Financial Crime World

Bulgaria Faces European Commission Infringement Proceedings over Fraudulent Activities in Finance Industry

The European Commission has taken decisive action against Bulgaria, launching two new infringement proceedings and advancing two others as part of its latest package. This move comes after it was discovered that Bulgaria had failed to adequately transpose EU rules on money laundering and combating fraud into national law.

Inadequate Transposition of EU Rules on Money Laundering

The Commission found that Bulgaria’s laws did not fully comply with the EU’s latest rules on money laundering, Directive (EU) 2018/843, in several key areas. Specifically:

  • The country failed to register, license, or regulate service providers
  • There was no mechanism for resolving discrepancies in its beneficial ownership register
  • Concepts of “establishment” and “residence” were not properly applied when providing information on beneficial ownership

Inadequate Transposition of EU Rules on Combating Fraud

Bulgaria was also found to have not correctly transposed EU rules on combating fraud to EU financial interests outlined in Directive (EU) 2017/1371. The Commission identified several issues with:

  • The definition of certain criminal offenses and related penalties
  • The liability of legal persons for crimes committed for their benefit

Consequences of Non-Compliance

The letters of formal notice issued by the Commission give Bulgaria two months to respond before the case could escalate to a reasoned opinion, the second stage in the infringement proceedings. If Bulgaria fails to comply, the Commission may decide to bring the cases before the Court of Justice of the European Union.

Ongoing Cases Against Bulgaria

In addition to these new proceedings, the Commission is also advancing ongoing cases against Bulgaria for:

  • Failing to remove barriers to access to justice in relation to air quality plans
  • Non-compliance with EU rules on marine equipment
    • Bulgaria has been accused of not allowing environmental organizations or individuals to bring actions before national courts to challenge air quality plans
    • Bulgaria was found to have failed to make progress despite receiving a letter of formal notice in October 2019

Impact and Warning to Other Member States

The Commission’s actions come as a major blow to Bulgaria’s reputation in the region and highlight concerns over fraudulent activities in the country’s finance industry. The move is seen as a strong warning to other EU member states that failure to comply with EU rules will not be tolerated.

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