Burden of Proof for Businesses Increases, Documents for Ownership Chain and Real Control

It will no longer suffice for businesses to register only the name of the person who appears as the beneficial owner.

The new draft law “On the register of beneficial owners”, now under consultation, requires entities to document how they have identified the real owner, the links of the ownership structure and the mechanism through which ultimate control is exercised.

According to the draft, reporting entities must “maintain appropriate, accurate and up-to-date data and supporting documents”, on the basis of which the beneficial owners and the type of control exercised by them are determined.

The obligation is not limited to documents proving direct ownership of shares. The draft law defines the beneficial owner as the individual who owns or “ultimately controls” a legal person, through shares, quotas, voting rights, capital participation or “control through other means”.

For structures with several intermediate companies, the draft provides for tracing indirect ownership at all levels. The participations in each link of the chain must be multiplied, while the results of different chains are summed.

The text requires that this assessment takes into account “all quotas/shares at every level of ownership”. When the shareholder of an Albanian company is another legal person, the entity must follow the structure up to the individual at the end of the chain and retain the documents on which the calculation was based.

The draft law also addresses cases where control does not arise solely from the capital percentage. The new definitions include management and supervisory functions and agreements that may give a person influence over decision-making.

The draft defines “formal appointment agreement” as the contract where one person instructs another to act on his/her behalf, for example as director, shareholder or founder.

For the identification of real control, agreements between partners, powers of attorney, management contracts and acts showing who appoints or instructs the managers may become important. For non-profit organizations, the ultimate effective control is related to the person who determines the decisions or controls the election, appointment and removal of the majority of the decision-making or executive bodies.

More detailed rules are also set for trusts and similar legal arrangements. For these structures, the settlor, trustee or fiduciary, protector, beneficiaries and any other individual exercising ultimate control must be identified.

The register must also contain data on the founding act, purpose, administered assets and the place from where the arrangement is directed. The declared information will not remain isolated in the register.

According to the draft law, the Beneficial Owners Register must collect data in real time from other state registers, while the National Business Center will be responsible for their administration, processing and storage.

Documentary control becomes important when banks, financial institutions or other obliged entities find that the information in the register does not match the data collected during customer due diligence. In these cases, the company must update the information, if the discrepancy is correct, or confirm the existing data.

The register was created following international demands for more transparency

The Law on the Beneficial Owners Register was adopted in the framework of strengthening ownership transparency and implementing international anti-money laundering recommendations.

In December 2018, MONEYVAL, the Council of Europe body that assesses national systems against money laundering and terrorist financing, asked Albania to improve the effectiveness of the system. In June 2019, the Parliament adopted five laws aiming to address the recommendations of this institution and to strengthen the preventive framework.

FATF, the intergovernmental body that sets global standards against money laundering and terrorist financing, included Albania in February 2020 on the list of jurisdictions under enhanced monitoring, known as the “grey list”. Albania exited this monitoring on 27 October 2023, after FATF assessed that the country had completed its action plan.

In the same period, the legal framework for beneficial ownership was also established. The European Commission reported that the law on the creation of the register was adopted in July 2020, while the register became functional at the end of June 2021, with data from businesses and non-profit organizations.

In June 2023, MONEYVAL assessed that Albania had improved technical compliance with FATF Recommendation 25, which relates to transparency and beneficial ownership of trusts and other legal arrangements.

The European Commission’s 2025 report on Albania also underlined that “The Beneficial Owners Register is functional” but another official Commission document, related to the programming of funding for the Western Balkans, highlighted that despite this, challenges persist in the implementation of anti-money laundering laws and in the full implementation of the register./MONITOR