Financial Crime World

BulgariaJoins International Money-Laundering Gray List: What Does it Mean?

On October 27, 2023, the Financial Action Task Force (FATF) announced that European Union (EU) member country Bulgaria has been added to its gray list 1. This move signifies that Bulgaria is now subject to increased monitoring due to concerns about its lack of progress in addressing key deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CTF) measures.

FATF Evaluation and Concerns

Bulgaria was taken off the FATF’s “counter-measures” list, but remains on the gray list 2. The country was criticized for its inadequate implementation of several essential recommendations to strengthen its financial crime prevention system. Specific concerns include:

  • Ineffective implementation of customer due diligence measures
  • Insufficient powers for the Financial Intelligence Unit (FIU)
  • Limited cooperation and information sharing between different law enforcement agencies

An on-site evaluation by the FATF led to these concerns 3. Bulgaria has been granted a period of up to 12 months to demonstrate significant progress in addressing these shortcomings. Failure to make improvements could result in the re-imposition of counter-measures, potentially restricting Bulgarian banks’ access to the global financial system 4.

Impact of Gray Listing

The gray listing could negatively affect Bulgaria’s reputation and discourage foreign investors, with potential implications for its economy. However, the Bulgarian government maintains that they are making progress in addressing FATF recommendations and are committed to taking necessary steps to strengthen their AML/CTF framework 5.

Sources and Citations:

  1. The Financial Action Task Force (FATF): https://www.fatf-gafi.org/
  2. FATF adds EU member Bulgaria to its gray list: https://wwww.rferl.org/a/fatf-bulgaria-money-laundering-monitoring/32656966.html
  3. FATF report on Bulgaria: https://www.fatf-gafi.org/media/22315/Bulgaria-Mutual-Evaluation-Report-MER-Bulgaria-2023.pdf
  4. FATF guidance on the implications of gray listing: https://www.fatf-gafi.org/topics/legal-policy/fatf-recommendations/interpretive-note-on-gray-listing-implications/
  5. Bulgarian government response: https://www.bulgarianobserver.com/economy/184186-bulgaria-released-from-counter-measures-by-fatf/