Financial Crime World

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LAWMAKERS’ LACK OF CLEARITY ON MONEY LAUNDERING LEADS TO CONFUSION AND INEFFECTIVENESS

A recent analysis has revealed that the Bulgarian legislation contains a significant loophole in its definition of money laundering, which could be exploited by criminals and undermine the effectiveness of anti-money laundering measures.

Inconsistent Definitions

According to experts, the Anti-Money Laundering Measures Act and the Criminal Code contain conflicting definitions of money laundering, leading to confusion among law enforcement agencies and financial institutions. The Anti-Money Laundering Measures Act defines money laundering as a specific type of criminal activity, while the Criminal Code includes advising a crime as a form of facilitating its commission.

Unnecessary Distinction

However, experts argue that this distinction is unnecessary and creates ambiguity in the application of anti-money laundering measures. “The regulation in the Anti-Money Laundering Measures Act is detailed and explicit, but it does not specify what constitutes an association for the purpose of committing a crime,” said Dr. Maria Achim, a leading expert on economic and financial crime.

Gap in the Law

The analysis also highlights that the definition of money laundering in the Criminal Code includes forms of facilitation that are not specified in the Anti-Money Laundering Measures Act. This creates a gap in the law that could be exploited by criminals to launder money undetected.

Compliance Challenges

Furthermore, experts point out that the lack of clarity on the concept of money laundering makes it difficult for financial institutions and individuals subject to anti-money laundering regulations to comply with their obligations. “The persons obliged under the Anti-Money Laundering Measures Act bear personal criminal responsibility when they violate or fail to implement the preventive measures established by the law,” said Dr. Achim.

Conclusion

The analysis concludes that the inconsistent regulation of money laundering terminology in Bulgarian legislation undermines the effectiveness of anti-money laundering measures and creates a risk of legal confusion and controversy. As such, it is essential for lawmakers to revisit the definition of money laundering in the Anti-Money Laundering Measures Act and align it with the Criminal Code to ensure a clear and effective approach to combating this serious financial crime.

References

  • Achim, M.V., & Borlea, S. (2021). Economic and financial crime: Corruption, shadow economy and money laundering. Springer. Switzerland.
  • Lewisch, P. (2008). Money laundering laws as political instrument: The social cost of arbitrary money laundering enforcement. European Journal of Law and Economics.
  • Nizovtsev, Y., Parfylo, O., Barabash, O., Kyrenko, S., & Smetanina, N. (2021). Mechanisms of money laundering obtained from cybercrime: The legal aspect. Journal of money laundering control.
  • Zavoli, I., & King, Ch. (2021). The challenges of implementing anti-money laundering regulation: An empirical analysis. Modern Law Review. University of Leeds.
  • Zlyvko, S., Shkliar, S., Kovalenko, A., Sykal, M., & Snigerov, O. (2021). Legitimization of income of clients as a factor of financial stability of banks. Entrepreneurship and sustainability issues.

Legislation