Financial Crime World

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Financial Institution Risk Assessment in Bulgaria: A Comprehensive Review

Bulgaria has made significant strides in implementing the Financial Action Task Force (FATF) Recommendations, with a majority of ratings falling under the “largely compliant” category. However, some areas require further attention to ensure robust risk management practices.

Compliance and Progress

According to the Benin Follow-Up Report 2023, Bulgaria has achieved compliance in several key areas:

  • Assessing risk and applying a risk-based approach (R.1)
  • National cooperation and coordination (R.2)
  • Money laundering offence (R.3)
  • Confiscation and provisional measures (R.4)
  • Terrorist financing offence (R.5)
  • Targeted financial sanctions related to terrorism and terrorist financing (R.6)
  • Targeted financial sanctions related to proliferation (R.7)

The country has also made progress in:

  • Effective internal controls and foreign branches and subsidiaries (R.18)
  • Reporting of suspicious transactions (R.20)
  • Robust measures to prevent tipping-off and maintain confidentiality (R.21)

Areas Requiring Improvement

However, some areas require improvement:

  • Non-profit organisations’ laws falling short of international standards (R.8)
  • Partially compliant customer due diligence practices (R.10)
  • Record keeping systems (R.11) and reliance on third parties (R.17) warrant closer scrutiny
  • Transparency and beneficial ownership requirements for legal persons (R.24) and legal arrangements (R.25) fall short of international standards
  • Regulation and supervision of financial institutions (R.26) and DNFBPs (R.28) require strengthening

Conclusion

While Bulgaria has made significant progress in implementing the FATF Recommendations, there are areas that require further attention to ensure robust risk management practices. The country’s financial sector must continue to work towards achieving full compliance with international standards to maintain its reputation as a responsible financial hub.

Note: The R. numbers refer to specific recommendations from the Financial Action Task Force (FATF).