FATF Status

Bulgaria is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 25 October 2024

Since October 2023, when Bulgaria made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime, Bulgaria has taken steps towards improving its AML/CFT regime, including by demonstrating initial implementation of its national action plan for its AML/CFT Strategy; demonstrating initial implementation of risk-based supervision for postal money operators, currency exchange providers and real estate agents and ensuring that confiscation is pursued as a policy objective. Bulgaria should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) addressing the remaining technical compliance deficiencies; (2) ensuring that the beneficial ownership information held in the Register is accurate and up-to-date; (3) improving investigations and prosecutions of different types of money laundering in line with risks, including high-scale corruption and organised crime; (4) ensuring the ability to conduct parallel financial investigations in all terrorism investigations; (5) addressing gaps in the PF TFS frameworks; and (6) identifying the subset of non-profit organisations (NPOs) most vulnerable to TF abuse and demonstrating initial implementation of risk-based monitoring to prevent abuse for TF purposes.

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Bulgaria was undertaken in 2024. According to that Evaluation, Bulgaria was deemed Compliant for 5 and Largely Compliant for 22 of the FATF 40 Recommendations. It remains Highly effective for 0 and Substantially Effective for 0 of the Effectiveness ratings.

Corruption remains a significant challenge in Bulgaria, consistently identified as a top concern by the public. Despite existing laws aimed at addressing conflicts of interest and asset declarations, implementation has been inconsistent, and recent reforms to the Anti-Corruption Commission have faced criticism for their rushed nature. The country ranks poorly on Transparency International's Corruption Perception Index, with ongoing issues in high-level corruption, particularly in public procurement, and a lack of substantial convictions against senior officials contributing to a challenging investment climate.

Bulgaria is a low-cost investment destination characterized by inexpensive labor and low corporate and income taxes, although it faces challenges such as labor shortages and inflation that have driven up wages. The country has the lowest labor productivity rate in the EU, and while the government is working to address these issues, the economy is projected to recover with a growth rate of 3.2 percent in 2024, supported by a significant public sector investment program.

Bulgaria presents a relatively low-cost investment climate, bolstered by government incentives aimed at attracting new investments, including low corporate and income taxes. However, challenges such as labor shortages, inflationary pressures, and a low labor productivity rate pose risks to productivity growth. Despite these issues, the country has seen significant foreign interest in sectors like software development and automotive, although concerns about the rule of law and regulatory inconsistencies remain prevalent among investors.