Countries/Jurisdictions of Primary Concern - Kosovo
Kosovo is not considered a regional financial or offshore center. The country has porous borders that facilitate an active black market for smuggled consumer goods, especially fuel, cigarettes, and pirated products, largely along the Kosovo - Serbian border. Kosovo is a transit point for illicit drugs. Drugs from Afghanistan make their way through Turkey where they are often routed through the Drenica Valley in Kosovo, from where they are smuggled to Western Europe. 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, human trafficking, and various types of financial crimes. Official corruption is believed to be a significant problem, as are resource constraints. 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); microfinance institutions; and construction companies
Number of STRs received and time frame: 229: January 1 – November 1, 2014
Number of CTRs received and time frame: 1,647: January 1 – November 1, 2014
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: 39: January 1 – November 1, 2014
Convictions: 0: January 1 – November 1, 2014
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:
In September 2014, the Government of Kosovo adopted its five-year National Strategy and Action Plan for the Prevention of and Fight Against the Informal Economy, Money Laundering, Terrorist Financing, and Financial Crimes; subsequently, a national money laundering/terrorist financing risk assessment report was prepared. 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, all prosecutors may pursue seizures and confiscations of instrumentalities and proceeds for all types of crimes. A National Coordinator for Economic Crime Enforcement was appointed in January 2014. This executive and his staff will monitor compliance with international AML/CFT standards and promote increased prosecutorial effectiveness. In May 2014, the Prime Minister signed a government decision authorizing large salary supplements for the National Coordinator and his staff.
In 2014, the Central Bank of Kosovo (CBK) finalized a draft AML/CFT regulation for the financial sector and approved an internal examination manual as an operational document for conducting AML/CFT examinations at banks and other CBK-supervised institutions. The FIU and CBK carried out 47 compliance inspections in 2014.
The Financial Intelligence Unit (FIU) maintains electronic communication with financial institutions and government agencies. The FIU has direct access to the Kosovo Business Registration Agency and the Department of Non-Governmental Organization Registration. The FIU has indirect access to Kosovo Police and Kosovo Customs databases. The FIU is taking steps to obtain access to other available databases and to integrate them into its analytical system. The FIU is able to exchange, domestically as well as internationally, all information accessible or obtainable directly or indirectly at its own initiative or upon request. It can disseminate financial information to domestic authorities for investigation when there are grounds for suspicion of ML or TF. Responses to requests for information from law enforcement continued to increase in 2014. The FIU receives feedback from the Kosovo Police with regard to transmitted cases. The AML/CFT Law allows the FIU, spontaneously or upon request, to share information with any foreign counterpart agency performing similar functions as long as those agencies are subject to similar obligations in terms of preservation of confidentiality. This sharing is subject to reciprocity.
Kosovo’s lack of UN membership, stemming from political disagreements with Serbia, is a limiting factor to the country’s participation in regional and international bodies, organizations, treaties, and conventions. The CBK became the only non-UN member to obtain a SWIFT code in 2013, greatly improving its ability to monitor international electronic transfers to domestic financial institutions.
The Government of Kosovo has made progress putting in place an AML/CFT regime. The government should now prioritize financial crimes enforcement and investigations to work toward successful prosecutions of money laundering. The Government of Kosovo should address border security and take steps to effectively combat organized crime and corruption.