The Bank of Albania (BoA) formulates, adopts and implements the foreign exchange policy of Albania and maintains a supervisory role in foreign exchange activities in accordance with Law 8269 of December 23 1997 (On the Bank of Albania), Law 8365 July 2 1998 (On banks in the Republic of Albania) and the Regulation on Foreign Exchange Activities 101 of December 10 2003 (FX Regulation).
As a general rule, the Banking Law does not impose any restrictions on the purchase, sale, holding, or transfer of monetary foreign exchanges. However, the Law on the BoA authorizes it to temporarily restrict the purchase, sale, holding, or transfer of foreign exchanges if the BoA so decides, intending to preserve the foreign exchange rate or its official reserves. In practice, the BoA has not used such measures in an overly restrictive manner and aims to achieve European standards for banking systems.
Foreign exchange transactions
Under the FX Regulation, foreign exchange transactions are those involving the exchange, purchase or sale of foreign currency in cash through a personal account or that of third parties, including the repayment of a loan in a currency different from the one in which the loan was granted or accepted, if not provided differently in a written agreement between the parties.
The FX Regulation defines a current account transaction as one between residents and non-residents that is recorded in the current account of the balance of payments. These include, among others, payments and transfers for settlements resulting from international trade (for example, payments for services provided within specific fields such as consulting, publishing, industry, construction, mining, transportation, insurance, and payments for any banking and exchange operations), and payments of loan principal and interest.
The FX Regulation defines a capital account transaction as one performed between residents and non-residents that is recorded in the capital account of the balance of payments (for example, direct investments, securities transactions, credit transactions, deposit transactions and insurance transactions).
Foreign exchange market operators
Foreign exchange transfers abroad can only be effected by licensed entities (banks, foreign bank branches and foreign exchange offices) that are required to report their foreign exchange activities to the BoA regularly. Those are obliged, also, to complete and keep all documentation required for the transfers abroad otherwise the BoA may apply disciplinary and penalty sections.
Although the FX Regulation provides that residents and non-residents may transfer capital within and into Albania without any restrictions, capital transfers out of the territory of Albania are subject to certain documentation requirements.
Natural persons must submit a request indicating the reasons for the capital transfer, the amount of capital transferred outside the territory of Albania, and the address to which the capital is to be transferred. Such persons must also submit a declaration on the source that created the funds to be transferred.
Legal persons must submit: a request setting forth the reason for the capital transfer, the source (of creation) of the funds, the amount to be transferred, and the address to which the capital is to be transferred; a document from the foreign subject explaining this transfer (if such a document exists); the decision by the legal person's relevant decision-making body on carrying out the capital transfer; the legal person's court registration decision; and, a certificate issued by the tax office certifying that the legal person has settled its tax obligations toward the tax authorities.
The FX Regulation sets forth certain types of capital transfers out of the territory of Albania for which a legal person is required to submit supporting documentation specific to the transfer. An example is a transfer of capital that was initially transferred to Albania for investment purposes, but that has not been used. In order for such a capital transfer to be executed, the FX Regulation prescribes that the legal person must submit to the bank the decision by its decision-making body on halting the investment.
Similarly, the licensed subject effecting the transfer must receive an authorization from the tax authorities in order to execute a capital transfer in some cases. An example of this is a capital transfer up to the amount of the total paid-in capital plus earnings from such capital investment (that is supported by documentation). The request for a transfer must include a certificate from the tax authorities indicating the amount invested plus the resulting earnings (after tax obligations have been satisfied). A certification regarding tax liabilities is also necessary for a capital transfer, up to the amount of capital and profits resulting from the sale or partial or total liquidation of an investment.
Residents and non-residents that carry out foreign exchange transaction in the foreign exchange market shall be responsible for the authenticity of all submitted documentation.