Financial Crime World

Bulgaria Urged to Improve Financial Fraud Prevention Strategies

The Council of Europe’s anti-money laundering body, MONEYVAL, has issued a report highlighting the need for Bulgaria to strengthen its efforts to combat money laundering and financing of terrorism.

Assessment of Compliance with International Standards

According to the report, Bulgaria achieved a moderate level of effectiveness in assessing money laundering and terrorism financing risks, as well as domestic coordination and investigation of terrorism financing cases. However, it fell short in other areas, including:

  • Use of financial intelligence
  • Investigations and prosecutions of money laundering cases
  • Confiscation of criminal proceeds
  • Targeted financial sanctions

Challenges and Recommendations

MONEYVAL commended Bulgaria for conducting a comprehensive national risk assessment but noted that the country lacks comprehensive statistics to inform its efforts. The report also highlighted challenges related to:

  • Inter-agency cooperation between law enforcement agencies, hindered by a lack of technical tools
  • Low number of money laundering investigations, prosecutions, and convictions
  • Criminal sanctions not commensurate with identified risks

To address these challenges, MONEYVAL recommends that Bulgaria:

  • Improve the use of financial intelligence, investigation, and prosecution of money laundering cases
  • Confiscate criminal proceeds in a more effective manner
  • Implement targeted financial sanctions
  • Take a systematic approach to investigating terrorism financing
  • Enhance risk-based supervision of non-profit organizations vulnerable to being misused for terrorism financing

Knowledge and Supervision

The report found that:

  • The knowledge of anti-money laundering and combating of financing of terrorism obligations by obligated entities is generally high
  • However, understanding of business-related risks and application of preventative measures in higher-risk areas needs improvement
  • Supervisors are applying a risk-based approach to the financial sector, while other sectors lack effective supervision due to resource constraints

Concerns and Recommendations

MONEYVAL expressed concerns over:

  • The lack of measures to prevent criminals from entering certain sectors, such as real estate brokers, trusts, and company service providers
  • Urged Bulgaria to establish market entry measures and take proactive steps to prevent unlicensed businesses
  • Significant concerns over the accuracy of beneficial ownership information held in registers and by obligated entities
  • Recommended that Bulgaria urgently review policies and take action to address these concerns

International Cooperation

The report concluded that while there are some technical and procedural constraints, Bulgaria generally provides timely and constructive assistance across a range of international cooperation requests.