A study published by the Friedrich Ebert Foundation sheds light on the worrying dimensions of money laundering in real estate.
A study published by the Friedrich Ebert Foundation in September 2025 sheds light on the worrying dimensions of money laundering in the real estate sector in Albania over the past decade. The analysis conducted by Prof. Assoc. Dr. Adriatik Kotorri documents that a significant part of the construction boom in the country may have been financed from sources of dubious origin. According to the data analyzed in the study, during the period 2015-2024, construction permits were granted in Albania for 11.48 million square meters with an average market value of 16.238 billion Euros. Of this amount, only 7.108 billion Euros were identified as being financed from legal sources, specifically 5.521 billion Euros from bank loans and 1.587 billion Euros from foreign direct investments.
The difference of at least 9.13 billion Euros raises serious questions about the origin of the funds. While part of this difference may represent unsold land or financed by legitimate savings, researcher Kotorri argues that the most worrying indicator is related to illicit sources.
One of the most important findings of the study is related to the dramatic increase in foreign investments from countries that have been or are currently on the grey list of the Financial Action Task Force (FATF), the international organization that monitors money laundering and terrorist financing. The case of Turkey is the first. Investments from this country have increased from 86 million Euros in 2015 to 257 million Euros in 2024. Turkey was part of the FATF grey list until June 2024, a period that coincides with the intensification of its investments in the Albanian real estate sector. Bulgaria represents the second case in terms of relative growth. From practically zero investments in 2015, this country reached 74 million Euros of investments in 2019 and continued with 28 million Euros of investments in 2024. Bulgaria has also been part of the FATF grey list until recently.
Researcher Kotorri points out that the United Arab Emirates, another jurisdiction with historically weak financial control, has also increased investments from zero to a peak of 19 million euros in 2023. The report argues that “these investment flows, from countries with weak financial control, raise questions about the true nature of these investments and the potential risk they pose for money laundering in Albania.”
DEPORTATION MECHANISMS
The study identifies several main routes through which illicit money infiltrates the construction sector, such as:
Establishment of companies with questionable capacities: From 2015 to 2023, the number of construction companies increased by 40%, reaching 6,955 companies. It is worrying that 82% of new companies have only 1-4 employees and do not have real capacities to carry out construction projects. According to the report, for the period 2017-2019, about 59% of companies that received permits for buildings over 6 floors did not have sufficient financial capacities.
Depositing funds in third countries: The method involves depositing funds in banks in countries with weak controls (such as Turkey, Bulgaria, and the UAE) and returning them to Albania as “foreign direct investment.” This scheme allows money of dubious origin to gain a “legitimate appearance” through the international banking system.
Cash payments and underpricing: The practice of declaring low values in contracts, while the rest is paid in cash, remains common. Although minimum reference prices were set in 2018, the difference between real and declared prices reaches up to 100% in elite areas.
Fragmented Deposit: Amounts are divided into small deposits to avoid automatic bank alerts (usually under 7,000 Euros) and are then used for property purchases.
MARKET DEFORMATION
One of the most alarming findings of the study is related to the paradoxes that this phenomenon has created in the Albanian real estate market.
The paradox of quantity: During the period 2011-2023, while the population fell by 478,590 inhabitants, the number of housing units increased by 74,286 units. However, the number of homeless families increased by 88%, from 70,630 to 132,563 families. Albania today has more housing units than families, but more people without shelter.
Price paradox: Prices have increased by 139% (from 862 Euro/m² in 2015 to 2,057 Euro/m² in 2024) while supply has increased by 46%. This violates basic economic logic that increased supply should lower prices.
Impact on housing affordability: In 2015, it took an average earner 38 years to buy an apartment in the suburbs. By 2024, that time has increased to 47 years, a 23% increase. For a couple, the time has increased from 19 to 23 years.
EVASION
The study estimates that during the period 2015-2024, corruption and tax evasion have generated at least 8.168 billion Euros in illicit income in Albania. These figures are based on data from ALTAX, which uses official sources including INSTAT, the Ministry of Finance, SPAK, KLSH, IMF, World Bank and Transparency International. A significant portion of these funds are believed to have found their way into the construction sector. According to the report by the “Global Initiative Against Transnational Organized Crime”, estimated money laundering in Albania for the period 2017-2019 alone amounts to 1.6 billion Euros. Paradoxically, while the phenomenon has increased local revenues through taxes and construction fees (from 12.9 billion Lek in 2015 to 30.5 billion Lek in 2022), it has created a dangerous dependency. The share of real estate-related taxes in total local revenues has increased from 37% to 51%.
performance
One of the strongest criticisms of the study is directed at the Financial Intelligence Agency (FIA). The analysis shows that FIA activity has declined dramatically over the past 5 years:
– Cases sent to law enforcement agencies fell from 1856 (2015-2019) to 1204 (2020-2024).
– On-site inspections were reduced from 806 to 550.
– Blocked assets fell from 71.4 million Euros (2015-2019) to only 15.8 million Euros (2020-2024), a 4.5-fold decrease.
Of particular concern is the observation that AIF activity declines in election years. With the exception of 2019 (when there was no electoral competition due to the boycott), all election years (2013, 2015, 2017, 2021, 2023) saw a decrease in frozen assets compared to the previous year. For non-declaration of amounts at the border, a key method of bringing illicit money from abroad, AIF has sent only 26 cases over the decade, an average of 2.6 cases per year, with a significant decrease in recent years.
INTERNATIONAL DIMENSION AND GREY LIST
Albania has been on the FATF grey list for three years, classified as a country with a low level of efforts to prevent money laundering. The report emphasizes that the progressive shift of the Albanian economy towards the real estate sector, accompanied by institutional tolerance towards funds of dubious origin, has created a “favorable terrain” for operators aiming to integrate illicit capital into the economy. (Faktoje.al)