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 is a significant and persistent issue in Bulgaria, ranking as the top concern among the public. Despite the existence of laws aimed at preventing conflicts of interest and mandating asset declarations for public officials, enforcement has been inconsistent, and recent reforms to the Anti-Corruption Commission have faced criticism for being rushed. The country struggles with high-level corruption, particularly in public procurement, and the judicial system's lack of transparency and autonomy further complicates efforts to combat these issues, creating an uncertain environment for both local and foreign investors.

Bulgaria is characterized as a low-cost investment destination with government incentives to attract new investments, although it faces challenges such as labor shortages and inflationary pressures that have led to rising wages. The country has the lowest labor productivity rate in the EU, and while it is working towards improving productivity through investments in innovation and renewable energy, it is also grappling with demographic challenges and a need for structural reforms to enhance economic competitiveness.

Bulgaria presents a relatively low-cost investment climate, bolstered by government incentives designed to attract foreign investment. Despite facing challenges such as labor shortages, inflation, and low productivity, the country offers competitive corporate and income tax rates, alongside a growing innovation ecosystem that appeals to international companies, particularly in sectors like software development and automotive manufacturing.