Over 10,000 individuals and legal entities in Bulgaria can be used to transact funds in money laundering schemes. This is claimed by Radomir Dukov, Chairman of the Bulgarian Association of Experts on the Prevention of Financial Crimes.
According to him, this is a model known as Money Laundering as a Service – money laundering as a service, in which ready-made companies and front persons are used to move financial funds.
It is important to clarify that the above 10,000 individuals are an unofficial assessment of the expert, and not an official number of participants in criminal schemes identified. Bulgaria expects to leave the “gray list“
The topic comes at a time when Bulgaria is awaiting a decision to leave the list of jurisdictions under enhanced surveillance of the Financial Action Task Force – FATF.
According to Dukov, our country, along with Monaco and Côte d'Ivoire, is expected to be officially removed from the list on October 30 after the organization's plenary session in Paris.
However, this will not mean that the problems with money laundering in Bulgaria have been solved.
“We should not expect that now, when they remove us, someone will say: I removed Bulgaria from the gray list and we no longer have a problem with money laundering“, the expert commented.
580 cases, but only 18 convicted
One of the main problems, according to Dukov, is the difference between the number of proceedings initiated and the actual results.
Last year, about 580 money laundering cases were monitored and conducted in Bulgaria. However, only 18 people were convicted.
According to the expert, it is the effectiveness of law enforcement and judicial institutions that is of key importance for the FATF assessment.
The organization does not only assess whether a country has adopted the necessary laws and regulations. The practical result is also important - investigations, convictions and confiscation of illegally acquired assets.
How “mules“ work
Money laundering schemes often rely on people or companies that formally appear to be legitimate participants in financial transactions.
Bank accounts, companies and various financial operations are used, through which the origin of the funds is concealed or made difficult to trace.
With the Money Laundering as a Service model, criminal networks can use already existing companies and front persons, instead of building the entire necessary infrastructure themselves.
In this way, financial movement can be distributed among multiple individuals and companies, which makes it difficult to establish the actual origin and recipient of the money.
1.8 billion euros in suspicious transactions
The scale of the problem is also visible from the data on identified suspicious transactions.
According to the information presented by Dukov, through the analysis of cash transactions over 15,000 euros, transactions for about 1.8 billion euros were identified and handed over to law enforcement agencies.
At the same time, for the entire past year, only 17 million euros were blocked based on signals from obligated persons.
The difference between these two values shows one of the main problems facing the system - the detection of suspicious transactions does not always lead to effective freezing or confiscation of funds.
The banking sector files the most reports
The majority of suspicious transaction reports to the National Anti-Money Laundering Agency come from the banking sector.
There are just over 20 banks in Bulgaria, which are among the most active participants in the system for preventing financial crimes.
The picture outside the banking sector is completely different. There are about 100,000 obligated persons - among them real estate brokers, notaries, accountants and other professionals.
According to Dukov, this sector sends relatively few signals.
One of the reasons is the fear of smaller companies and professionals that reporting could lead to inspections or the loss of important clients.
What is changing with the new EU rules
The upcoming European rules against money laundering will place additional requirements on Bulgarian institutions.
According to the expert, the new EU package, which begins to be implemented in 2027, will impose serious changes, including with regard to information about the beneficial owners of companies.
The Commercial Register will also have greater responsibilities, including with regard to verifying data on beneficial owners and controlling the information provided by companies. What does it mean to be removed from the "grey list"?
Bulgaria's inclusion in the FATF list in 2023 has had an impact on the relations of Bulgarian companies and banks with international financial institutions.
According to Dukov, Bulgarian citizens and businesses have been treated as higher-risk, which has led to additional checks, delays in transactions and difficulties in opening bank accounts abroad.
Delisting could reduce this pressure and facilitate international financial operations of Bulgarian companies.
But it will not automatically to solve the problem of financial crimes.
The biggest challenge remains efficiency
According to the expert's assessment, Bulgaria has made progress in terms of legislation and the regulatory framework, but the serious question remains whether the institutions can achieve sufficient results in practice.
This means more effective investigations, better control outside the banking sector and a greater ability to track and confiscate illegal funds.
Therefore, the expected exit from the “grey list“ FATF will be an important step for Bulgaria, but it will not end the problems.
Against the backdrop of the estimate of over 10,000 individuals and legal entities used to transact funds, and the huge difference between the identified suspicious operations and the actually blocked funds, the fight against money laundering remains a serious challenge for Bulgarian institutions.
Here I would keep this more nuanced version for Fakti — a strong title, but a clear clarification that “10,000“ is an expert, not an official statistic. This keeps the material from being too categorical.
Sources: Bloomberg, Dnes.bg