Anti-Money Laundering (AML) in Bulgaria

Money laundering in Bulgaria is a growing problem. Though it is considered a major transit point for the trafficking of drugs and persons into Western Europe, the country experiences a considerably laidback regulatory control, as well as low tolerance from the government with regard to the enforcement of a stricter Anti Money Laundering (AML) law.

Bulgaria is primarily a cash economy, making it more difficult to trace money laundering and criminal activities. In addition, Automated Teller Machine (ATM), tax and credit card fraud are also serious problems for Bulgaria, as well as smuggling and a prevalence of organized crime.

The Law on the Measures against Money Laundering (LMML) is the backbone of Bulgaria’s AML regime. It determines the preventive measures against the use of the financial system for the purpose of money laundering, as well as the organization and control over their enforcement. Banks and other financial institutions are required to maintain records on customers and documents on operations or transactions for a term of five years.

All financial institutions are required to apply Know Your Customer (KYC) standards and report any activity which exceeds 30,000 BGN to the Financial Intelligence Agency, Bulgaria's Financial Intelligence Unit (FIU). In addition, all banks and financial institutions are required to fully comply with LMML.

The Economy of Bulgaria

Bulgaria has an open, free-market economy and is classified as an upper-middle-income country. Once a Communist country, Bulgaria averaged more than 6 percent growth from 2004 to 2008, which was driven by significant amounts of foreign direct investment. Successive governments have demonstrated a commitment to economic reforms and responsible fiscal planning; however, the global downturn is reducing exports, capital inflows and industrial production.

Banking in Bulgaria

The Bulgarian National Bank (BNB) is an independent financial institution responsible for issuing all banknotes and coins in the country, overseeing and regulating the banking sector and maintaining the government's currency reserves. The BNB plays a key role in the Bulgarian economy by maintaining the stability of the Bulgarian currency and strengthening the development of the banking and credit system in the country.

The BNB maintains the stability of the national currency by ensuring:

• Full coverage of the Bank’s pecuniary obligations with highly liquid assets.
• Unrestricted exchange between the Bulgarian Lev and the reserve currency in the country at a fixed official exchange rate.
• Necessary issuance of banknotes and coins in the country.
• Strict and effective banking supervision.
• Support for the normal functioning and development of financial markets.

As of January 1, 2007, the BNB is a full member of the European System of Central Banks and actively participates in the decision making process in the area of banking and finance in the European Union (EU). The BNB works for the strengthening of the banking and financial system of EU by participating in committees at the European Central Bank (ECB), the European Commission and the EU Council.

Bulgaria's Currency

The currency in Bulgaria is the Lev. The Lev was first introduced in 1881 and has been redenominated several times, mostly recently in 1999.

The Lev comes in both banknotes and coins. Banknotes are available in 5, 10, 20, 50 and 100 denominations. The Bulgarian coins (known as a stotinka) are available in 1, 2, 5, 10, 20, 50 cent pieces and the 1 Lev coin.

Other Key Statistics about Bulgaria

Time Zone: UTC+2 (7 hours ahead of Washington, DC during Standard Time).

Daylight savings time: +1hr, begins last Sunday in March; ends last Sunday in October.

Location: Southeastern Europe, bordering the Black Sea, between Romania and Turkey.

Population: 7,148,785 (July 2010 est.).

Labor Force: Approximately 7.5% works in agriculture, 36.4% in industry and 56.1% in services industries. The unemployment rate is 9.1%.

Languages Spoken: Bulgarian (official) 84.5%, Turkish 9.6%, Roma 4.1%, other and unspecified 1.8%.

Trade Organizations: Bulgaria is a member of the World Trade Organization (WTO).