Countries/Jurisdictions of Primary Concern - Kosovo
Kosovo is not considered a regional financial or offshore center. The country has porous borders which facilitate an active black market for smuggled consumer goods, especially fuels, cigarettes and pirated products, largely along the Kosovo - Serbian border. According to the Customs Service, significant quantities of cigarettes and fuel are smuggled into the country. Kosovo is a transit point for illicit drugs. Proceeds of drug trafficking do not fund the black market of smuggled and pirated items.
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.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR ILLEGAL DRUG SALES THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
KNOW-YOUR-CUSTOMER (KYC) RULES:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks; money exchangers and remitters; securities brokers and service providers, portfolio and fund managers; insurance companies; issuers of traveler’s checks, money orders, e-money, and payment cards; political parties; casinos; attorneys, accountants, notaries, and auditors; real estate agents; high-value goods dealers; non-governmental organizations (NGOs); and microfinance institutions
Number of STRs received and time frame: 149: January 1 – November 1, 2013
Number of CTRs received and time frame: 1,544: January 1 – November 1, 2013
STR covered entities: Banks; money exchangers and remitters; securities brokers and service providers, portfolio and fund managers; insurance companies; issuers of traveler’s checks, money orders, e-money, and payment cards; NGOs; political parties; casinos; attorneys, accountants, notaries, and auditors; real estate agents; and high-value goods dealers
MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:
Prosecutions: 0: January 1 – November 1, 2013
Convictions: 0: January 1 – November 1, 2013
RECORDS EXCHANGE MECHANISM:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Kosovo is not a member of a FATF-style regional body.
ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:
The Government of Kosovo adopted a National AML/CFT Strategy and Action Plan in September 2012. Kosovo law restricts all money laundering investigations in Kosovo to a relatively small unit in the prosecutor’s office which focuses mostly on organized crime and corruption. However, recent amendments to the criminal procedure code allow all prosecutors to pursue seizures and confiscations of instrumentalities and proceeds for all types of crimes. An Economic Crimes Institute was created at the national police training academy in June 2013 and a National Coordinator for Economic Crime Enforcement is expected to be appointed in January 2014. This executive and his staff will monitor compliance with international AML/CFT standards and promote increased prosecutorial effectiveness. Legislative and regulatory amendments in 2013 grant full police powers to criminal investigators in the Tax Administration and authorize a national AML/CFT risk assessment.
The financial intelligence unit (FIU) operates with full-time liaisons assigned from all major law enforcement agencies and maintains electronic communication with financial institutions and government agencies. The FIU monitors covered entities for possible terrorism financing activity and works closely with the domestic intelligence community. It increased independently-generated cases referred to law enforcement from 50 in 2012 to 114 in 2013, and doubled responses to requests for information from law enforcement. The FIU shares regulatory compliance duties with the Central Bank AML Unit, which supervises all “financial institutions” as defined by Kosovar law. Each of these entities is making significant progress in addressing legislative and administrative challenges to comply with international AML/CFT standards. Foremost among these improvements is the implementation of extensive amendments to the AML law and over 20 sets of administrative instructions and sub-legal acts that, among other provisions, clarify the role of the Central Bank and its AML Unit, and authorize the FIU to conduct on-site examinations of designated non-financial businesses and professions (DNFBPs) and freely exchange information obtained at the international level. The measures also increase financial sanctions for failure to comply with the law and create criminal offenses for terrorism financing, making false statements, willfully failing to report required information, and intimidating a witness in connection with an STR.
Additional provisions address preventive measures by adding NGOs, political parties, construction companies, and dealers in precious metals to reporting entities; adding a requirement for reporting entities to incorporate a risk-based approach; requiring reporting entities to identify all beneficial owners with at least a 20 percent stake in the enterprise; prohibiting the use of anonymous bank accounts; clearly defining information required for wire transfers; establishing conditions for enhanced due diligence; clarifying requirements with respect to politically exposed persons (PEPs); prohibiting transactions involving shell banks or shell companies; adding a confidentiality requirement to DNFBP STRs; and updating AML requirements for casinos.
Kosovo’s lack of UN membership, stemming from political disagreements with Serbia, is a limiting factor to the country’s participation in regional bodies and organizations. Fortunately, the Central Bank was able to overcome this obstacle earlier this year and became the only non-UN member to obtain a SWIFT code, thereby greatly improving its ability to monitor international electronic transfers to domestic financial institutions.