FATF Status

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

Latest FATF Statement - 21 February 2025

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 ensuring that the beneficial ownership information held in its Register is accurate and up-to-date and by identifying the subset of non-profit organisations (NPOs) most vulnerable to TF abuse. 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) improving investigations and prosecutions of different types of money laundering in line with risks, including high-scale corruption and organised crime; (3) ensuring the ability to conduct parallel financial investigations in all terrorism investigations; (4) addressing gaps in the PF TFS frameworks; and (5) demonstrating initial implementation of risk-based monitoring of NPOs 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 and reflected in the country's low position on Transparency International's Corruption Perception Index. Recent legislative changes aimed at reforming the Anti-Corruption Commission have been criticized for their rushed implementation and lack of thorough analysis, while high-level corruption, particularly in public procurement, remains a serious challenge. Despite Bulgaria's ratification of various international anti-corruption agreements, the effectiveness of enforcement remains weak, with ongoing issues such as bribery and a lack of significant convictions against senior officials contributing to an uncertain investment climate.

Bulgaria is a low-cost investment destination with government incentives to attract new investments, characterized by low labor costs and flat corporate and income taxes. However, the country faces challenges such as low labor productivity, wage increases outpacing productivity growth, and demographic issues that threaten future productivity. Despite these challenges, Bulgaria is expected to recover economically in 2024, driven by a significant public sector investment program.

Bulgaria presents a relatively low-cost investment climate, bolstered by government incentives designed to attract new investments. Despite facing challenges such as labor shortages and inflation, the country maintains some of the lowest labor costs in the European Union, alongside a flat corporate tax rate. However, concerns regarding the rule of law and regulatory inconsistencies persist, which may deter foreign investors.