Albanian loan sharks take advantage of strict bank conditions
Informal lending practices can be spotted in notary offices, however, the document granting the loan will not mention an interest rate, as it is illegal. However, the parties will agree on any guarantees.
A notary’s statement seen by BIRN regarding a US$45,000 loan given by two people to a third for business purposes included the borrower’s house as collateral.
A notary public who spoke on condition of anonymity told BIRN that a network of trusted notaries in Tirana signs dozens of such agreements every day, for loans ranging from 10,000 to one million euros.
“Such deeds are a daily job for some notaries across the country, but a number of notaries specialize in them. They are known as VIP notaries,” she explained.
“The rest of us only do this when we know the parties well, because we are supposed to report these transactions to the Anti-Money Laundering General Directorate,” she added.
Another notary who also spoke on condition of anonymity explained that around 20% of their daily work is related to these loan contracts. He highlighted the existence of an informal investment market where notaries play the role of intermediaries.
“There are people who have large amounts of money, created illegally, and as such cannot pass through banks. They look for companies in which to invest minority shares, such as 20% of the capital, and use notaries for this purpose,” he explained. Construction and energy are the preferred sectors for investment, according to him.
Albania’s Law on the Prevention of Money Laundering and Terrorist Financing obliges notaries to report any suspicious transactions, including cash payments for goods, such as car purchases or loans, to the General Directorate of prevention of money laundering – the state office controlling the flow of money in the economy with the aim of reporting and investigating suspicious transactions.
“If we fail to report suspicious transactions, we could be subject to fines of 5 to 20 million leks,” the notary explained, adding that, however, some notaries are able to overcome the difficulties and avoid the penalties. “They have their own relationships,” she explained.
“For the rest of us, it only remains to point out the emigrants, the poor people who have worked all their lives to buy a house,” she said.
Data from the Directorate General for the Prevention of Money Laundering shows that some 12 notaries were fined in 2021 for failing to report shady matters. The total fines amounted to 3.8 million lek. The main reason for the fines was for not reporting significant transactions or not being vigilant enough.
Some experts believe that the fight against loan sharks can only be won by developing a legitimate financial market.
“There is no other solution than the development of a formal financial market, so that people can move away from the informal,” said Artan Gjergji. “We need the liberalization of services from financial institutions,” he added.
Florian Zekja, the entrepreneur, only sees the solution in a long-term government strategy. That could start with a tax amnesty, which he says would lead to the legalization of that money. However, he says strict conditions should be applied.
“A second part should be a joint collaboration between companies, the Central Bank and commercial banks to facilitate lending procedures, the risk of which makes it difficult for dozens of companies to obtain loans, pushing them into the black market. “, added Zekja.
Fabian Zhilla, a criminology expert, says the legal framework to combat the phenomenon is already in place. The problem is that law enforcement is not very proactive in its application.
“We need to investigate the finances of organized crime and those who possess large amounts of cash and administer cash,” he said. agencies should create direct communication channels with companies for more timely information.
“What is needed is a stronger law enforcement response to combat and prevent the phenomenon,” Zhilla said.