Welcome to illegal heaven!

Kosovo is ranked among countries with under-developed economy, political instability, lacking rule of law, with developed organization crimes and in full control of the government – just like almost all under-developed countries world-wide.

Bordered with Albania (with whom it has integrated border agreement), with Serbia (who still believes Kosovo is part of Serbia and doesn’t recognize its independence), Montenegro and Macedonia, Kosovo facilitated an active black market for smuggled consumer goods (especially fuels, cigarettes, pirated products). Moreover the country is a transit point for illicit drugs. Illegal proceeds from domestic and foreign criminal activity are generated from official corruption, tax evasion, customs fraud, organized crime, contraband, and other types of financial crime. Official corruption is believed to be a significant problem. Kosovo has a large informal economy. Most of the proceeds from smuggling activity are believed to be laundered directly into the economy in areas such as construction and real estate, retail and commercial entities, banks, financial services, casinos, and trading companies.

Welcome to illegal heaven!\

money-laundering

For the purpose of this article I’ll be focusing more on money-laundering, because it is one of the most silent-kept topics both from locals and international parties.

ML is a global issue and I must admit no country is immune to this issue. Based on IMF data 2-5% annually is the estimation of ML on the world’s GDP (approximately 500 million to 1 billion Euros). Many worldwide institutions deal with this issue, both specialized institutions such as Financial Intelligence Units and special brands within financial international organization such as International Monetary Fund, World Bank, etc.

If we analyze the AML trend through years across the world we will see that Asia is among top countries with the highest ML rates, followed by America and Europe. Previously developed countries were much more threatened by this issue, but due to tighter regulations in these countries ML activities are being pushed into developing countries.

Developing countries such as Kosovo are very attractive place for money laundering because institutions fighting ML are very weak, therefore converting dirty money into legal money is very easy. Money launders use different methods to make their illegal gains appear legally and the most common used methods are: cash smuggling, casinos, insurance policies, bank transactions, fake companies and catering industries.

If you look in Kosovo the most developed sectors are indeed the above-mentioned ones: banks, insurance companies, construction (real estate) and casinos. After the end of war in 1999 Kosovo was administrated by UNMIK (United Nations Mission in Kosovo) but until 2004 there was no action for fighting money laundering, hence many people become rich during ‘a night’. Only on 6th of February 2004 UNMIK promulgated UNMIK Regulation whose main focus was deterrence of money laundering and related criminal offences. In the same year the Financial Intelligence Center has been mandated but only in 2013 for the first time Financial Intelligence Unit drafted a study on criminal typologies of money laundering (ML) and Terrorist financing (TF).

The most preferred way for money launders is bank activities, because they are more secure and stabile. Moreover for financial institutions to fight ML activities they need to constantly update and change their ML policies, which many time, are almost impossible to do, especially in under-developed countries such as Kosovo. Technology has advanced rapidly in last couple of decades. Due to these advancements, wire transfers have become faster even across borders, therefore for MLs is very easy to choose an under-developed country to perform their illegal activities and then to transfer them in their state ‘legally’. Which other underdeveloped country is of better choice than Kosovo, which besides having all benefits for Money Launders uses Euro currency as its official currency.

The sad part of the story is that it is a known topic in here. Intellectuals living in Kosovo are aware of this issue, it was time to time present even in the media, but yet nothing concrete was done, besides some theoretical reports, nothing concrete was done besides some people getting richer and richer everyday whereas most of the population suffers from poverty, by living with less than 1 euro per day.

 

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