Kosovo gets stuck in the fight against money laundering, the EU Office: Cases are not handled in an adequate way

By the end of 2021, the two brothers from Pristina, Mirsad and Fatlum Soopyan were confirmed the sentence for criminal work “money laundering”. In addition to confiscating property of nearly one million euros, they were even awarded parole sentences of two years in prison and five thousand euros in fines.

This was the first time that an indictment was filed only for the carrying out of criminal work “money laundering” in Kosovo, without any other associated criminal offence in the indictment. Yet, even in this case, their sentence had been decided to be executed only if they were to commit another criminal act in the next two years.

Since then, the European Union has voiced concern that Kosovo has not made enough steps to combat this phenomenon.

“Money laundering cases, indeed, are not adequately handled by Kosovo justice system institutions”, the EU's response to REL says.

According to data from this institution, only two people were charged with this crime during 2022, compared with nine in the preceding year, while a total of three were sentenced throughout that year.

In Oxford's dictionary, money laundering is defined as an illegal process through which the origin of illegally acquired property is hidden, whether through bank transfers or illegal businesses.

In Kosovo, according to a 2020 report by the Financial Intelligence Unit, money laundering is more likely to be done through real estate and construction sectors, nongovernmental organisations and artificially inflated bills with high value.

Why is money laundering no longer being severely punished?

The European Union's office in Kosovo says one of the main reasons is the lack of awareness among prosecutors and judges that cases of money laundering can be tried without any other criminal acts committed.

With this assessment, re-expounded in the latest Progress Report, published by the European Commission on November 8th of 2023, Gzim Shala, a researcher at the Kosovo Institute for Justice (IKD).

“Prosecutors and judges do not consider money laundering acts as criminal acts, says Shala.

It's almost understated that money laundering has preceded any other criminal acts. However, since no other basic criminal act can be uncovered, it cannot be prevented from addressing the criminal crime of money laundering”, he adds.

The executive director of the Group for Legal and Political Studies (GLPS), Arbresha Loja, says that some improvements in the justice system, such as recruiting new judges and prosecutors, and increasing the number of selected subjects, have been reported in the last three progress reports. However, some things have not changed, she adds.

“Raporti, but we as a civil society have raised the issue that Kosovo continues to be characterised with the low level of final asset seizure, although there is a legal base”, Loxha says.

According to a research conducted by GLPS in 2020, the majority of allegations of money laundering have not included demands for seizures of property.

Loja insists that this should be changed, since, according to her, seizure of property is a highly effective “approach in the economic weakening of individuals and criminal groups” and “would signal that state institutions are seriously dealing with the fight against criminality”.

According to the Law for the prevention of this phenomenon, anyone who commits the criminal money laundering work can be punished with up to ten years in prison and fines up to three times the value of property subject to criminal work.

And despite the lower than legal punishment, in one of the international organisation Egmont's reports, the very case of two brothers from Pristina as one of the most impressive cases of money laundering. It notes that this has been the first case that has resulted in indictment and punishment only for money laundering in Kosovo, without any other criminal act.

“In this money laundering scheme, frauds moved funds from numerous jurisdictions, which they assumed had weak bilateral co-operation tools, since Kosovo is not a member of the United Nations or Interpol, nor is it recognised by some of those jurisdictions”, the report reported in 2021.

However, it is described that through co-operation with the Financial Intelligence Units of other members of the Egmont group, the Kosovo entity had managed to investigate the case.

The Egmont Group of Financial Intelligence Units is an international organisation that enables co-operation among the world's various states in investigating and preventing cases of money laundering and financing terrorism.

According to data in the latest report published by the Financial Intelligence Unit, banks are the institutions that report most of the cases that could lead to money laundering indictments, reporting on suspicious transactions.

The Kosovo Central Bank defines by laws certain procedures that banking officials must follow during transactions and deposit admissions in large sums of cash from customers, in an attempt to combat money laundering.

However, a bank official has complained about the REL that these procedures are sometimes too long and include completing many documents that, according to him, cause huge burdens on bank workers who should serve other customers.

What changes are recommended?

Loxha, from GLPS, believes a positive step has been made with the decision that even basic courts can handle money laundering cases when the value of wealth does not reach over 500 thousand euros, as it says it eases the burden on special prosecutors.

For a more effective fight of this phenomenon, the EU recommends that prosecutors be further specialised in handling these cases, as well as more active in investigating and identifying this work.

Radio Free Europe asked the Special Prosecutor (PSRK) where there are a total of six prosecutors in the Department for Corruption and Financial Crime how many cases they have begun to investigate after criminal charges filed by Kosovo Police, but received no answers.

The 2020 investigation of GLPS, on this subject, had found that seven of the last nine money laundering investigations had been launched only after the criminal complaint filed by Kosovo Police.

But even though the police have a legal obligation to present criminal accusation, The PSRK would have to be more active in pursuing this work, because, according to constitutional and legal competencies, it is a tracking organ”, the report says.

Kosovo police said during 2022, have initiated a total of nine cases for criminal activity “money laundering”, and eight more during 2023.

There is no mention in the government's 2021-2025 programme of the Government of Kosovo for establishing the efficiency of the fight against money laundering.

The value of the informal economy in Kosovo amounts to up to 30 per cent of GDP (the local production) as much of the business does not even possess fiscal equipment. Fiscal evasion, or avoidance of taxes, can lead to the attempt to launder money as businesses generate undeclared illegal profits.

According to Progress Report 2023, ATK has conducted more inspections of cases suspected of tax evasion during the period between June 2022 and April of 2023 than the same period a year ago.

According to the EU, although these inspections generated 181.5m euros more for Kosovo's budget, authorities in Kosovo still have work to do to ensure the timely prejudice of tax evasion cases and financial fraud”.

The EU has allocated a 20m-euro budget to help Kosovo, among other things, in the fight against money laundering. As a first step, the EU hopes that Kosovo will change the current Law on Money Laundering Prevention and Combating Terrorism Financing to harmonise it with EU laws.

It is a fact around the world that inefficient criminal justice increases the possibility of criminals keeping the profits from criminal activities. In this respect, a more efficient justice system, including in Kosovo, would be a preventative factor”, the European Union Office in Kosovo says.