Financial Crime World

Bulgarian Bank’s Liability in Multi-Million Euro Financial Fraud Case: Legal Perspective

In a recent financial fraud case, a Bulgarian bank’s role is being questioned regarding its responsibility in allowing the transfer of millions of euros to scammers, raising concerns about due diligence and regulatory compliance.

Background of the Case

  • Unidentified international scammers induced a large company to transfer funds to Bulgarian bank accounts.
  • Subsequently, the funds were moved to an offshore account outside the European Union, violating Bulgarian and international anti-money laundering laws.

Victim Corporation’s Experience

  • Mikov & Attorneys, a legal firm, revealed their client - a prominent international corporation, fell for the scam, unwittingly transferring substantial funds to Bulgarian accounts.
  • The payee’s bank allegedly failed to block or return the funds, allowing large sums to be transferred to third parties.

Liability of the Payee’s Bank

Could the Bulgarian payee’s bank be held liable for the damages suffered by the corporation?

Bulgarian Law

  • Anyone causing wrongful damage must make amends.
  • The bank is subject to these obligations, especially regarding payment processing.

Exercise of Due Diligence

  • Bank employees must exercise caution when handling large transactions with potential signs of fraud.
  • Banks must comply with Bulgarian and EU regulations like Regulation (EU) 2015/847 and Directive (EU) 2015/849.

Required Safety Measures

  • Scrutinize payment orders.
  • Investigate inconsistencies.
  • Detect missing or incomplete payee information.
  • Implement risk-based procedures to verify payee identities.

Given the context, some legal experts believe the Bulgarian bank should have taken more care to prevent significant losses for the corporation. This could potentially be a landmark case in Bulgaria’s financial fraud sphere.

By Plamena Banabakova, Attorney-At-Law, Mikov & Attorneys.