Bulgaria Fails to Meet International Standards in Money Transfer Services
A recent assessment by international financial experts has revealed that Bulgaria is only partially compliant with global standards regarding money transfer services. The country’s laws and regulations lack sufficient provisions to effectively prevent the use of shell banks, a common method used by criminals to launder money.
Deficiencies in Bulgarian Legislation
The assessment highlighted several deficiencies in Bulgaria’s legislation, including:
- Lack of clarity on the definition of money or value transfer services (MVTs)
- Insufficient information available to determine the reputation of institutions and the quality of supervision
- Failure to define and document the respective AML/CFT responsibilities of each institution involved in correspondent banking relationships
Additionally, the country’s laws do not adequately address the exemption of certain types of “other stores of values” from the requirements for MVTs. Moreover, Bulgaria fails to impose effective sanctions on individuals or entities that provide postal money orders without a license.
Shortcomings in Enforcement
The report also criticized Bulgaria for its lack of effective enforcement mechanisms, including:
- Administrative penalties and criminal fines that are not always proportionate to the severity of the offense
- Failure to provide for effective sanctions on individuals or entities that violate AML/CFT regulations
Efforts to Improve Anti-Money Laundering and Combating Terrorist Financing Regime
Despite these shortcomings, Bulgaria has taken some steps to improve its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime. The country has:
- Established an agency responsible for enforcing AML/CFT regulations
- Implemented rules for reporting suspicious transactions
Recommendations for Improvement
To better prevent money laundering and terrorist financing, Bulgaria should:
Strengthen Legislation and Enforcement
- Improve the definition of MVTs and clarify the scope of these services
- Increase transparency in correspondent banking relationships by requiring institutions to disclose more information about their counterparties
- Implement more effective sanctions on individuals and entities that violate AML/CFT regulations, including fines and criminal penalties
Enhance Cooperation between Law Enforcement Agencies and Regulatory Bodies
- Increase cooperation between law enforcement agencies and regulatory bodies to improve the detection and prosecution of money laundering and terrorist financing offenses