From: Alice Taylor
1028 Building Permits Issued in Tirana from 2017 to 2019 Amid Money Laundering Concerns

According to data from INSTAT, 1028 new building permits covering almost 3 million square metres, were issued between 2017 and 2019 by the Municipality of Tirana.

In the first quarter of 2020, 245 permits were approved, a decrease of 42% on the same period 2019. These construction permits will cover 333,645 square metres. 

Some 409 permits were granted in Tirana in 2019. The Mayor of Tirana Erion Veliaj had previously argued that issuing more permits for construction would lead to lower property prices in the city. Despite this, the Bank of Albania reported an increase in housing prices by some 14% during the second half of 2019, rising to 15% in Tirana. In residential areas outside the city, prices rose by as much as 25%.

These increases were noted despite construction costs decreasing in the fourth quarter of 2019.

In a report published last week, the Global Initiative against Transnational Organised Crime (GITOC) noted that real-estate and the funding of new residential or commercial constructions was a popular way to launder money in Albania.

“It begins with the financing of new residential or commercial construction, continues with financing the construction contracts and undercounting the value of labour in construction, and again with the sale of the finished buildings.”

It noted that Municipalities often issue construction permits but do not monitor what happens thereafter. In Albania, construction since the fall of communism has been stimulated by people from the Albanian diaspora who invest in the country with funds where it’s not possible to ascertain the source of legitimacy.

Then in 2012, Albanian construction slowed down to “negligible levels” due to the global recession. Then in 2016, the construction sector began to grow sharply with experts attributing the surge to “criminal investment of the proceeds of crime.”

The report found that out of 141 companies given building permits for high-rises between 2017 and 2019, 59% did not have the financial capacities to complete them. The balance sheets of the companies in question revealed that they had minimal revenue and no assets or loans that could be used to fund the projects.

GITOC estimated that 60% of the value of the project derived from illicit money. The report also claims that even when you factor in the value of mortgages, there is a discrepancy of some EUR 600mllion in 2019 alone. Findings from the report and an unnamed Albanian money laundering expert stated that up to EUR 1.6 billion of “dirty money” could have been laundered through the Albanian real-estate sector between 2016 and 2019.

Also noted was the way that criminals and those looking to launder money establish links with politicians and officials to secure their permits. Bribery, influence-peddling, brokering, blackmail, and abuse of power are all used to acquire permits and other benefits.  

The report also noted that in terms of contracts not open for public tender, up to 30% of the bid value is paid in bribes.