Loan sharking leaves people trapped in debt in Kosovo.

Loan sharking is a serious problem in Kosovo, forcing already desperate people into even more precarious positions. The suicide of one such victim made local headlines in May 2024, but the phenomenon has otherwise received insufficient attention, including from the authorities, despite some cases detected and investigated by law enforcement. Cars and even homes are put up as collateral and seized, sometimes with the connivance of notaries. Although loan sharking is illegal in Kosovo, investigations into the cases are rare — and successful prosecutions even rarer.

Significant loan sharking in Kosovo began in the 1990s, when people had almost no access to bank loans, unemployment was very high and investment opportunities were limited. Although legitimate access to credit increased significantly in first decade of the 2000s, illegal moneylenders continued to offer an alternative to the bureaucratic and cumbersome lending procedures of banks. They often preyed on entrepreneurs who needed financial support for their businesses, providing illegal loans on the same day as a request and without paperwork.

However, such loans clearly came with risks, including extortionate interest rates, especially in the case of late payment, as well as threats, violence and the seizure of assets. Loan sharking in Kosovo is believed to generate millions of euros in illegal proceeds, some of which are linked to money laundering, according to the country’s 2020 anti-money laundering risk assessment.¹

Although widely perceived as a problem, not least by the victims, there is limited data on the extent of loan sharking in Kosovo. There have been few investigations and prosecutions in connection with loan sharking, and the phenomenon is also not sufficiently addressed by government policies and priorities.²

Limited but revealing data

Although data on loan sharking is limited, the available statistics give some indication of the prevalence of the crime. For example, between 2021 and 2023, the Kosovo Police dismantled 106 criminal groups, nine organizations (8.5%) on the basis that they were engaged in loan sharking.³ Of the 740 suspects arrested in connection with organized crime, 78 (10.5%) were found to be engaged in loan sharking. Most of the cases were investigated in Kosovo’s Pristina and Peja regions.⁴

Currently, 14 organized crime groups believed to be involved in loan sharking are being investigated by Kosovan police units engaged in tackling organized crime and corruption.⁵ Most of the suspects are free while awaiting trial.

According to the Police Inspectorate, four police officers were investigated between 2021 and 2023, resulting in three police officers being arrested and charged on suspicion of loan sharking.⁶ In an interview, the head of the police inspectorate acknowledged allegations that other police officers were involved.⁷ In a country where there are few investigations into loan sharking, it is not surprising that investigations into police involvement are even rare and more complex.

Deeper and deeper in debt

Recent cases show the modalities of the loan sharking and the amounts of money involved. For example, a criminal organization known as the Brezovica group is being investigated by the prosecution service in the south-eastern city of Ferizaj. According to the prosecutor, Rasim Maloku, the group is thought to consist of about 15 people, including owners of big businesses operating in Kosovo.⁸

The victims of this group are estimated to have borrowed around €2 million and paid more than €500 000 a year in interest.⁹ One of the victims had got into financial difficulties during the COVID-19 pandemic and turned to the loan sharks for help. He was charged 10% interest per month.¹⁰ In June 2024, police arrested a group from the city of Gjilan who had allegedly lent €50 000 to a businessperson and demanded €600 000 in return on the basis of an interest rate of as much as 20% per month.¹¹

Falling into the clutches of loan sharks can lead to an expensive downward spiral. In one case in Ferizaj, loan sharks offered to help a heavily indebted ‘client’ sell his cars in order to repay the loan. The borrower handed over a car, valued at €100 000, to the loan sharks, who sold it the same day for €60 000, making a profit for themselves but leaving the victim with a €40 000 shortfall.¹² Such cynical schemes are facilitated by the fact that some loan sharks run their own car dealerships.

To get their cars back, indebted former car owners sometimes agree to lease the car from the dealer or sign a long-term repayment contract — again, at high interest rates. In such deals (which are sometimes formalized by notaries), the debtor agrees that payment default entitles the loan shark to seize their assets.¹³ In some cases, the assets are cars; in more extreme cases, houses or apartments have been used as collateral. As a result, victims whose debts have become unpayable have been forced to forfeit their homes by legal private enforcers.¹⁴

Delays in repaying loans, even by one day, trigger additional interest and penalties. In some cases, loan sharks are unreachable by phone or in person when the debtor tries to pay. However, after a few days, the loan shark will reappear, complain that the loan has not been repaid on time and charge additional penalties.

Although Kosovo has a criminal code that enables the criminal justice system to investigate loan sharking cases,¹⁵ few victims report cases to the police, largely out of fear. In some instances, this is because the police are the loan sharks.

In March 2024, a family from the city of Peja was evicted from their home by police. The recipient of the forfeited property was allegedly a police officer who, according to the family, had loaned them €80 000 at a monthly interest rate of 10%.¹⁶ The property is valued by the victim at close to €1 million. The Prizren prosecutor’s office withdrew the charges against the suspect, stating that there was a lack of evidence that the suspected had committed extortion, while the main victim claimed that he had been threatened and had fled to the US.¹⁷ The accused police officer remains on duty. A police captain was arrested in 2021 on suspicion of loan sharking. He is accused of making a profit of over €17 000 on a loan of €20 000.¹⁸ In 2022, two police officers, including a sergeant, were arrested, while no cases were investigated in 2023.¹⁹

Loan sharking is sometimes a family business. In July 2024, police arrested a mother and her two sons whose late father had headed a loan-sharking enterprise. The victim in this case had initially received a loan of €14 000 from the father.²⁰ As the victim was unable to repay the loan, he was forced to take an additional loan from the mother. When he was not able to repay the second loan, he took out two additional loans from the two sons. To cover the last debt, the victim took out a loan of €27 000 from a person outside the family. Only then did the victim inform the police. From an initial loan of €14 000, the victim ended up with a debt of more than €80 000.

Financial ruin is not the only harm caused by loan sharking, however. Witnesses have testified during trials that they were kidnapped or that their relatives were threatened with death.²¹ Some victims have even committed suicide, such as a man in Cagllavica, a village near Pristina, who died in May 2024.²² Another loan shark victim attempted suicide in the city of Mitrovica in October 2023.²³ In both cases, the loan sharks were arrested.

Loan sharking in the wider region

Loan sharking is an underestimated and under-reported crime in many Western Balkan countries.²⁴ In Serbia, loan sharks are well-connected with lawyers and notaries, ensuring the arrangements are formal and certified.²⁵ In March 2022, Serbia conducted its first operation aimed at combating loan sharking, which resulted in the arrest of eight people accused of money laundering, loan sharking and other crimes. The suspects secured the illegal loans with pledges of real estate through contracts signed by notaries and lawyers. When the loans were not repaid, the accused took ownership of the assets. Authorities seized assets worth nearly €5 million.²⁶

In Bosnia and Herzegovina, loan sharking is often associated with groups involved in drug and weapon trafficking or other crimes.²⁷ However, there have even been cases of criminal groups lending money to police officers, and then extorting them for information and cooperation to repay their debts.²⁸

A reliance on informal business arrangements in cash-based societies, together with the ineffectiveness of money laundering prevention and control, enables loan sharks to continue their criminal activities and launder illicit proceeds. While their victims are mired in debt and personal tragedy, loan sharks often use their ill-gotten gains to invest in construction, real estate and car dealerships. They also flaunt their extravagant lifestyles on social media.

Despite lower interest rates, simplified procedures for obtaining bank loans and a growing recognition of the serious financial harm and the inherent threats and violence associated with loan sharking, people in the Balkans continue to take out illegal loans. More attention should be paid to the issue in Kosovo and other Balkan countries to raise awareness of the problem and its harms, and to prevent people from falling into a debt trap (which can even amount to a death-trap). Some victims have reported that they were unaware of the consequences, while others felt they had no choice despite knowing the risks.

Information campaign required

Although various campaigns have been launched to raise public awareness about certain crimes and public safety concerns in Kosovo, there have been no initiatives specifically targeting the dangers and consequences of obtaining illegal loans from loan sharks. To address this gap, it is essential to develop targeted awareness campaigns that focus on educating the public about the risks of loan sharking. These campaigns should highlight the severe financial, legal and personal safety implications of such loans. Private sector actors, such as notaries, should not only inform potential victims about the consequences of such loan contracts, but also inform the authorities if they suspect that loan sharking is taking place. In addition, there is a need for increased training and awareness within government and law enforcement agencies to enable them to better plan and implement effective measures to prevent and combat loan sharking.

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