Introduction: The Importance of the Regulation and Its Context
The Regulation “On the Licensing, Organization, Activities, and Supervision of Currency Exchange Offices” is the primary document that sets the conditions and rules for operating private currency exchange offices in Albania. This regulation plays a critical role in ensuring financial integrity and preventing illicit activities such as money laundering, since currency exchange offices are often considered a vulnerable link in this regard. The Bank of Albania, as the supervisory authority, approved the initial regulation in 2007, and has since strengthened it with periodic amendments to meet increasingly stringent international standards. In particular, the most recent amendments (September 2025) aim to further strengthen the regulatory requirements, in line with Moneyval's recommendations for preventing money laundering and the financing of terrorism. These changes are expected to significantly affect how currency exchange points operate and to increase the transparency of their activities.
The original 2007 regulation: what did it provide?
The initial regulation was adopted by the Supervisory Council of the Bank of Albania by decision no. 31, dated 06.06.2007 . It established the basic framework for the licensing and supervision of currency exchange offices, setting the minimum criteria that interested parties had to meet. Some key points of the original version included:
Minimum initial capital
A minimum capital was required for licensing. According to the regulation (and subsequent updates), this threshold was 2.5 million lek (or the equivalent in foreign currency). This amount had to be deposited in a bank and ensured that the entity had the financial means to carry out its activities.
Licensing and organizational procedures
Entities had to apply to the Bank of Albania for a license, submitting the required documentation. The regulation laid down criteria for the ownership and management structure (e.g., the requirement for good reputation of the administrator and owners), although at that time the concept of beneficial owners was not yet explicitly mentioned.
Limitations of activity
The regulation stipulated that currency exchange offices are permitted to conduct only currency exchange activities and related operations, prohibiting involvement in other financial activities without a license. They must also comply with anti–money laundering requirements under applicable laws.
Supervision and penalties
The Bank of Albania had (and continues to have) the right to inspect these offices and impose disciplinary measures in case of violations. In the original version, administrative fines for violations ranged from 20,000 to 100,000 lek. Likewise, in serious cases (e.g., well-founded suspicions of involvement in money laundering), the old regulation allowed the suspension of the license for up to 60 days as a precautionary measure. After this period, the entity either resumed operations (if cleared of the suspicions) or had its license revoked.
In general, the 2007 regulation laid the foundations for oversight of this sector, requiring that every currency exchange office be licensed, have sufficient capital, reputable management, and comply with anti–money laundering laws. Over the years, the Bank of Albania has made several partial amendments (in 2007, 2011, 2014, 2016, 2019) to align the regulation with new laws and directives. However, the package of amendments approved in September 2025 represents the most significant improvement to date, directly addressing current market challenges and international requirements.
Key changes approved in 2025
On September 3, 2025, the Supervisory Council of the Bank of Albania approved Decision No. 42, dated September 3, 2025, which introduced a series of fundamental changes to the existing regulation. These changes aim to improve the licensing and supervision of currency exchange offices by strengthening requirements for the reputation, integrity, and financial sustainability of entities, in line with international standards for combating money laundering. Below are the key points of these changes, illustrated with concrete examples:
Doubling the minimum capital and transparency of funding sources
The minimum initial capital required to obtain a license has been increased from 2.5 million lek to 5 million lek. This doubling aims to ensure that only the most financially stable entities operate in the market. Furthermore, the new regulation requires that every capital payment (initial or additional) be accompanied by documentation on the origin of the funds. License applicants must justify the source of the invested capital, including a notarized statement confirming that the capital is not borrowed. The Bank of Albania now has the right to request additional clarifications and to verify in detail the source of the funds that will be used as capital for the exchange office. These additional requirements increase financial transparency and prevent the introduction of funds of questionable origin into this activity.
Inclusion of beneficial owners and stricter “Fit & Proper” criteria”
An important innovation is the introduction of the concept of “beneficial owners” into the regulations. Now, during the licensing process, entities must identify and declare their beneficial owners (persons who actually own or control the company) These beneficial owners, like shareholders/partners and administrators, are subject to an assessment of suitability and integrity by the Bank of Albania. According to the amendments, good reputation, the professional and financial integrity of each beneficial owner or director becomes an explicit condition for license approval. The Bank will assess these elements both at the time of license issuance and whenever there are changes in the ownership structure or governing bodies during operations. This means that, for example, if an exchange office is sold or transferred to new owners, those owners will undergo a strict vetting process to ensure they have high integrity and are not involved in illegal activities. The definition of “good reputation” is formalized in the regulations: the individual must not have any criminal record (especially for financial crimes), must have professional ethics and be in good financial standing, and must not be subject to investigations or sanctions in violation of the law. These added “fit & proper” standards are expected to significantly increase the screening of entities and their related individuals, removing suspicious individuals from the market.
New requirements for administrators and reporting
The new regulation sets higher standards for the management staff of currency exchange offices. The administrator of an exchange office must now have a higher education degree – at least a master's degree or its equivalent in a relevant field. This formal educational requirement had not been clearly defined before and is intended to ensure that the management of the entities is entrusted to individuals with professional qualifications. Likewise, verification of the administrator's good reputation becomes a condition for license approval, similar to that for owners. In terms of reporting, the new regulation provides for the use of the ERRS electronic system (Electronic Regulatory Reporting System) to submit periodic reports. This is expected to standardize and facilitate data exchange between exchange offices and the Bank of Albania. Additionally, the Bank will have closer cooperation with the Financial Intelligence Unit (FIU) during the review of license applications and the monitoring of activities. The involvement of the FIU – which is responsible for analyzing suspicious transactions – ensures that anti-money laundering aspects are prioritized from the moment an entity is licensed.
New limits on cash transactions
One of the most commented-on changes is the establishment of official limits on the amount of physical cash that can be exchanged or held by currency exchange offices. Any transaction over 1,000,000 lek (about 10,000 USD, or ~8,500 euros) is not allowed to be carried out directly in cash. If a client requests to exchange an amount above this threshold, the transaction must be conducted through bank accounts or other payment instruments and not simply by handing over physical cash at the counter. This limit aims to curb the informal circulation of large amounts of cash and to push these exchanges toward banking channels, where records are kept and better control is possible (e.g., customer identity verification, suspicious activity reporting, etc.). Likewise, the regulation requires that exchange offices not hold in their daily cash register more cash than their initial capital level. This means that, with the new minimum capital requirement of 5 million lek, an exchange office cannot physically hold more than 5 million lek in cash on its premises at the end of the day. This measure limits the stock of money circulating outside banks and reduces the risk of abuses or informal activities during the day.
Harsher punitive measures
To ensure compliance with the new rules, the Bank of Albania has significantly increased the penalties against entities that violate them. The maximum administrative fines have been raised from 100,000 lekë to 1,000,000 lekë, effectively tenfolding the maximum limit. In the past, fines for violations (for the entity or its administrator) ranged from a minimum of 20,000 lekë to a maximum of 100,000 lekë; now, for serious violations, an office can be hit with a much heavier fine, reflecting the critical nature of the new obligations. Another significant change concerns license suspension: previously, if there was credible evidence that an entity was involved in money laundering/terrorist financing, the Bank would suspend the license for up to 60 days. Now this period has been extended – the new regulation provides for a suspension of up to 90 days (3 months), with a complete ban on activity during that period. This gives the Bank more time for investigations or legal proceedings, and puts pressure on the entity to promptly address the violations; in serious cases, the suspension may be followed by license revocation. Furthermore, entities that voluntarily suspend operations for a period of 1–3 months are now required to officially notify the Bank and follow a specific documentation procedure during the temporary suspension. Failure to comply with this requirement may result in penalties, as the Bank aims to have clear information on every active or inactive entity in the market.
Higher licensing and operating costs
In line with the increase in requirements, the fees paid by entities have also been raised. The fee for applying for the new license has been doubled from 1,500 lekë to 3,000 lekë, and the fee for obtaining an exchange officer card (an identification document for exchange office personnel) has been doubled from 500 lekë to 1,000 lekë. These figures themselves are nominal compared to other financial requirements, but they reflect the new policy of increasing the financial responsibilities of entities. Also, fulfilling the new obligations (e.g., implementing ERRS, additional reporting and control procedures) will entail higher operating costs for companies, which is considered an investment in raising the sector's standards.
In summary, the 2025 changes address a number of areas where the old regulation was considered weak: higher capital requirements to increase resilience, transparency in ownership and financial sources to combat money laundering, restrictions on cash transactions to formalize cash circulation, as well as stricter punitive measures to ensure compliance with the rules. These changes have been drafted with the clear aim of aligning domestic practices with current EU standards and Moneyval recommendations, subjecting every entity operating in this business to a finer sieve.
Practical implications for currency exchange offices
The approved changes are expected to have significant effects on the operations of over 600 active currency exchange offices in Albania. Some of the main practical impacts are:
Stronger barrier to market entry
Doubling the minimum capital requirement to 5 million lek means that individuals or new companies seeking to obtain a license must have a substantial amount of their own funds available. This could reduce the number of new applicants or eliminate smaller players who cannot meet this financial threshold. Some existing offices may be forced to restructure or consolidate; for example, two or more small operators could join forces to meet the capital requirement and continue operating. The transitional period for meeting the capital requirement (if such a period is stipulated by the Bank) will be crucial for their survival. In the medium term, a professionalization of the market is expected – financially weaker or poorly owned entities will exit the market, leaving room for fewer but better-capitalized and transparent exchange offices.
Increasing transparency and accountability
Identifying beneficial owners and assessing their reputations means that the true owners of businesses can no longer hide behind other names or fictitious partnerships. This increases individual accountability – every real owner will know they are subject to scrutiny by the Bank and law enforcement institutions. As a result, owners with problematic backgrounds or questionable financial resources will find it difficult to remain in this sector. Implementing these requirements may also bring additional administrative costs for exchange offices (e.g., obtaining notarial certificates, ownership documents, criminal record certificates for administrators/owners, etc.), but in return, the sector will become more formalized and trustworthy for the public and investors.
Cash constraints: effects on daily operations
The establishment of a 1 million lek ceiling on cash transactions will change customer behavior and daily exchange operations. For most small and medium-sized transactions (e.g., a citizen exchanging a few hundred euros), no impact is expected, since they are usually below the threshold. But for large transactions—often carried out by businesses or individuals with substantial amounts of currency—the involvement of banks will be required. Thus, a company that wants to convert, say, 15,000 euros into lek will now have to do so using a bank account (i.e., send or receive funds through the bank) instead of simply showing up with cash at the money changer. This policy is expected to increase the traceability of large transactions and reduce the volume of physical cash circulating outside the banking system. Even the exchange offices themselves will have to carefully manage their daily cash, since exceeding the limit (capital) could cost them dearly—exposing them to penalties. Although some operators may see this as a business constraint, in the long run it reduces the risk of robberies or losses (since they hold less cash on hand) and forces them to strengthen ties with banks for daily liquidity.
Strengthening the culture of compliance
With increased fines and the possibility of longer-term or even indefinite license suspension, exchange offices will be more careful in complying with the legal framework. Violations that were previously considered “minor” (e.g., failure to report a request on time, improper posting of exchange rates, or even negligence in identifying a suspicious transaction) can now result in fines of up to 1 million lek – a rather significant sum for small businesses. This is expected to increase investments in internal control systems and staff training. Exchange offices will have to train their employees on the new rules – e.g., how to refuse a cash transaction above the permitted limit, how to report through ERRS, how to conduct due diligence for unusual clients, etc. Improving the compliance culture will have a positive impact across the sector: it will make it safer and more integrated with the formal financial system.
The effect on customers and the broader market
For the general public and businesses, these changes offer greater security guarantees when using currency exchange services. A client can now expect every exchange office to have vetted, reputable owners and managers, sufficient capital (which implies a greater ability to meet financial obligations), and to be under strict monitoring by the authorities. This increases the credibility of these entities. On the other hand, clients exchanging large sums may face a few additional procedures (e.g. the requirement to go through banks), but this is seen as a measure to protect them as well from risks (e.g., not carrying large amounts of cash) and to combat the informal economy. In a broader view, such reforms help maintain financial stability and the integrity of the country's economic system, as they reduce potential channels for illicit or informal cash flows.
In the short term, some operators may feel the increased regulatory burden—whether in financial terms (capital, potential fines) or procedural. However, the long-term benefits are expected to be positive: a healthier market with fewer problematic players, fairer competition, and lower risks for Albania's financial system.
Conclusions and the future direction of financial oversight
The latest changes to the regulation of currency exchange offices clearly demonstrate the Bank of Albania's strategic orientation toward strengthening financial supervision and aligning with international best practices. This trend is expected to continue in the coming years. Some reflections on the future:
Harmonization with the EU and global standards
Albania aspires to integrate into the European Union, and part of this process is the adoption of the acquis communautaire, including the directives on financial services and anti-money laundering. Identifying beneficial owners, limiting cash transactions, and stringent due diligence requirements are elements common to EU regulations. In this context, the Bank of Albania appears determined to move in parallel with EU developments, which will make the transition to European legislation more gradual and natural for the sector.
Reducing informality in the economy
Measures such as capping cash amounts and requiring transparency of ownership contribute to the broader fight against economic informality. By channeling large foreign exchange transactions through banks, the regulation helps increase the use of the banking system and reduce the volume of physical cash held “under the mattress.” This is in line with other recent initiatives, such as reducing fees on electronic payments and promoting the digitization of payments by the Bank of Albania. We can anticipate that in the future there will be additional measures to integrate the bureau de change sector with digital platforms and perhaps to encourage them to offer such services in an authorized manner.
Raising control standards
Since currency exchange offices will be monitored more closely (cooperation with the FIU, electronic reporting, as frequent inspections as possible), an increase in the supervisory capacities of the Bank of Albania itself is expected. This will require investment in human and technological resources by the Bank to analyze the larger volume of information coming from ERRS and to monitor on-site compliance with the regulations. If these measures are implemented rigorously, the sector will gradually be cleansed of irregular entities, increasing financial stability in the country.
Impact on other non-bank sectors
The success (or challenges) of these changes at exchange offices could serve as a precedent for addressing other nonbank financial sectors. For example, nonbank financial institutions such as currency exchange outlets, credit unions, electronic payment providers, etc., may face similar criteria in the future, with the aim of unifying supervisory standards across the financial sector.
In conclusion, the new regulation for currency exchange offices is an important step toward strengthening the financial supervision architecture in Albania. By comparing the original 2007 text with the revised 2025 version, a marked transformation is evident—from a basic regulatory approach to a much more comprehensive and proactive one. This reflects an evolution of priorities: from simply licensing activity in the 2000s to ensuring that this activity is carried out by responsible, transparent, and legally and financially resilient actors today. For the public and the national economy, these measures are expected to bring benefits in the form of a cleaner, more formalized financial market aligned with the developed world. The Bank of Albania, for its part, appears determined to continue on this path, staying ahead of developments and ensuring that the Albanian financial sector is safe, sustainable, and reliable.
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