.

172. The CC provisions do not cover in full the required ancillary conduct. This is because they require an agreement between two or more persons and, as noted above, simple acts to aid and abet or facilitate or to counsel commission are not encompassed by the CC collaboration provisions. The gap left by the CC provisions is filled only partially by the ancillary conduct that is incorporated directly in the ML provisions themselves as noted above. As an example, in the case of offences under Article 287, aiding and abetting and facilitating are covered only if there is already collaboration – cooperation or an informal arrangement or agreement involving two persons. For Article 287/b offences, “assistance” is covered. This appears to extend to aiding and abetting and facilitating, but not to counselling. There is no practical experience with the use of these ancillary offence provisions in the case of ML. This existing framework has gaps in coverage for ancillary conduct. Where coverage is lacking, this is not based upon a fundamental principle of domestic law.

Liability of Natural Persons (c. 2.1):

173. The ML offences extend to natural persons who knowingly engage in ML activity. The knowledge element for both Articles 287 and 287/b is the perpetrator’s knowledge that the property is proceeds of an offence.

174. As noted in the 3rd assessment report, in addition to liability for intentional ML, under Article 14 CC there is also liability for negligent conduct. Article 14 provides that persons are guilty if they commit a criminal act intentionally or because of negligence. Article 16 CC sets forth what is meant by negligence as follows: “A criminal act is committed because of negligence when the person, although he does not want its consequences, foresees the possibility of their occurrence and with little consideration attempts to avoid them, or when he does not foresee the consequences, but according to the circumstances, he should and could have foreseen them.”

175. In this respect, the Albanian provisions go beyond the requirements of the Vienna and Palermo Conventions. There have not been any prosecutions for ML using the negligence standard.

The Mental Element of the ML Offense (c. 2.2):

176. The Albanian CPC at Article 152 provides that the court is to evaluate evidence “based upon its conviction after their examination in their entirety.” This Article also provides that indications must be important, accurate and in accordance with each other for them to establish a fact. Judicial authorities confirm that, with the application of this CPC provision which reflects the “intimate conviction” standard of civil law systems for evaluating evidence, it is possible for the mental element of criminal conduct to be inferred from objective factual circumstances.

Liability of Legal Persons (c. 2.3):

177. Article 45 of the CC provides for the responsibility of legal persons for crimes performed on behalf of or for their benefit. It also provides that sanctioning measures and procedures are to be regulated by a special law.

178. At the time of the 3rd round assessment, as an implementing law was not yet in place, legal persons were not yet subject to criminal sanction. In 2007, Albania adopted the Legal Persons Liability Law. Legal persons are now subject to criminal liability and sanctions for all offences in CC, including ML and all the FATF designated categories of offences. The law defines rules on liability, criminal proceedings, and types of penalties for legal persons that commit criminal offences. A legal person is liable for criminal offences committed on behalf of or for its benefits or by its subsidiaries or representatives and by persons who represent, lead or administer the legal person.

Liability of Legal Persons should not preclude possible parallel criminal, civil, or administrative proceedings (c. 2.4):

179. Article 2 para.1 and 3 of the Legal Persons Liability Law makes clear that civil and trade law also applies to legal persons, and that administrative sanctions may be imposed. Accordingly, parallel proceedings against legal persons are possible. In one case, an entity was sanctioned administratively and excluded from participation in public procurement for a two year period.

Sanctions for Money Laundering (C.2.5):

180. Article 287 of the CC provides the sanctions for the ML criminal offence for natural persons. They are:

  • three to 10 years of imprisonment and a fine from 500 thousand to lek 5 million (US$5,000 – 50,000) for the basic offences (Article 287 para.1);

  • five to 15 years of imprisonment and a fine from 800 thousand to lek 8 million (US$8,000 – 80,000) if the same offence is committed during the exercise of a criminal activity, in collaboration, or more than once (Article 287 para. 2); and

  • five to 15 years of imprisonment and a fine from lek 3 million to 10 (US$30,000 – 100,000) if the same offence has caused grave consequences (Article 287 para. 2). 11

181. For Article 287/b offences, the punishment is six months to three years of imprisonment and a fine of up to lek 100 000 (US$1,000). Grave consequences is not defined in Albanian law but in the context of robbery is recognized under Decision No. 5 2003 of the Supreme Court to be lek 1 million (US$10,000) in the case of an individual and lek 2 million (US$20,000) in the case of a juridical entity.

182. Under the Legal Persons Liability Law, legal persons are subject both to principal sanctions of a fine and termination and to supplementary sanctions. Article 12, provides for the following sentences:

  • if the offence is punishable by not less than 15 years of imprisonment, a fine from lek 25 to 50 million (US$250,000 - 500,000);

  • if the offence punishable by not less than seven years up to 15 years of imprisonment, a fine from five million to lek 25 million (US$50,000 – 250,000); and

  • if the offence is punishable by seven years of imprisonment maximum, a fine of lek 500 thousand to five million (US$5,000 – 50,000).

183. Under Articles 8, 11 and 12 of the Legal Persons Liability Law, a legal person may be terminated if it was founded with the purpose of committing the criminal offence; it has largely used its activity to serve the commission of the criminal offence; or the commission of the offence caused serious consequences. A sentence that includes termination may be issued if the commission of the criminal offence has occurred more than once, or in cases of other aggravating circumstances set forth in Article 50 of the CC, for instance where the act occurs after sentencing for another crime or the commission of the crime involves an abuse of public office. Under Article 45 of the CC, the liability of legal persons is also without prejudice to the criminal liability of natural persons who committed or collaborated in the commission of the same offence.

184. In all instances, under Article 36 CC, confiscation of instrumentalities and proceeds is mandatory.

185. These sentences appear to be consistent with the sanctions for other financial crimes under Albanian law. For instance fraud is punishable by imprisonment of up to five years or if committed with accomplices, repeated or producing specified harm, by three to ten years, or if causing serious consequences by 10 to 20 years. Fines for fraud are from lek 100,000 to three million (US$1,000 to 30,000). Extortion is sanctioned with two to eight years or if certain kinds of force are used by seven to 15 years. For extortion, the fine is from lek 600,000 to three million (US$6,000 – 30,000) or if there are serious consequences, two million to five million (US$20,000 to 50,000).

186. The available sanctions as far as imprisonment appear proportionate and dissuasive, but would need to be applied in a way that serves as a deterrent. The fines for natural and legal persons are consistent with those for other financial crimes in Albania. In the case of legal persons the fine for the most grave activity may not exceed US$500,000. It should be noted, however, that administrative fines, which are available in addition to the criminal fines, do not have a maximum cap and hence a higher administrative fine could be applied. For the imprisonment terms, they are comparable to those that apply elsewhere in the region. In addition, if the Council of Ministers recommended CC amendments are adopted, the minimum sentence will be increased.

187. Effectiveness of the sanctions is not yet established. This is because since 2006, there have been convictions under Article 287 only in four cases involving four individual defendants. The information available on the sanctions imposed in these cases is that the prison terms were in the range of two to five years. During the period 2007-2009, no fines were imposed in relevant cases.

Statistics (applying c. 32.2):

188. Statistics provided by the Prosecutor’s Office on ML penal proceedings at the investigative and trial stages is as follows:

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189. These statistics show a total of 17 cases in which 24 defendants were convicted over a period of four and three-quarters years. Most of the convictions - 13 cases that involve 20 defendants - were on charges under Article 287/b of the CC. The information available on two of the four in which there was a conviction under Article 287 is that the Court in Fier decided a case in 2007 that involved self-laundering (Decision 109 of April 23, 2007, First Instance Court of Fier). A 2008 case involved the conviction of one defendant in a ML matter involving domestic fraud. The assets involved could not be located and the fraudulent transactions were conducted using cash.

190. The authorities provided the following table which represents a summary of the offences they consider to be the major source of illegal proceeds in Albania. It covers the period 2006 through the first half of 2010.

Offences that are Major Sources of Illegal Proceeds
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Additional Element—Would an act that occurs overseas which does not constitute an offense overseas, but would be a predicate offense if it occurred domestically, lead to an offense of ML (c. 1.8):

191. There is no practice with respect to laundering the proceeds of actions that do not constitute a crime where committed but constitute a crime in Albania. However, Articles 7 and 7/a of the CC provide for criminal liability under Albanian law for ML acts committed outside of Albania by foreign citizens if the acts are against the interest of the Albanian State or an Albanian citizen.

Effectiveness:

192. Although, as the chart on proceeds-generating offences above demonstrates, the authorities have registered a number of cases that involve proceeds generating crimes in the period from 2006 to 2009 and in many such cases persons were charged, the authorities have undertaken only 124 investigations involving 44 suspects for ML in relation to these and other predicate criminal activity in that period. Although the number of investigations for ML is increasing, for instance in 2009 50 such investigations were opened, actual results thus far are quite limited. The Prosecutor’s Office has reported that for matters under the basic ML criminal provision (Article 287), since 2006 only four cases have been sent to court. A conviction was obtained in each case – one in each year 2007 through 2010. There have been 20 defendants convicted in 13 cases that were initiated under Article 287/b which relates to acquisition, possession or use of stolen goods.

193. These figures must be evaluated also in terms of the substantial risk that ML is occurring given the fact that organized criminal groups are active in Albania and that Albanian nationals that are part of such groups but operate elsewhere return proceeds to Albania. In addition, the risk for the laundering of proceeds is enhanced because of the relatively high levels of drug transit and considerable level of production, corruption and trafficking in women and minors that occur in Albania.

194. Considering the risks and the statistics provided for the predicate offences, it is clear there has been only modest use of the ML criminal provisions in the period since the last assessment, and that there continues to be a reluctance to use the provisions as an additional charge against a predicate offender. In addition, there has only been a single stand-alone ML prosecution.

195. The reasons for the few ML cases ultimately reaching the trial stage or for which a conviction has been obtained is several-fold. The Joint Investigative Unit that focuses on ML matters was only established in mid-2007. With it, the authorities began to give more concerted attention to developing and instituting ML criminal prosecutions. However the most concrete results from this organizational change will likely be in future years. Also, prior to 2007, prosecutorial and police resources devoted to ML cases were more limited. In addition, developing the expertise necessary to pursue various aspects of complex financial criminal activity has been a more recent priority as Albania has turned to use of a Joint Investigative Unit for implementing ML law enforcement initiatives.

196. One critical factor is likely the deterrent effect to prosecutors and investigating officers in developing cases because of the high degree of proof that is considered necessary in Albania to establish before the court the elements of ML. As mentioned earlier, although it is clear that a predicate offence conviction is not necessary to proceed and facts may be proven through indices (circumstantial evidence) if they are accurate, comprehensive and compliant with each other, as a practical matter the prosecutor is called upon to establish with specificity all the elements of the predicate activity (time, place, event, kind of criminal activity) and the specific proceeds (including amounts) in order to establish that a criminal offence occurred and that the offence produced proceeds. Once all these elements are established, the prosecutor must then establish the specific laundering activity.

2.1.2 Recommendations and Comments:

197. The authorities should:

  • Enact a provision or amend existing provisions so that self-laundering is covered for the Article 287/b offences;

  • Extend criminalization of use beyond the use and investment in economic or financial activities;

  • Amend Article 287/b so that it is clear that its coverage extends beyond acquisition, possession or use in the case of stolen goods;

  • Enact provisions to cover insider trading and market manipulation;

  • Make clear that property derived indirectly is covered, if needed by way of amendment;

  • Enact provisions so that required ancillary activity is covered in situations where currently it is not (for instance applies to facilitating even in the absence of an agreement);

  • Provide training for courts, prosecutors and judicial police that instruct regarding practices in Europe and elsewhere that will permit better use of existing provisions under more liberal standards;

  • Utilize Article 287/b CC more pro-actively by instituting proceedings for use of property knowing that it was obtained as a result of a criminal offence particularly in subject matter areas where there is a significant criminality problem;

  • Address the issue of the demanding proof levels by considering the legislative and practical approaches taken in other civil law systems where for instance the amount of the proceeds may be estimated, and confiscation may extend to proceeds of other criminal activity once a single criminal offence is established.

198. The authorities should also:

  • Evaluate whether the criminal fines available in the case of convictions of legal persons for ML will be sufficient in all instances.

2.1.3 Compliance with Recommendations 1 and 2

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2.2 Criminalization of Terrorist Financing (SR. II rated as PC in 2006 MER)

2.2.1 Description and Analysis

Summary of 2006 MER factors underlying the ratings and recommendations

199. In the 2006 assessment, a general concern was that the FT provisions then in force did not cover all elements required by the FT Convention and SR II. Specifically, the report noted that it was not clear that existing provisions covered the financing of individual terrorists, financing for extra-territorial terrorist acts or domestic collection for terrorists or terrorist organizations that were located outside Albania. There was also a concern that the provisions did not extend to legal persons nor was it clear they would be applied in a way such that knowledge, intent or purpose could be inferred from objective factual circumstances. In the assessment report it was also noted that Article 230/a was not sufficiently specific in that it lacked a definition of “funds”.

Legal Framework:

  • UN Convention for the Suppression of the Financing of Terrorism (“FT Convention”) (ratified in 2002).

  • Article 230 CC - criminalizes terrorist acts (amended in 2007).

  • Article 230/a CC - (financing of terrorism) (added to the CC in 2003).

  • Article 230/b CC- (hiding of funds and other wealth/goods that finance terrorism).

  • Article 230/c CC- (giving information from persons carrying public functions or persons on duty or in exercise of the profession).

  • Article 230/ç CC - (performance of services and activities with identified persons) (added to the CC in 2004).

  • Article 230/d CC - (collection of funds for the financing of terrorism) (added to the CC in 2007).

  • Article 231 CC - (recruiting of persons for the commission of acts with terrorist purposes or for the financing of terrorism). (added to the CC in 2007).

  • Article 234/a and 28 CC - (terrorist organizations).

  • Law No.9754 of June 14, 2007 “On the criminal liability of legal persons” (“Legal Persons Liability Law”).

  • Law No. 9258 of July 15, 2004, “Law on Measures for the Suppression of Terrorism Financing” (“SFT Law”).

Criminalization of Financing of Terrorism (c. II.1):

200. Since the 2006 assessment, as relevant to FT, there have been two changes, both additions to the CC12: Article 230/d which criminalizes the collection of funds, and Article 231 which prohibits recruiting for financing activities.

200. The provisions that criminalize the financing of terrorism are Articles 230/a and 230/d. Article 230/a, which relates to the provision of support, in unchanged since the 3rd round assessment. However, that Article relies on Article 230 to define the activities for which support is prohibited, and Article 230 has been revised. Article 230/d, which covers collection for terrorist acts or organizations, is new. The text of the relevant provisions is as follows:

Article 230 Actions with terrorist purposes

“The commission of the following acts, that have the purpose to intimidate the public or compel an Albanian or foreign governmental agencies to do or refrain from doing any act, or seriously destroy or destabilize, essential political, constitutional, economical, and social structures of the Albanian State, or another State, institution or international organization, is punishable by no less than 15 years of imprisonment or by life imprisonment.

The actions for terrorist purposes include but are not limited to:

  • a) actions against person, that might cause death or serious body harm

  • b) hijacking or kidnapping

  • c) serious destruction of public property, public infrastructure, transport system, information system, fixed platforms on the continental shelf, private property in large scale

  • d) hijacking of aircrafts, vessels, and other means of transport

  • e) the production, possession, procurement, transportation or trading of explosive materials, fire arms, biological, chemical and nuclear weapons as well as the scientific research for the production of weapons of mass destruction, named above”.

Article 230/a Financing of terrorism

“Financing of terrorism or its support of any kind is punished by not less than 15 years of imprisonment or with life imprisonment and with a fine from lek 5 million up to lek 10 million”.

Article 230/d Collection of funds for the financing of terrorism

“The collection of any type of financial means, directly or indirectly, for the financing of terrorist organizations or the commission of acts for terrorism purposes, is punishable by 4-12 years of imprisonment and by a fine varying from lek 600,000 to lek 6 million”.

201. Other provisions exist in the CC that are related to FT.13

202. Although the FT criminal offence provisions as revised parallel FT Convention requirements much more closely than the provisions under review in the 2006 assessment, they continue to fall short of meeting fully the required FT Convention scope.

203. First, although Article 230/a makes “financing” a criminal act in the specified circumstances and Article 230/d prohibits collection of “any type of financial means”, in the absence of any court decision or practical application, it is not clear that these terms will cover the full extent of “funds” as required under the FATF recommendations. The authorities refer to the definition of funds in Article 2, para. 13 of the law No 9917 of May 19, 2008 “On the prevention of money laundering and terrorist financing” (AML/CFT Law) which provides a definition closely paralleling that reflected in the FT Convention and SR II. However, as noted in the 2006 report, this definition is part of an administrative rather than criminal legal order and although it might be used as a reference point by a court in determining meaning, there is no certainty that the full extent of funds would be recognized. Moreover, a provision within this group, Article 230/b CC, in differentiating “funds” from “other goods”, suggests there is a concept of “funds” that is narrower than funds as “assets of every kind” as per the FT Convention’s definition.14

204. Secondly, while as noted above, the relevant provisions now address collection (Article 230/d) and provision (Article 230/a) of funds in separate provisions, it is not clear that these provisions apply in all necessary situations as required by the standard.

Financing of Terrorism

205. Article 230/a (provision of funds) provides simply that FT or its support is punishable. While it is clear that any provision that results in a terrorist act is covered, there is no indication that a provision with the intention that funds be used for terrorist acts, regardless whether the terrorist act is actually committed or attempted is covered. The authorities have indicated that the Council of Ministers proposed CC amendments address this issue.

206. Third, there are a number of issues with Article 230 CC, the article that defines what constitutes a terrorist act. These issues on the definition of such acts affect the financing activities that are criminalized under Articles 230/a and 230d. Article 230 subsection (a) refers to actions against a person that “might” cause death or serious body harm. However, the FT Convention requires coverage for actions that “are intended to” cause such harms. The language of Article 230 CC would not cover amateur terrorist acts which could not or would not cause the harms, but nonetheless were intended to do so. The authorities have indicated that the proposed CC amendments also address this.

207. Other other issues also arise because of the relationship between revised Article 230 which defines acts with terrorist purposes and the provisions that relate to the financing of prohibited acts. Not all of the acts that constitute offences under the treaties annexed to the FT Convention are reflected in CC Article 230 subsections (b) – (e). For instance, the 1988 Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation requires that the act of disrupting the services of the airport if such an act endangers or is likely to endanger safety at that airport be covered (Article 2, para.1). The 1973 Internationally Protected Persons Convention specifies the activity of violent attacks on the private accommodations or means of transport of protected persons that are likely to endanger such persons’ person or liberty. The 1979 Convention against the Taking of Hostages covers threats to continue to detain a hostage. The Convention on the Physical Protection of Nuclear Material requires penalization of the possession or handling of nuclear material not only nuclear weapons. In these instances, as examples, some of the acts set forth in the annexed treaties are not covered by the Albanian CC provision which defines the terrorist acts for which financing must be prohibited. The authorities note that proposed CC amendments also address this.

208. Another such issue is that Article 230 imposes specific purpose or intent requirements on all terrorist acts including the conduct that must be made offences under the treaties annexed to the FT Convention. The current provisions apply the purpose/intent requirements found in Article 2 para. 1(b) of the Convention also to the conduct specified in Article 2 para 1(a) of the Convention (incorporating conduct specified in annexed treaties). Such specific intent or purpose requirements should not apply in the case of Article 2 para. 1(a) treaty offences.

209. Also, the offence as defined in Article 230 has a purpose to compel “Albanian or foreign governmental agencies” rather than the Albanian or a foreign “government.”

210. Article 230 also states that actions for terrorist purposes “include but are not limited to.” This Article would incorporate actions that are not specified, but could relate to other actions that legal provisions specify as ones with terrorist purposes. Although this appears to lack the specificity that is necessary to describe actions for which a person would have criminal liability, in the civil law and Albanian legal framework this may provide flexibility to encompass some actions not specifically mentioned in Article 230.

211. Finally, Article 230 refers to “actions with terrorist purposes” and Article 230/a uses the term “terrorism”. The authorities explained that the terms have exactly the same meaning. As explained, provisions within a Chapter (here Chapter VII “Terrorist Acts”) are considered together with initial provisions possibly using longer and more expressive terminology and the later references being of a more succinct nature.

212. Article 230/d in prohibiting the collection of “any type of financial means” to commit acts with terrorist purposes appears to mean that it would cover any kind of wealth from whatever source whether legitimate or ill-gotten. Without judicial interpretation or practice, however, it is difficult to know for certain that property acquired both legitimately and illegitimately would be covered.

Financing of Individual Terrorists as Reflected in SR II

213. Albania’s CC provisions cover the financing of individual terrorists only to the extent that the funds are provided or collected to support terrorist activities. The provisions that might apply to criminalize the financing of individual terrorists, Articles 230/a and 230/d, do so only if funds are provided with the intention to support a terrorist act. In the absence of such intent, the general provision of support to an individual terrorist, for example shelter, food or education, does not fall within the scope of the provisions. Although the provisions comply with the requirements of the FT Convention, they do not cover the full extent of the scope of SR II.

214. Although making funds available to a person designated domestically as a terrorist is an administrative violation under (SFT Law), as described in the part of this report that relates to SR III, this is limited to situations where there is an order from the Minister of Finance with respect to the funds.

215. In addition, Article 230/ç prohibits the giving of funds and other wealth for the performance of financial services as well as of other transactions with identified persons towards whom measures of terrorism financing are applied. The reference in Article 230/ç to persons towards whom measures of terrorism financing are applied is a reference to the domestic list that is issued by the Council of Ministers under the SFT Law. Currently that list is the same as the UN Consolidated List. Article 230/ç however prohibits financial support for the provision of such services rather than the provision of the services.

Financing of Terrorist Organizations as Reflected in SR II

216. Article 234/a makes the financing of a terrorist organization punishable. Article 230/d prohibits the collection of funds to finance a terrorist organization.

217. A terrorist organization is defined in Article 28 (2) of the CC. Article 28 was revised in 2007 to provide a simpler and broader definition of terrorist organization and to require only two rather than the three persons required in the case of other criminal organizations. It is “a special form of the criminal organization composed of two or more persons that have sustainable collaboration in time, aiming at the commission of actions with terrorist purposes.”

218. These provisions are clear in prohibiting both collection for and provision of funds to a terrorist organization. With the revision of the CC provision, in the case of a terrorist organization, only two or more persons are necessary.

Attempt and Ancillary Offenses under Article 2 (4) - (5) FT Convention

219. Article 2 paras. 4 - 5 of the FT Convention requires that States criminalize attempts to commit the FT conduct, and for both completed or attempted conduct, participation as an accomplice, the organization or direction to others to commit an offence, and contributions to the attempt or completed conduct through association or conspiracy.

220. The general provisions of the CC at Articles 22 - 28 on attempts and collaboration, discussed in relation to the ML offence apply to all offences including the FT offences. See, the discussion of this criterion under Recommendation 1, and the issues noted therein.

Predicate Offense for Money Laundering (c. II.2):

221. As indicated in the discussions under Recommendation 1 above, any offense under Albanian law may constitute a predicate offense for ML. FT acts that constitute offences under the Albanian CC are thus predicate offenses for ML.

Jurisdiction for Terrorist Financing Offense (c. II.3):

222. The FT criminal provisions can be applied to financing activities as to which Albania has criminal jurisdiction to proceed (actions occurring Albania, those by Albanian citizens wherever located, those against certain Albanian interests) regardless of whether the act or organization being financed is located in Albania or elsewhere.

The Mental Element of the TF Offense (applying c. 2.2 in R.2):

223. The discussion of the mental element set forth in Recommendation 2 applies in relation to the offence of FT as well. The intentional element of FT is inferred by the court as it assesses the evidence. The court analyzes both objective and subjective elements of the criminal offence.

Liability of Legal Persons (applying c. 2.3 & c. 2.4 in R.2):

224. Legal persons are also liable for engaging in FT. As noted in the discussion under Recommendation 2, criminal liability is extended to legal persons and this applies with respect to all offences including FT. At the time of the 2006 MER although Article 45 CC provided for responsibility for legal persons, an implementing law had not yet been enacted. The implementing law, the Legal Persons Liability Law, was enacted in 2007.

Sanctions for FT (applying c. 2.5 in R.2):

225. The sanction for violating Article 230/a (financing of terrorism) is not less than fifteen years of imprisonment or with life imprisonment and a fine from lek 5 million up to lek 10 million.

226. For violations of Article 230/d (collection of funds for the financing of terrorism), the sanctions are four to12 years of imprisonment and a fine from lek 600,000 to 6 million. Article 230/b which criminalizes hiding funds that finance terrorism provides for four to 12 years of imprisonment and with a fine from lek 600,000 to 6 million; or if committed in the exercise of a professional activity, in cooperation or more than one time, by from seven to 15 years of imprisonment and a fine from lek one to 8 million; or if it causes serious consequences by no less than 15 years of imprisonment and a fine from lek five to 10 million.

227. These sanctions are substantial and exceed the sanctions many countries have established. There is a significant disparity between the sanctions for the provision of funds in Article 230/a of a minimum of 15 years compared with that for collection of funds of four to 12 years set forth in Article 230/d. The sanctions have potential to be dissuasive. However, with only a single conviction for hiding funds, neither dissuasiveness nor effectiveness of the criminal provision that is required by the FT Convention prohibiting the collection or provision of funds could be established.

Statistics (R.32):

228. There have been no prosecutions or convictions for FT under Articles 230/a or 230/d in the three year period 2006 - 2009. In 2009, however, one person was convicted of violating Article 230/b CC for concealing funds used to finance terrorism. In January 2008, a criminal trial commenced in Albania against Hamzeh Abu Rayyan on charges of concealing funds used to finance terrorism. In 2009 he was convicted in relation to his activities in administering funds for a person on the UNSCR list, Yassin al-Kadi. Authorities are awaiting a decision of the High Court to execute the decision of the Court of Appeals. The sentence imposed was four years imprisonment and a fine of lek 600,000.

229. Statistics provided by the prosecutor’s office indicate there have been only a few investigations in the period 2006 - 2009 as set forth in the chart below.

230. As the statistics below demonstrate, for prosecution-level investigations relating to FT since 2006, there have been five matters with only two identifiable persons. In each instance upon further investigation, it was found that the allegations were not supported.

FT investigations based on the confirmation provided by GPO.

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2006 – Four investigations were initiated regarding two persons. One of these proceedings was dismissed in 2006 while three cases were transferred to 2007.

2007 – Three proceedings transferred from the preceding year. One of those was dismissed and two were transferred to the following year.

2008 – Three proceedings (two were transferred from 2007 and one registered in 2008). All three proceedings were dismissed.

2009 – There were no investigations.

231. Statistics provided by GDPML during the on-site mission are set forth below. They indicate that there have been a total of 11 STRs received in the period 2006 -2010 that relate potentially to FT. Of these, one referral was made in 2010 to the police for additional investigation based upon a possibility that ML had occurred.

STRs regarding FT during 2006 -2010

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Effectiveness:

232. The authorities have prosecuted one case relating to FT activities, and were successful in gaining a conviction. Because the case involved the charge of concealing funds used to finance terrorism rather a charge relating to financing itself, it is uncertain how prosecutions under the provisions that address directly the financing of terrorism, Articles 230/a and 230/d, would work in practice. There have been a few matters that reached the level of investigation after being registered but none of the matters, after further investigation, were found to be substantiated. The FIU has had only 11 STRs relating to FT in the period 2006-2010. All were received in 2009 and 2010. A single referral was made, and this was for a ML investigation.

233. With a history in the first half of the 2000s of the government freezing assets of terrorist financiers, curtailing activities of suspect Islamic NGOs, and expelling individuals suspected of having links to terrorism and the historical backdrop after the 1991 fall of the Communist regime of in-country activities by some Al Qaeda operatives and the presence of Islamic non-governmental organizations (some of them fronts for Al Qaeda-linked activities), Albania remains at risk regarding possible financing of terrorism activities.

234. The authorities appear vigilant regarding the presence of these risks, but they have thus far not been able to develop actionable criminal FT cases other than the one indicated above. Authorities noted that securing evidence to prove that funds are to finance a terrorist activity rather than a charitable or other legal cause is a challenge and often not possible. In at least one circumstance a request to foreign partners for supporting evidence also did not produce results. It was also noted that even when some evidence exists, it is often not possible to identify a perpetrator. In these circumstances, the authorities prefer to sequester funds based upon a UN designation, when this is possible, rather than using the criminal FT provisions.

235. The authorities do investigate matters that come to their attention and appear ready to act to undertake prosecutions in all FT matters for which there is sufficient evidence.

2.2.2. Recommendations and Comments

236. The authorities should:

  • Enact amendments to the FT criminalization provisions in Chapter VII of the CC provisions, so that:

    • Article 230/a applies regardless of whether the terrorist act is actually committed or attempted;

    • it is clear that the financing prohibited extends to the full extent of “funds” as that term is defined in the FT Convention;

    • the financing of individual terrorists regardless of whether the funds are provided or collected to support terrorist activities is criminalized.

  • Enact amendments to Article 230 CC so that:

    • it covers each specific action that is required to be criminalized under all the treaties that are annexed to the FT Convention;

    • it covers actions “intended to cause” death or serious bodily harm, not simply that “might” cause this;

    • the specific purpose or intent requirement set forth in Article 2 para. 1 (b) of the FT Convention is not required in the case of the conducts specified in the annexed treaties (Article 2, para. 1(a));

    • the purpose set forth in the Article is to compel the Albanian or foreign government rather than “Albanian or foreign governmental agencies”.

  • Either revise CC provisions on ancillary offences to deal with gaps in coverage as set forth in Recommendation 1, or incorporate coverage for all required ancillary conduct (facilitating in the absence of an agreement) directly in the CC Chapter VII – Terrorist Act provisions.

  • Work towards developing additional cases as domestic intelligence, coordination with foreign partners working on FT and terrorism matters, and STR reporting provide such opportunities.

237. The authorities should also:

  • Consider making it clear that the Article 230 reference of “actions with terrorist purposes” is coextensive with the Article 230/a use of the term “terrorism”.

2.2.3. Compliance with Special Recommendation II

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2.3 Confiscation, Freezing and Seizing of Proceeds of Crime (R.3 rated as PC in 2006 MER and 32)

2.3.1 Description and Analysis

Summary of 2006 MER factors underlying the ratings and recommendations

238. The issues noted in the 2006 MER were that: no explicit provision addressed confiscation from third parties or provided legal protection for bona-fide third parties; provisional measures might not be available early enough in an investigation, and were subject to automatic cessation; prosecutors could not apply such measures directly in cases of urgency; and deficiencies in the material elements of FT could limit the application of measures in such cases. In addition, the assessors noted that the authorities had not established effective implementation nor were necessary statistics maintained in a systematic manner.

Legal Framework:

  • CPC Articles 208 – 220, 274 – 276.

  • CC Articles 30 and 36.

  • Law No. 10192 of December 3, 2009 “On preventing and striking at organized crime and trafficking through preventive measures against assets” (“Organized Crime Law”).

Confiscation of Property Related to ML, FT or Other Predicate Offences Including Property of Corresponding Value (c. 3.1):

239. Albania uses its general CC and CPC provisions to address confiscation for ML and FT in criminal proceedings. Criminal confiscation is governed by Articles 30 and 36 of the CC. These articles make confiscation a supplemental punishment and provide for mandatory confiscation of direct and indirect proceeds or value, instrumentalities, and objects of the offence. CPC Articles 208 - 220 (relating to securing evidence) and 274 - 276 (relating to seizure of criminal assets and instrumentalities) govern procedural aspects of confiscation and preliminary measures. None of these provisions have changed since the 3rd round assessment.

240. Article 36 CC provides for confiscation of direct and indirect proceeds, laundered property, instrumentalities used or intended for use in the commission of a crime and property of corresponding value. This applies to all offences including ML, FT and other predicate offences. That provision is explicit that “objects that have served or are specified as means for committing the criminal offence”, “criminal offence proceeds”, “any other asset whose value corresponds to the criminal offence proceeds”, and “objects” are all subject to confiscation.

241. A major development since the previous assessment is the adoption a new Organized Crime Law. This law provides an alternative method to recover criminal property by a court order imposing the preventive measures of sequestration and ultimately confiscation. Under the law a civil standard applies. Article 3 of the Law provides that its provisions can be used in the case of the following crimes in the CC:

  • Articles 333, 333/a - Participation in a criminal organization or structured criminal group;

  • Articles 234/a, 234/b - Participation in terrorist organizations or armed bands;

  • Chapter VII, special part, CC - Commission of other actions for terrorist purposes;

  • Article 109 - Kidnapping or keeping hostage a person;

  • Article 109/b - Forcing through blackmail or violence the submission of wealth (extortion);

  • Article 110/1 – Trafficking in persons;

  • Article 114/b - Trafficking of women;

  • Article 128/b - Trafficking of minors;

  • Article 278/a - Trafficking of weapons and munitions;

  • Article 282/a - Trafficking of explosive, burning, poison, and radioactive matters;

  • Article 283 - Manufacturing and selling narcotics;

  • Article 283/a - Trafficking of narcotics;

  • Article 284/a - Organizing and leading criminal organizations;

  • Article 114/a - Exploitation of prostitution with aggravated circumstances;

  • Article 287 - Laundering of crime proceeds.

Confiscation of Property Derived from Proceeds of Crime (Property in Third Party Hands) (c. 3.1.1 applying c. 3.1):

242. The CC provisions apply to any proceeds from the crime as well as laundered property, instrumentalities and property of corresponding value. All such assets are subject to confiscation regardless of whether the assets are held or owned by the defendant or by a third party. Although the CC provisions do not address with direct language the issue of third parties holding or owning such items, Articles 30 and 36 apply to committal means and proceeds without exception and so to assets wherever they may be found (whoever may hold or own them). The practice in Albania confirms that they apply when the property is held or owned by a third party. In a criminal prosecution, the prosecutor will be obliged to show that the property in third party hands is the proceeds or instrumentalities of crime or its substitute. Property held by third parties has been sequestered in a number of cases and in matters for instance involving the misappropriation of stolen goods, has been seized, confiscated and returned to the injured party or legal owner.

243. Also, one of the CPC provisions, Article 210, is explicit on the issue of third party-held property, in the case of bank accounts. It provides that the authorities, through a court order, may seize assets in a bank “if there are reasonable grounds to think that they are connected to a criminal offence, even though they do not belong to the defendant or are not under his name.”

244. Article 36 (1) and (4) CC provide for confiscation of property derived directly or indirectly from proceeds including income, profits or other benefits from proceeds.

245. When the Organized Crime Law is being applied, property in third party hands is also reachable. Under Article 3 the law applies not only to the assets of person as to which there exists a reasonable suspicion relating to one of the various covered crimes, but also to related persons, and to natural or juridical persons where there is evidence that assets held relate to the illegal activities of the person under investigation.

Provisional Measures to Prevent Dealing in Property Subject to Confiscation (c. 3.2):

246. CPC Article 274 provides for a court to order the seizure of property of any kind that is covered by CC Article 36, that is property that ultimately may be confiscated in a criminal case. It may also order that any item connected to a criminal offence be seized if it might aggravate or prolong the consequences of the offence or facilitate the commission of other offenses. Article 300 of the CPC also provides that the judicial police in cases of urgency may seize material evidence and items connected with the offence. Within 48 hours, the police must have the prosecutor affirm the seizure and an appropriate sequestering order is obtained. A sequestration order immobilizes assets through a freeze or seizure.

247. Provisional measures are available early in an investigation prior to the registration of an offence through use of Article 300 of the CPC and through the usual procedure of the prosecutor, at the request of the law enforcement officer who would like the assets sequestered, immediately registering the criminal offence, thereby moving the case into the formal investigative stage. The prosecutor then immediately seeks the order from the court under CPC Article 274 for the sequestration of the assets. The prosecutor needs only a minimum level of data to register the offence, a suspicion that a criminal offence occurred, and his decision is not subject to challenge. In practice, prosecutors often will register an offence at law enforcement request and then immediately seek a sequestration order. In essence, the police undertaking the preliminary investigation can secure these measures by seeing that the case moves to the next stage.

248. In urgent matters, under Article 210 of the CPC, the prosecutor may also order seizure of bank records and assets in bank accounts. This is not subject to later validation by the court, and has been used in some cases.

249. In addition, as noted above, in many situations the authorities are now able to seize and confiscate property independently of the criminal process using the preventive measures provisions of the Organized Crime Law. In the case of the serious crimes to which it applies, including ML, FT and many proceeds-generating crimes including drug and human trafficking, a sequestering of assets, and ultimately confiscation, is available independently of the criminal investigation or proceeding through a civil process.

250. Under Article 10 of the Organized Crime Law, the court is to order a sequestering of assets if it finds:

  • a reasonable suspicion that the person is involved in criminal activity;

  • that the person has assets or income that do not correspond to lawful activities; and

  • either there is a real danger that the assets will be alienated or lost, or a reasonable suspicion that the person’s continued possession or use of the assets constitutes a danger or will facilitate criminal activities.

251. Thereafter, the prosecutor seeks verification of the person’s income/assets and reviews the source of income. If there is a disparity, a reverse burden applies with the person called upon to demonstrate the lawful origin of the assets.

252. The Organized Crime Law may be applied autonomously of any criminal proceeding. If assets also become subject to measures in a criminal proceeding, the measures under the Organized Crime Law are suspended.

253. Under Article 22 para. 1 (j) of the AML/CFT Law, GDPML is also empowered to order a temporary blocking of transactions or financial actions for a period of up to 72 hours. If it believes a criminal offence is involved, it refers the case to the GPO.

254. Article 276 of the CPC provides for an appeal by the person whose property has been seized. A seizure is lifted automatically if the court fails to rule within 15 days. As recommended, following the 3rd round assessment, the authorities undertook a review of how this provision had worked in practice. They indicate that it has not resulted in the release of proceeds on procedural grounds because of a court delay. It is the view of the assessors, however, that there is no guarantee going forward that courts will always rule in a timely manner.

255. In the case of sequestrations under the Organized Crime Law, under Article 27, appeals are available and regulated by the Code of Civil Procedure.

256. As noted in the 3rd round, assessment even when there is an acquittal or a case is dismissed, proceeds and instrumentalities may be confiscated.

Ex Parte Application for Provisional Measures (c. 3.3):

257. The authorities have indicated that provisional measures are issued on an ex parte basis and without prior notice. This has been the long accepted practice in matters under the CC and CPC, although no CPC provision addresses this explicitly. Until recently, there had never been a challenge. Currently in a case under review in the Supreme Court, the issue is being considered. The lower court upheld a provisional measure in a criminal case that was challenged on the basis that the defendant was not represented as it was imposed.

258. For proceedings under the Organized Crime Law, under Article 12, the request is to be examined by the court with the participation of the prosecutor only.

Identification and Tracing of Property Subject to Confiscation (c. 3.4):

259. Law enforcement authorities use their powers to secure documents from State offices and provisions of the CPC to identify and trace property. In the case of matters arising under the CC, police authorities stated they were able to secure documents from State offices as part of their preliminary investigation. Such offices are required, pursuant the Law on State Police and sector specific laws as the Law on Banks and the AML/CFT law, to provide such documents. The authorities then rely to identify and trace assets on the provisions of the CPC which provide generally for the gathering of evidence for criminal prosecutions. See the discussion of general law enforcement powers under Recommendation 28 of this report.

260. Provisions exist for special investigative techniques (interception, etc.). However, there are no specific provisions that would allow investigators to secure information on whether a person is a customer of a financial institution or to monitor activity in financial accounts for specified periods of time. In practice, financial institutions provide this information to investigators based upon letters of request from the prosecutor. Failure to abide by such a letter of request would be considered an obstruction of justice. In Albania there is not a centralized register of bank account holders.

261. Article 210 of the CPC provides for access to bank records based upon a court order or in urgent matters through the action of the prosecutor alone, once there is a showing of reasonable grounds for a connection to a criminal offence. Bank secrecy is lifted when this provision is applied. The Law on Banking at Article 91 para. 2 provides for the lifting of bank secrecy in the case of criminal investigations and prosecutions. In addition, law enforcement authorities indicated that bank information may be available because a STR was filed. The authorities indicated that through these means they are able to secure necessary information to trace and identify assets, and the assessors consider that these provisions would permit adequate access.

262. For the analysis of the provisions concerning access to information which is protected by professional secrecy, refer to Recommmendations 26 and 28 and the issues noted therein. Article 211 of the CPC provides for an assertion of a duty relating to professional secrecy, and access to such information if there is a conclusion the assertion is without merit.

263. The authorities indicated they have ready access to the information they need to identify and trace proceeds and instrumentalities. Since Article 36 of the CC provides for a broad range of assets that may be confiscated, CPC provisions are available to support the gathering of the evidence not only of the criminal activity but of the proceeds, substitute proceeds, etc., and as a practical matter such provisions have been used in investigations of proceeds of crime.

264. For matters arising under the Organized Crime Law, under Article 9, any person, entity or public office so requested must provide data and documents deemed essential for the investigation. This provision permits authorities to undertake actions that assist in locating and identifying property subject to confiscation.

Protection of Bona Fide Third Parties (c. 3.5):

265. For assets that are sequestered for purposes of confiscation in a criminal proceeding whether they be proceeds or instrumentalities, under Article 276 of the CPC any person who asserts an interest in the property is entitled to appeal the order within 10 days of receiving knowledge. The court is obliged to rule on the challenge within 15 days from its receipt of the documents. In addition, Articles 58 - 68 of the CPC provide for injured parties to intervene in a criminal proceeding to assert a civil dispute.

Power to Void Actions (c. 3.6):

266. Article 677 of Albania’s Civil Code provides that a contract is deemed to be illegal if it is in contradiction with the law, the public order or if the contract is serving as a means to avoid the application of a legal norm. If a contract is entered into in order to prejudice the recovery of property, it would be in contradiction of the law and it could be put aside.

Statistics (R. 32):
Property Frozen, Seized and Confiscated in ML Cases

267. In the first ten months of 2010 (January – October) after the adoption of the Organized Crime Law in late 2009, 26 civil confiscation matters were sent to the Serious Crimes Prosecutor’s office. Seven of these relate to ML. Prior to the enactment of the new Organized Crime Law, ML was not a covered offence, so there were not properties frozen or confiscated in ML cases using civil procedures before 2010. There has been no property confiscated in the ML cases prosecuted under Article 287.

268. GDPML maintains statistics on the assets frozen by the GDPML in ML-related matters, and of the sequestered assets, those that are ultimately seized and confiscated. The data for the last four years is as follows:

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269. This chart indicates that on the GDPML level in the four year period since 2007, there have been 51 orders freezing property issued by the GDPML. The assets frozen in total in US$ equivalent are about US$7.64 million and US$1.03 million and 1060 m2 for real property (apartments). The prosecutor’s office does not maintain statistical data on other assets that might be seized during the investigative stage of a criminal case.

Property Frozen, Seized and Confiscated in FT Cases

270. During 2006 - 2010, the period since the last assessment, there have been no restraints or confiscations of FT assets in criminal FT cases. In this period, there has been a single FT criminal case. In that case, which is addressed in the section on criminalization of FT, a conviction was obtained for concealing funds to finance terrorism. There was neither a restraint of assets nor a criminal confiscation in that case. However, the funds the defendant concealed (in the amount of lek 10,089,604 (US$100,896) are frozen in a related matter in which the Minister of Finance issued an order based upon UN Security Council Resolution 1267 listing.

Property Frozen, Seized and Confiscated in Predicate Offence Criminal Cases

271. The Albanian State Police provided information that in the first ten months of 2010 (January – October 2010), 26 civil confiscation matters were sent to the Serious Crimes Prosecutor’s office as follows:

  • 6 - criminal organizations (two arms trafficking; drug trafficking)

  • 11 - drug trafficking

  • 7 - money laundering

  • 2 - women trafficking and exploitation

272. Ten of these (of which five involve ML as the involved offence) have reached the court. In each instance a sequestration was ordered by the court. The total amount involved is approximately US$8.2 million. In addition, the Agency for the Administration of Seized and Confiscated Assets provided data on the total properties seized, seized and released and actually confiscated under the previous and current Organized Crime Laws. The data provided is as follows:

273.

Properties Seized According to Organized Crime Laws (previous and current):

Year 2008

  • One decision of the court.

  • One person is concerned.

  • One bank account seized.

  • The value of seized properties is about 607, 500 Albanian lek.

Year 2009

  • One decision of the court.

  • One person is concerned.

  • One car seized.

  • The value of properties assets is about 2, 000, 000 Albanian lek.

Year 2010

  • 10 decisions of the court.

  • 13 people are concerned.

  • 50 properties seized.

  • The value of seized properties is about 728, 188, 939 Albanian lek.

Total seizure in three year

  • 12 decisions of the court.

  • 15 people are concerned.

  • 52 properties seized.

  • The value of seized properties is about 730,796,439 Albanian Lek, as follow:

  1. 28 bank account with a value of 420, 887, 399 Albanian lek.

  2. Nine vehicles with a value of 7, 440, 000 Albanian lek.

  3. Three commercial companies with a value of 50, 000, 000 Albanian lek.

  4. 12 real estate properties with a value of 252,469,040 Albanian lek.

Properties Confiscated According to Organized Crime Laws (previous and current):

Year 2005

  • One decision of the court.

  • One person is concerned.

  • Two properties are confiscated.

  • The value of confiscated properties is about 2, 785, 000 Albanian lek.

Year 2006

  • Two decisions of the court.

  • One person is concerned.

  • Five properties are confiscated.

  • The value of confiscated properties is about 2, 223, 514 Albanian lek.

Year 2007

  • One decision of the court.

  • One person is concerned.

  • One property is confiscated.

  • The value of confiscated properties is about 865, 000 Albanian lek.

Year 2008

  • Three decisions of the court.

  • Three people are concerned.

  • Eight properties are confiscated.

  • The value of confiscated properties is about 62, 274, 820 Albanian lek.

Year 2009

  • No confiscation have been taken

Year 2010

  • Two decisions of the court.

  • Two people are concerned.

  • 12 properties are confiscated.

  • The value of confiscated properties is about 14, 305, 000 Albanian lek.

Total confiscation in five year

  • Nine decisions of the court.

  • Eight people are concerned.

  • 28 properties are confiscated.

  • The value of confiscated properties is about 85, 476, 849 Albanian lek, as follow:

  • a. Eight bank account with a value of 2, 621, 529 Albanian lek.

  • b. 13 vehicles with a value of 6, 895, 000 Albanian lek.

  • c. Seven real estate properties with a value of 75, 960, 320 Albanian lek.

Properties Recovered (seized then released) According to Court Decisions:

Year 2006

  • One decision of the court.

  • One person is concerned.

  • One property is recovered.

  • The value of recovered property is about 78, 000, 000 Albanian lek.

Year 2007

  • One decision of the court.

  • One person is concerned.

  • Two properties are recovered.

  • The value of recovered properties is about 8, 794, 718 Albanian lek.

Year 2008

  • Six decisions of the court.

  • Six peoples are concerned.

  • 14 properties are recovered.

  • The value of recovered properties is about 280, 102, 095 Albanian lek.

Year 2009

  • Four decisions of the court.

  • Four peoples are concerned.

  • 12 properties recovered.

  • The value of recovered properties is about 41, 339, 514 Albanian lek.

Year 2010

  • Four decisions of the court.

  • Four peoples are concerned.

  • 41 properties are recovered.

  • The value of recovered properties is about 345, 674, 970 Albanian lek.

274. The value of all recovered (seized then released) properties in five years, according to court decisions, is 753, 911, 297 Albanian lek.

275. This data show that a total of properties seized under the Organized Crime Law in the period 2008-2010 was about lek 730,800,000 or about US$7.31 million. For the lengthier five year period of 2005-2010, lek 85,500,000 or about US$855,000 was actually confiscated. For the four year period, 2006 to 2010, lek 754,000,000 or US$7.5 million was seized and then released.

276. Information on the level of predicate activity for the major proceeds-generating crimes in the period 2006-2010 is set forth in the chart found in the statistics section of Recommendation 1. In this period, over 7100 persons were charged with such crimes.

Additional Element (c. 3.7):

277. As noted above, the Organized Crime Law that was enacted in 2009 provides a form of non-conviction based preventive confiscation in the case of some kinds of criminal activity. Among the situations when its provisions may be applied are when the criminal activity is ML or participation in a criminal or terrorist organization.

278. The Law permits the court to sequester and ultimately to confiscate assets that are beyond that which a person can demonstrate he acquired legitimately. Under Article 21, persons to whom the Law is being applied must demonstrate the lawful origin of their property.

Effectiveness:

279. The enactment of a new Organized Crime Law since the 2006 MER that provides for civil preventive confiscation in the case of many serious offences has added significantly to a framework for addressing criminal assets.

280. Although the framework provided by the CC and CPC, as noted in the previous assessment, lacks an explicit reference to reaching proceeds in the hands of a third party, it is clear that it calls for the sequestering and confiscation of proceeds wherever found and that any person with a claim on assets that are sequestered may appeal to the court for a lifting of the freeze. In addition, practice has confirmed that assets in the hands of third parties are reachable. The new Organized Crime Law also has specific provisions for reaching assets held by related persons and other involved persons or entities.

281. The assessors are of the view that sequestering is available as needed even relatively early in an investigation (because a formal investigation can be commenced with a relatively low level of evidence/information and prosecutors will register the offence and open the investigation as needed in order to seek the sequestering of assets even at an early stage) and, in cases of urgency, even prior to the registration of a criminal case (because judicial police can use Article 300 of the CPC).

282. While the provision for the automatic cessation of provisional measures remains, the authorities confirmed that in practice the court has acted as needed. A provision that requires that the court act within 15 days rather than providing for automatic cessation would ensure that, going forward, an inappropriate lifting does not occur for technical reasons.

283. Although the sequestering of assets remains the prerogative of the court (the prosecutor as a usual matter is not invested with this authority and may do so only in cases of urgency), the freeze authority of the GDPML provides the ability to freeze bank and accounts and other assets on a temporary basis. In addition, the prosecutor may in cases of urgency when the assets are in a bank issue the freeze order.

284. The limitations on the scope of the FT criminal offence identified in the discussion under SR II would have a cascading effect on Albania’s ability to freeze and confiscate should it need to do so in a FT criminal case. Many of the deficiencies in the FT criminalization provision are likely to be remedied if amendments to the CC recommended by the Council of Ministers are enacted.

285. Although law enforcement authorities are in practice able to secure customer information and monitor financial accounts, explicit provisions in these areas that set forth law enforcement’s powers, their extent and the manner in which they can be used would improve the framework. See discussion under Recommendations 27 - 28.

286. The most significant issues relate to effectiveness. Although the legal framework is sound and does not appear to pose impediments for confiscation, nonetheless confiscation remains a rare event. There have been only a handful of ML and FT cases prosecuted successfully since 2006.

In none of these cases were there assets confiscated. In none of these cases were assets sequestered in anticipation of a confiscation. There have been no confiscations as yet in ML cases under the current Organized Crime Law. This is not surprising given that this law has only been in force since December 2009. Of the ten sequestrations that have occurred since the enactment, five are in matters where the registered offence is ML.

287. The authorities have not in the past maintained full range of statistics that would show sequesters and confiscations in the course of the criminal proceeding for proceeds-generating predicate offences generally. In the case of confiscations using civil means, it appears that in the five year period (2005-2010) only lek 85,500,000 or about US$855,000 was actually confiscated.

288. In the absence of a demonstration that either criminal or civil confiscation provisions are used to recover property in such cases, effectiveness is not established. It is clear that significant proceeds-generating crime has occurred since 2006. Over 7100 persons have been charged with such crimes.

289. It is important that the framework Albania has established actually be used to take assets out of the criminal economy and keep them from being invested in additional crimes. It is clear, for reasons at least in part of restrictive court interpretations as well as the more limited scope of the previous Organized Crime Law, that the previous law did not have the potential to be effective to recover proceeds in the same way as the new law does. It is also clear that the GPO and Albanian State Police are committed to vigorously using the law and have taken steps to tap its potential to address criminal proceeds.

290. For criminal confiscation related to ML the prosecutors are of the view and the representatives of the courts confirmed, that the courts will require in practice very specific evidence of the ML activity, and impose exacting standards in order for the prosecutor to the recover proceeds on behalf of the State. The GPO was of the view that prosecutors must trace specific amounts through all steps from predicate activity to ML, showing a clear link between the amount and a specific event that is part of the criminal activity.

291. In the absence of either changes in legislation that modify this or a more liberal view of existing provisions by the courts, the prospects for actual confiscation in criminal cases is limited. For instance, were a prosecutor to demonstrate the three incidents of drug trafficking for which he has the best evidence in specific (small) amounts as part of a pattern of activity or three specific instances, of many, of Ponzi scheme fraud that had many victims, the confiscation recovery would be limited to the small amounts involved. Other civil law States in Europe and elsewhere have faced this same issue and adopted provisions and practices that address it. With the now broader and more vigorous Organized Crime Law, some of the difficulties faced may well be able to be addressed through parallel Organized Crime Law proceedings. These are permissible under the law.

292. At the same time, in the criminal confiscation context, it would be useful for the judiciary and prosecutors to have a more developed understanding of the approaches other countries use, some with similar provisions, and how to make full use of existing provisions consistent with the criminal nature of confiscation and the protections in such cases.

293. It is also noteworthy that although Article 36 of the CC provides for the recovery of assets of equivalent value, this provision has never been used. Were this provision viewed as a general value confiscation provision, it would alleviate some of the issues that prosecutors now face regarding in tracing proceeds for confiscation. It will be important going forward to try to use this provision and avoid a narrow interpretation of the Article 36 para. 1 (cc) of the CC “of any other asset, whose value corresponds to the criminal offence proceeds.”

294. In the period up until the enactment of the new Organized Crime Law, there was no general directive to prosecutors to pursue and develop the proceeds aspects of the case for every proceeds-generating crime or a culture that the proceeds aspects of the crime were of equal importance. With recent directives as this law has come into effect, there is a new directive that prosecutors are to consider these aspects of their dockets at least in the case of certain specified crimes.

295. The maintenance and use of statistics appears to be improving but could be further improved.

2.3.2 Recommendations and Comments

296. The authorities should:

  • Criminalize FT in conformity with the standard as set forth SR II, so that instrumentalities used and to be used and proceeds can to be sequestered and confiscated and extend ML criminalization to insider trading and market manipulation as set forth in Recommendation 1.

  • Use the CC provision permitting the confiscation of assets of equivalent value to seek recoveries in a wide range of circumstances.

  • Through enhanced CC or CPC legislative provisions and/or the better use of existing provisions in criminal cases and/or parallel use of Organized Crime Act civil proceedings, work towards developing a framework that is effective in actually recovering criminal assets without the same degree of tracing, specificity and linkage between specific criminal acts and specific monies.

  • Provide training to the judiciary and prosecutors so they have a greater understanding of how provisions similar to the existing CC and CPC provisions for criminal confiscation in other civil law contexts are applied in a more lenient and effective fashion.

  • Make fuller use of the provisions in part by emphasizing the importance to law enforcement and prosecutors that criminal assets be pursued early on in every proceeds-generating crime under investigation/prosecution.

  • Establish a national registry of bank accounts administered by the BoA, which, upon proper authority, can be accessed on request by Law Enforcement authorities’ powers to facilitate the investigation of ML/FT, in order to enhance their capacity to identify and trace property that is or may become subject to confiscation or is suspected of being the proceeds of crime.

  • With corruption as an important proceeds-generating crime, include corruption as an offence under the Organized Crime Law which provides a civil standard and reverse onus in the recovery of proceeds of crime.

  • As necessary, provide explicitly in the CPC that provisional measures are to be issued on an ex parte basis.

297. The authorities should also:

  • Even in the absence in practice of inappropriate automatic cessations of provisional measures on technical grounds, consider amending Article 276 CPC and replacing it with an affirmative requirement on the court to act within a certain period to ensure that, going forward, an inappropriate lifting of sequestered assets does not occur because of inaction by a court.

  • Consider enacting specific provisions on law enforcement powers to secure customer information and monitor financial accounts so that there is an improved ability to identify and trace for both domestic and foreign cases.

2.3.3. Compliance with Recommendation 3

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2.4 Freezing of Funds Used for Terrorist Financing (SR III rated LC in previous MER & R. 32)

2.4.1 Description and Analysis

Summary of 2006 MER Factors Underlying the Ratings and Recommendations

298. In the 2006 assessment, there were concerns expressed about: the absence of legal procedures for dealing with, and an authority with clear responsibility for, foreign requests; the absence of secondary provisions or mechanisms to address requests for subsistence and other expenditures; a lack of guidance for the private sector or supervisor review of their implementing measures; and the absence of information on the number and origin of reports relating to the UN measures or any confiscation measures applied.

Legal Framework:

  • United Nations Security Council Resolutions 1267 and 1373 (“UNSCRs 1267 and 1373”).

  • Law on Measures for the Suppression of Terrorism Financing “Law No. 9258 of July 15, 2004” (“SFT Law”).

  • Law 10192 of December 3, 2009 “Law on the prevention and striking of the organized crime through preventive measures against property” (“Organized Crime Law”).

299. Albania implements its obligations to freeze funds of persons and entities subject to sanctions under UNSCR 1267 and successor resolutions and UNSCR 1373 and related resolutions through its SFT Law.

300. The SFT Law provides a positive framework for Albanian authorities to meet the obligations under the UNSCRs. Articles 6, 10 and 15 of the law set forth systems: 1) for orders of the Minister of Finance imposing administrative freezes of assets with provisions in cases of urgency for a freeze even before a decision by the Council of Ministers to list a person or entity; and 2) for reporting both by covered institutions and persons under Albania’s AML/CFT law and the public at large (imposing obligations on any persons who know that funds are aimed at terrorist financing) to report information on, and suspicions of, terrorist financing.

301. The framework provided by law and practice, however, has areas that the authorities should consider anew in light of the more developed understanding since the 2006 report of the practical measures necessary to implement adequately UNSCR obligations.

Freezing Assets under UNSCR 1267 (c. III.1):

302. Article 6 of the SFT Law provides the Minister of Finance with the authority to freeze the assets of those persons designated by the Council of Ministers under Article 5, and also to prohibit persons from providing such designated persons with funds, financial services or assets.

303. The Council by Decision No. 718 of October 29, 2004 designated all persons and entities on the United Nations’ 1267 list as of that date. Since that time, the Decision has been amended four times to reflect the UN’s updated 1267 list (Decisions No. 671 (October 26, 2005), No. 767 (November 14, 2007), No. 442 (June 16, 2010) and No. 721 (September 1, 2010). The Decisions taken together:

  • list named individuals/organizations;

  • oblige all persons and entities with knowledge of a listee’s funds, assets, financial transactions or other activities to inform the Minister of Finance immediately;

  • instruct the Minister of Finance to take the measures to freeze, seize, and prohibit the provision of services of the listed persons/entities;

  • provide that, until there is compliance with the Minister of Finance’s freezing/seizing/prohibiting services measures, anyone holding or controlling the funds is prohibited from performing legal acts or services with respect to such assets.

304. The authorities indicated that the Council Decisions were sent by the GDPML to all entities subject to the AML/CFT Law and to the national property registry. In addition the lists are made available on the websites of the Council of Ministers, the GDPML and the National Publication Center. The UN Consolidated list, as continuously updated by the relevant UN Committee also appears on the GDPML website.

305. Freeze orders are issued by the Minister of Finance under Article 6 of the SFT Law when specific property is found. The orders name specific individuals and organizations. Article 18, para. 2 provides that such orders become effective immediately at the time of issuance. The orders typically provide for the immediate seizure of “all properties (accounts, investments and assets)” of the named person, prohibit the provision of financial services and funds to the person, and list financial accounts to be seized immediately. The order also provides for its execution by institutions that are prohibited from providing services and by various government entities.

306. Under Article 16 of the SFT Law, the Minister of Finance may, as noted above, issue a freeze order that is valid for 30 days, even before the Council of Ministers has issued its decision. Furthermore if a suspicion is reported pursuant to law AML/CFT, a freeze order for 72 hours can be issued by GDPML in order to allow for possible criminal proceeding. The freezing order issued by Minister of Finance applies to persons designated under the resolutions of UN Security Council, respective acts of the international organizations or other international agreements where the Republic of Albania is a party.

307. Since 2004, there have been sixteen such orders issued, all in the period 2004 to 2006. In some cases, a second order (included in this total) was issued to another financial institution or entity for additional assets after the public notification of the initial order caused the reporting of other assets of the same individual or related individuals or entities. Assets of 14 individuals and associations have been frozen. All assets remain frozen. The assets consist of 26 bank accounts (lek 340,331,974, approximately US$3.4 million) and 42 real estate assets valued in total at lek 1,222,819,184 or approximately US$12.2 million).

308. The official notifications of the five Council of Minister Decisions, as well as of the 16 freeze orders, were made by publication in the Official Journal. The Council of Minister Decisions are also sent to all persons and entities required to report STRs under the AML/CFT Law.

Freezing Assets under UNSCR 1373 (c. III.2):

309. Under Article 5 of the SFT Law, the Council of Ministers is empowered to list on its domestic list “persons designated by these resolutions” (referring to the relevant UNSCRs) and persons “designated through acts of other international organizations or other international agreements to which Albania is a party”.

310. UNSCR 1373 however does not identify or designate persons or entities to which it applies. Rather it requires that States determine who is covered by the UNSCR 1373 mandate to freeze the funds and assets of “persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts,” of associated entities and those under their direction and/or control.

311. Although the Albanian authorities indicated they would rely on the SFT Law for UNSCR 1373 implementation, since there are no specific designations by the UN Security Council under UNSCR 1373, nor designations by other international organizations or agreements, the SFT Law does not appear to provide sufficient legal authority to designate and freeze the assets of persons that domestic authorities might determine fall within the category of persons committing terrorist acts within the meaning of UNSCR 1373. This is because Article 5 provides authority as relevant to UNSCR 1373 only for the listing of persons “designated through acts of other international organizations or other international agreements to which Albania is a party.” However, other international organizations do not designate such persons nor do international agreements do this. States make these designations.

312. Considering Article 15 of the SFT Law in relation to Article 5, however, it becomes clear that the intention of Article 5 was to provide a procedure for making designations to comply with Albania’s obligations under UNSCR1373. Article 5 at para. 3 contemplates including additional persons other than UNSCR 1267-listed persons in a Council of Ministers Decision.

313. Article 15 provides a procedure for, and standard to be used (“reasonable grounds”), for the Council of Ministers in making such a determination.

314. Albanian authorities have not designated or listed persons pursuant to obligations under UNSCR 1373 nor has it sought to freeze assets of such persons. All freeze orders that have been authorized by the Council of Ministers and issued by the Minister of Finance relate to UNSCR 1267 persons/entities.

Freezing Actions Taken by Other Countries (c. III.3):

315. Albanian authorities advise they are prepared to consider freezing actions of other States at a State’s request, but they have not been asked to do so. If the authorities received a foreign request, they would use the same procedures as used for a domestic designation as set forth in the SFT Law. Upon a conclusion that a reasonable basis existed, the Council of Ministers would issue a decision, and the Minister of Finance would then issue a freeze order. In the case of a freeze request relating to a person or entity on the UNSCR 1267 list, the Minister of Finance would issue an order specific to the assets located as the Council of Ministers Decision would already cover such person or entity.

316. To meet the “without delay” obligation, the Minister of Finance is invested with temporary freeze authority under Article 16 of the SFT Law. In addition, if the foreign freeze action involved a criminal matter, they would use the CPC and AML/CFT Law. These procedures will permit a prompt determination of whether there is a reasonable basis, and a subsequent freezing without delay.

317. Albanian authorities that are responsible for UNSCR implementation do not use as a reference point, nor apparently consult, the external terrorist list that applies in the European Community through EC Regulations or any EC internal lists, or other lists such as the US’s OFAC list.

318. In addition, actions by other States designating persons subject to targeted sanctions under UNSCR 1373, that is names on foreign lists, such as EC lists or the US OFAC list, are apparently taken into account on a voluntary basis only by a few financial sector participants.

Extension of c. III.1-III.3 to Funds or Assets Controlled by Designated Persons (c. III.4):

319. Under Articles 3, 6, 15 paras. 4 - 6 and 16 of the SFT Law, and as noted in the previous MER, the obligations apply to: all kinds of property; assets derived or generated from funds; assets that are controlled; and assets whether wholly or jointly owned.

320. The law provides coverage for “control rights” but does not specify both direct and indirect control. Given the broad interpretation generally afforded terms under Albanian law, indirect control would likely be covered but there is no jurisprudence or practical experience.

Communication to the Financial Sector (c. III.5):

321. As previously noted, the five decisions of the Council of Ministers making designations and the 16 Minister of Finance orders were published in the Official Journal. In addition, Council of Ministers decisions are sent to all persons and entities required to report STRs under the AML/CFT Law. Authorities indicate that the Minister of Finance freezing orders were communicated quickly to the financial and other institutions where assets had been located as well as published in the Official Journal.

Guidance to Financial Institutions (c. III.6):

322. Albanian authorities have not issued any guidance to financial institutions or others in the private sector regarding obligations under the UNSCRs. Other than publication of the Council of Ministers Decisions on the Council of Ministers, GDPML and National Publication Center websites, and the availability of the UN Consolidated List on the GDPML website, there is no guidance provided whether general in nature or relating to actions required by a Ministerial Decision or specific freezing order. The authorities are aware of the FATF Best Practices paper regarding the freezing of terrorist assets but as yet have not adopted all of the practices suggested.

323. Although the authorities have communicated directly with the specific institution named in a freeze order at the time they must freeze, there is a question regarding the subsequent notification to other financial institutions of the freeze orders. The notice of freeze orders is through the official publication three or four weeks later in the Official Journal and on the website of the National Publications Center.

324. In addition, authorities in Albania have not undertaken steps to communicate with all institutions, the general public, DNFBPs, etc. regarding the general obligation to freeze as a sanction (not to make funds available) and to whose funds such an obligation applies (those whose names appear on the list issued by the Council of Ministers).

325. The MoF provided a notice dated August 8, 2010 to the registrar for NGOs that checks should be undertaken in the process of registering NGOs against the list and provided a copy of the most recent Council of Ministers Decision and list.

De-Listing Requests and Unfreezing Funds of De-Listed Persons (c. III.7):

326. The Council of Ministers makes the designations. Under Article 18 para. 1, the Council may also issue a decision to de-list persons at their request or at the request of the Minister of Finance. Under Article 23 para. 3 of the SFT Law, a de-listing is to occur only based upon a subsequent decision of the UN Security Council, or because continued listing is unnecessary to carry out UN Charter or treaty obligations. De-listings of persons on the 1267 list thus would take place only in consultation with UN Sanctions Committee.

327. Under Article 19 of the SFT Law, a designated person is provided 15 days from the time of his/her appearance on the domestic list to appeal the Council of Minister’s designation. However, the right to challenge is limited to a claim regarding mistaken identification. These provisions while consistent with the obligation to de-list in the UNSCR 1267 context only using UN procedures, do not address the right of persons listed in the UNSCR 1373 context to seek a de-listing. This is because a challenge is possible only on the grounds of mistaken identity which falls under the next criteria C.III.8.

328. In the case of a request to for unfreezing, Article 22 provides that interested persons and third parties may challenge a freezing of funds in the Tirana District Court. There are ongoing challenges to several of the freezes with no final determinations at the time of the assessment.

329. There are no publicly-known procedures in place for seeking the de-listing provided for by Article 23 para. 3. Other than the SFT Law provision at Article 19 (appeal in the circumstance of mistaken identification) which affected persons may become aware of, there is no guidance or issued procedure. In the absence of any practical implementation of UNSCR 1373, procedures also have not been developed to notify persons listed under UNSCR 1373 of their designation and their right to seek a de-listing and unfreezing of their funds. Finally, there is no procedure or public practice regarding notification to persons listed pursuant to UNSCR 1267 whose funds or other assets have been frozen in Albania of the freezing of their funds and their right to challenge such freeze.

330. In practice, there have been no requests to Albanian authorities for de-listing or unfreezing.

Unfreezing Procedures of Funds of Persons Inadvertently Affected by Freezing Mechanism (c. III.8):

331. As noted, Article 19 of the SFT Law provides for an appeal to the District Court of Tirana by persons whose funds have been frozen to challenge the freeze on the basis that they are not the designated person. An affected person has 15 days after notified of the freeze to appeal to the court.

332. The procedures for unfreezing are not however publicized nor is information provided to the person affected at the time the freeze order is issued.

Access to frozen funds for expenses and other purposes (c. III.9):

333. Article 21 of the SFT Law provides for access to funds. Within 72 hours of a request from a designated person, the Minister of Finance may authorize that payments from the frozen funds be made for medical, family or personal needs of a designated person, for his debts/liabilities to the government, or for debts from executed performance or obligatory insurances. The designated person may also file an appeal with the Tirana District Court challenging any order of the Minister of Finance refusing a request for access.

334. Article 21 para. 3 provides that the Minister of Finance is to impose detailed rules and procedures for permitted expenses in line with the criteria set forth in the relevant UNSCRs. No regulation has yet been issued providing for such procedures. In addition, there is no notification or guidance document provided to the person whose funds have been frozen of the procedures for access to the funds.

Review of Freezing Decisions (c. III.10):

335. Albania has a procedure in place that permits a person or entity whose funds have been frozen or seized as a sanction pursuant to UNSCR implementation to challenge the measure. Article 22 of the SFT Law provides that interested persons, as well as third parties who are acting in good faith, may appeal to the District Court in Tirana any freezing/seizing decision within 30 days of receiving notice of the freeze or seizure.

Freezing, Seizing, and Confiscation in Other Circumstances (applying c. 3.1-3.4 and 3.6 in R.3, c. III.11):

336. Provisions to freeze seize and confiscate terrorist-related funds in a criminal law context, rather than as a sanction under UN resolutions, also exist in Albania. The provisions that apply generally to criminal offenses discussed in relation to Recommendation 3 for freezing and confiscation apply equally to terrorism-related criminal offences whether the investigation or prosecution is for terrorist activities or for their financing. Funds and assets are subject to preventive measures and confiscation in such cases to the extent that they are the proceeds, instrumentalities or intended instrumentalities all in accordance with the provisions of the CC and CPC. See discussion under the section related to SR II. In addition, the Organized Crime Law provides in certain circumstances for imposition of preventive measures as seizure and confiscation independently of a criminal process and before the formal opening of criminal investigation. The provisions of the law may be applied to the unexplained assets of persons as to whom there exists a reasonable suspicion based upon indicia of the commission of acts for terrorist purposes or participation in a terrorist organization.

Protection of Rights of Third Parties (c. III.12):

337. Article 22 of the SFT Law provides that interested persons and third parties, who are acting in good faith, may appeal to the District Court in Tirana any freezing/seizing decision within 30 days of receiving notice of the freeze or seizure. Thus, third parties have access to review if they believe their rights have been infringed. Protections for third parties in criminal cases are set forth in the discussion of Recommendation 3 and SR II.

Enforcing the Obligations under SR III (c. III.13):
Monitoring Compliance

338. Pursuant to Articles 22 and 24 of Albania’s AML/CFT Law, compliance with AML/CFT preventive measures and with the duty to report suspicions of FT is verified through inspections that GDPML carries out jointly with supervisory authorities or on its own. In the case of financial institutions and non-bank financial institutions, the Bank of Albania by its Decision 44 at Article 6 para.7 requires that such institutions consult the updated list of persons approved by the Council of Ministers Decision prior to establishing a business relationship or carrying out transactions.

339. There is, however, no specific legal mandate in the AML/CFT Law for supervisors designated therein to review the compliance of financial institutions or other entities covered by the law with the obligations to review the list of listed persons and entities issued by the Council of Ministers and to freeze funds/assets.

340. In addition to the lack of legal authority for overseeing certain aspects of UNSCR implementation, there are no specific materials in supervisory manuals, or checklists for compliance, or instructions for financial institutions or others regarding their obligations to with respect to locating assets of persons on the list or, should they receive a freezing order from the Ministry of Finance, on obligations with respect to the order.

341. In supervisory oversight, GDPML apparently does not sufficiently monitor whether participants use screening mechanisms to check against the domestic list, UN lists, the other relevant lists (e.g. EU external lists or internal lists).

342. Understanding of FT requirements among FIs was varied. Banks demonstrated the strongest understanding of the requirements, as the list is publicized by both the BoA and the GDPML. Banks which are part of international groups had a greater understanding of the screening requirement, and group policies sometimes referred to OFAC requirements and the EU list. These were, however, the result of group policies rather than adherence to requirements of Albanian law. Some non-bank financial institutions and services had limited knowledge of the list, and there was often some confusion between this list and the one produced by the FIU relating to PEPs and that relating to countries that do not adequately apply the FATF standards.

343. There is a limited understanding of terrorist financing requirements within the DNFBP sectors. Entities subject to an inspection by the GDPML were aware of the terrorist financing list. Entities aware of the list would only consult it if individuals were deemed suspicious or corresponded to a particular profile. In theoretical instances where a match with the list was made, entities would stop the transaction and report to the GDPML. No entity was aware of the requirement to freeze the assets. Entities that were not inspected by the GDPML were unaware of the list or any related requirements.

344. As noted above, on August 8, 2010, the MoF by notice dated advised the registrar for NGOs that in registering NGOs there should be checks against the list.

Sanctions

345. Article 24 para. 1 provides that any failure by an entity listed in the SFT Act or AML/CFT act to abide by the provisions of the SFT Act constitutes an administrative violation. Thus, failure to comply with an order issued by the Minister of Finance to freeze funds under Article 6; the failure to report suspicions under Article 10; the disclosure of information under Article 12; and the taking of any action or undertaking a transaction with frozen funds under Article 15 para. 7 are all subject to an administrative fine of lek 50,000 to 10 million and indemnification for the amount of the asset involved.

346. In the case of violations of a freeze order issued by the Minister of Finance or a Council of Ministers Decision, there would be criminal liability under Article 230/ç of the CC which prohibits the giving of funds and other wealth for the performance of financial services as well as of other transactions with identified persons towards whom measures of terrorism financing are applied. The sanction is four to ten years of imprisonment and a fine from lek 400,000 to 5 million.

Statistics (R.32):

347. As noted above, 16 freezing orders have been issued by the Minister of Finance since 2004 when the SFT Law came into effect. These relate to 14 different individuals and associations. Financial institutions and others have frozen or seized approximately lek 1,563,151,158 (US$15.8 million) pursuant to administrative freeze orders issued under the law. All assets frozen under the orders remain frozen.

348. No administrative cases have been instituted against entities for failure to comply with the provisions of the SFT Law.

349. GDPML monitors whether STR reports received relate to FT, and within the larger FT category, whether they relate to a Council of Ministers’ listed person/ entity. There have, however, not been any STRs relating to persons/entities on the Council of Ministers’ list in the period since the last assessment report.

Additional Element (SR III)—Implementation of Measures in Best Practices Paper for SR III (c. III.14):

350. Albania’s legislative framework and procedures reflect a number of the practices set forth in the Best Practices Paper. For instance, there is a competent authority to designate persons or entities and procedures that permit a freeze to occur without delay and without prior notice. Measures are not conditional upon the existence of criminal proceedings. There is close cooperation among law enforcement and intelligence authorities who coordinate among themselves and as required with the private sector. As noted above, however, not all best practices particularly relating to guidance have been adopted.

Additional Element (SR III)—Implementation of Procedures to Access Frozen Funds in UNSCR 1373 matters (c. III.15):

351. The SFT Law provides for access to frozen funds but, as noted, the Minister of Finance has not issued rules and procedures for permitted expenses in line with the relevant UNSCR and it is not clear what would occur in the case of a request for access by a person designated based upon UNSCR 1373.

Effectiveness:

352. To comply with its obligations under UNSCRs 1267 and 1373 and successor resolutions, Albania relies on an administrative system that permits it to act quickly to freeze funds as noted above. Using this framework, it has cooperated extensively with foreign partners and successfully frozen substantial assets. The legal framework provides for the combination of a Decision of the Council of Ministers that prohibits anyone from allowing or performing legal acts or services with respect to assets of a person it has listed (all persons and entities on the UNSCR 1267 list) and a specific freezing order issued by the Minister of Finance for the located assets of specified persons/entities in conformity with UNSCR 1267. The procedures have been used in a number of instances, and as noted funds are frozen. However, one important issue is that the legal basis to act under the SFT Law in a UNSCR 1373 matter appears questionable. Moreover, this is untested as the authorities have never used their framework to designate administratively individuals or entities other than those that appear on the UN’s 1267 list.

353. Additionally, a number of the problems noted in the previous assessment have not yet been addressed adequately. There is no clarity regarding an authority responsible to receive foreign requests. The authorities have not yet adopted secondary provisions or mechanisms to address potential requests by affected persons for subsistence or other expenditures. There continues to be a lack of guidance to the private sector and inadequate review of private sector practices for complying with UNSCR obligations. Guidance to financial institutions and others on how to deal with freezes and outreach efforts to ensure that such institutions and others are aware of UNSCR obligations need impro