On June 21, Parliament tightened up Bulgarias anti-money-laundering law as a prerequisite to intensifying the fight against organised crime and to complying with European Union requirements.
Amendments to the Measures against Money Laundering Act oblige banks to ask for information concerning the individuals behind company accounts, on the origin of funds, and on the reason for spending.
Financial institutions must also inform authorities of suspicious activity by their clients.
Offshore transfers will be closely monitored.
The amendments envisage that the Finance Minister can block suspicious money transfers.
The EU has criticised Bulgarias anti money-laundering legislation of 1998 for failing to lead to action against unlawful large-scale money transactions.
The amendments come ahead of a report by the European Commission (EC), expected in October, which will recommend whether the country will join the EU next year or in 2008.
Despite gangsters being believed to have taken advantage of loose control of money laundering, no major money laundering case has so far been prosecuted in Bulgarian courts.
The EC highlighted money laundering as one of the areas of serious concern in its May report, which left Bulgaria and its partner in EU accession Romania without firm admission dates, because of serious shortcomings in several areas of preparation in each of the Black Sea neighbours.
The amendments to the Measures against Money Laundering Act, tabled by Petar Dimitrov from the left-wing Coalition for Bulgaria, who is also the chairperson of the parliamentary committee on economic policy, aim at bringing the law into compliance with the Revised 40 Recommendations of the Financial Action Task Force (FATF).
These were prepared after the EC report said that legislation against money laundering was not in full compliance with the EUs second Money Laundering Directive on prevention of the use of the financial system for money laundering.
The non-compliance concerns the obligations of persons providing legal consultations. The amendments in compliance with the directive provide that the persons from this category have to generally apply all measures against money laundering, envisaged by the law.
There are exemptions from any obligation to report information obtained either before, during or after judicial proceedings, or in the course of ascertaining the legal position for a client. Thus, legal advice remains subject to the obligation of professional secrecy unless the legal counsellor is taking part in money laundering activities, the legal advice is provided for money laundering purposes, or the lawyer knows that the client is seeking legal advice for money laundering purposes.
The amendments establish requirements for the identification of the real owner of clients - legal persons, for the collection of information about the purpose and nature of relations with the client, an explicit opportunity to exchange information between financial and regulating authorities is provided as well.
Envisaged is the introduction of FATF recommendations on establishing relationships with banks, registered under jurisdictions where they have no presence, use of anonymous accounts, increased attention to complicated or big operations or transactions, which might be related to money-laundering, including after the establishment of relations with a client.
The introduction of special measures regarding the obligations for identification of natural persons who are the real owners of clients - legal persons, as well as of the natural persons who have direct or indirect control over the client.
The amendments also aim at making the process transparent so that the Financial Intelligence Agency and Finance Ministry could react and stop money laundering. The Finance Ministers powers are expanded in this respect.
