Harmonisation of the Albanian Anti-Money Laundering Law with the EU Anti-Money Laundering Directive: Challenges and Perspectives

Harmonising Albania’s AML Law with EU Standards – Progress Made, Enforcement Lags Behind

Albania has taken important legal steps to align its anti-money laundering and countering the financing of terrorism (AML/CTF) framework with European Union requirements. Since the first national AML law in 2000, successive legislative reforms culminated in Law 9917/2008 and multiple amendments that largely mirror EU AML Directives and FATF standards. The statutory architecture now covers money laundering, terrorist financing, beneficial ownership transparency, risk-based customer due diligence, and a Financial Intelligence Unit (FIU). Yet the story of harmonisation is only half the picture: enforcement and practical implementation remain significant weaknesses that blunt legal gains and leave Albania exposed to illicit finance.

How Albania’s law converges with EU rules

Material scope and definitions in Albanian law now correspond closely to the EU regime. Money laundering and terrorist financing are criminalised in line with EU definitions, and obliged entities mirror the Directive’s categories: banks and non-bank financial institutions, payment and money-transfer services, notaries and other legal professionals in specified situations, real estate actors, gambling providers, and various non‑financial businesses and professions. The legislature has adopted many provisions verbatim or with only minor wording changes, and Albania has created a national beneficial‑ownership register and adopted due diligence rules that reflect Directive obligations.

Risk-based approach and FIU functions

The Albanian framework embraces the risk-based approach. Obliged entities are required to identify and assess ML/TF risks and implement proportionate controls, and legal provisions on simplified and enhanced due diligence largely reflect EU standards. A national risk assessment exists and was updated in 2023. The FIU’s statutory tasks – collection, analysis and dissemination of suspicious transaction reports (STRs), accessing public databases, training and producing statistics – are set out in law.

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"Albania has made clear legislative progress in aligning its AML/CTF framework with EU standards, creating modern rules on beneficial ownership, customer due diligence, and STR reporting. However, legal alignment alone is insufficient without stronger institutional independence, resources, and targeted supervision to turn information into investigations and convictions.

Strengthening the FIU’s operational autonomy and boosting law enforcement capacity are urgent priorities to close the gap between reports and outcomes. Sustained political will, clearer transposition of remaining Directive provisions, and measurable enforcement benchmarks will determine whether harmonisation delivers real reductions in illicit financial flows."

Where legal gaps and divergences remain

Despite broad alignment, there are notable gaps and structural divergences with EU expectations that matter in practice.

First, the Albanian FIU is organised as a general directorate under the Ministry of Finance rather than as an operationally independent and autonomous unit; that subordinated position risks politicisation and limits perceived independence compared with the EU Directive’s model.

Second, a full catch‑all provision for entities to consider novel or atypical financial activities that may be vulnerable to abuse is absent, limiting legal clarity for emerging sectors.

Third, several detailed Directive requirements have not been fully transposed – examples include some specific enhanced‑due‑diligence provisions, certain cross‑border trust/arrangement reporting nuances, and other procedural elements.

Finally, while Albania has a beneficial‑ownership register with broad access, some technical and cross‑border trust provisions have not been fully addressed.

Enforcement data – many reports, few prosecutions

The most striking tension between law and practice appears in enforcement outcomes. STR reporting rose substantially over the last decade, from a few hundred reports annually in the late 2000s to peaks in the 1,300–1,700 range in recent years, which reflects greater awareness among reporting entities and a maturing reporting culture. Banks and money-transfer companies remain the main reporters, and notaries and the cadastral agency also contribute significant numbers.

Despite high reporting volumes, the number of cases forwarded to law enforcement and prosecutions is comparatively small and – to a worrying extent – declining. FIU referrals to prosecutors and police vary year by year but have fallen in recent reports, while criminal convictions for ML/TF remain rare: between 2015 and 2022 only some dozens of convictions were recorded across the country. Administrative sanctions against entities for compliance failures are modest in number relative to the scale of reporting and persistent risk indicators. Independent assessments and external reports identify constrained investigative capacity, slow or limited prosecutions, endemic informality and cash use, and corruption risks as the main reasons enforcement underperforms.

Why enforcement lags matter

Legal harmonisation on paper yields limited protective effect when investigative, prosecutorial and supervisory capacity cannot turn information into sound criminal cases, asset freezes, confiscations or meaningful compliance enforcement. High informal cash flows and sectors seen as vulnerable in Albania – currency exchange offices, construction and real estate – remain problematic in practice, and international actors have identified significant illicit financial flows into Albanian real estate. Where obliged entities beyond the banking sector under‑report or fail to apply effective controls, the entire system weakens.

Practical priorities to close the gap

To move from formal harmonisation to effective resilience against illicit finance, policymakers and practitioners should prioritise several practical reforms:

• Strengthen FIU independence and resourcing so that analysis, dissemination and operational cooperation with law enforcement and courts can be sustained at scale, and ensure guaranteed, professional data protection safeguards consistent with privacy rules.
• Build prosecutorial and investigative capacity: specialized training, dedicated ML/TF units, faster case triage and greater use of financial investigation tools will help convert STRs into successful investigations and asset recovery.
• Improve sectoral supervision and outreach beyond banks: targeted supervision, tailored guidance and stronger oversight of non‑bank financial institutions, exchange offices, real estate professionals and notaries would reduce blind spots.
• Close legal transposition gaps: complete and precise alignment with remaining Directive requirements, including enhanced‑due‑diligence specifics and cross‑border trust disclosures, will reduce ambiguity and strengthen cooperation with EU counterparts.
• Prioritise transparency plus safeguards: maintain broad access to beneficial‑ownership information to help investigators and obliged entities, while ensuring secure safeguards for sensitive personal data and mechanisms against misuse.
• Focus on deterrence: meaningful, proportionate administrative and criminal penalties against negligent or complicit entities and individuals would strengthen deterrence and signal political will to address systemic abuse.

Conclusion – legal progress, implementation as the decisive test

Albania’s statutory framework for AML/CTF has advanced considerably and now broadly mirrors EU AML/CTF standards. That legislative alignment is a necessary achievement for an EU aspirant state, but it is not sufficient. Persistent enforcement gaps – limited FIU independence and resources, insufficient investigative and prosecutorial outcomes, sectoral under‑reporting, and a large cash/informal economy – undermine the protective effect of modern laws. For Albania to realise the benefits of harmonisation and to reduce its attractiveness for illicit financial flows, the decisive task ahead is implementation: professionalizing institutions, improving cross‑agency cooperation, closing remaining legal gaps and ensuring that STRs yield robust investigations, prosecutions and asset recovery. Only then will the legal progress translate into measurable reduction of money laundering and terrorist financing risks.

Dive deeper

• Research ¦ Nano, G.; Skara, G. Harmonisation of the Albanian Anti-Money Laundering Law with the EU Anti-Money Laundering Directive: Challenges and Perspectives. Laws 2025, 14, 95. https://doi.org/10.3390/laws14060095 ¦ Link ¦ licensed under the following terms, with no changes made: CC BY 4.0