Bulgaria Strengthens Anti-Money Laundering Measures, Says MONEYVAL

Bulgaria has taken notable strides in its fight against money laundering and the financing of terrorism, according to a new evaluation released on Tuesday by MONEYVAL, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, which operates under the Council of Europe.

Since MONEYVAL's last assessment of the country in April 2022, Bulgaria has implemented improvements in several key areas. These include the enforcement of financial sanctions linked to terrorism, the enhancement of customer due diligence procedures, greater transparency around corporate ownership, and stronger oversight of specific high-risk professions and businesses, the committee’s report revealed.

As a result of these advancements, Bulgaria is now rated as either “compliant” or “largely compliant” with 32 out of the 40 recommendations set by the Financial Action Task Force (FATF), the international watchdog for anti-money laundering (AML) and counter-terrorist financing (CTF) efforts.

However, the report also pointed out that Bulgaria still falls short in eight critical areas, where it remains only “partially compliant.” These include issues related to the confiscation and provisional measures of assets, the criminalisation of terrorist financing, the application of sanctions for the proliferation of weapons of mass destruction, the oversight of non-profit organisations, correspondent banking, the use of new technologies, the enforcement of sanctions, and international cooperation in freezing and confiscating assets.

Bulgaria's ongoing deficiencies have kept it on the FATF’s grey list of countries under increased monitoring—a status it was assigned in 2023. While the FATF does not formally mandate harsher controls for countries on this list, the designation often leads to more intense scrutiny from foreign financial institutions. These additional checks can disrupt financial flows and complicate international transactions.

According to a 2021 study conducted by the International Monetary Fund (IMF), being grey-listed by FATF results in a significant economic impact. The study noted that affected countries see an average decline in capital inflows equal to 7.6% of GDP, while foreign direct investment typically drops by around 3%.

Currently, Bulgaria stands out as the only European Union member state under FATF’s increased monitoring. Croatia, which had previously been on the grey list, was removed earlier this month following FATF’s recognition of improvements in its AML and CTF framework.

Looking ahead, MONEYVAL has stated that it expects Bulgaria to submit a follow-up report within one year detailing its further efforts to fortify its anti-money laundering and counter-terrorism financing systems.

MONEYVAL, which is a permanent monitoring body of the Council of Europe, is tasked with ensuring that its member states adhere to global standards designed to combat the laundering of criminal proceeds and the funding of terrorist activities. 

By fLEXI tEAM