Банкеръ Weekly



Vassil Kirov, Director of the Bureau for Financial Investigation Agency, to the BANKER weeklyMr. Kirov, amendments to the Act on Measures against Money Laundering are to be discussed. What has necessitated the gathering of information about all deals exceeding BGN30,000, paid in cash, and why has differentiation according to the means of payment been introduced?- Principally, there are three types of obligations for notification of the financial investigation services. The first one is notification about dubious operations and deals, the second - about operations and deals over a fixed threshhold when they are paid in cash, and the third one - about all operations exceeding a specified amount. Bulgarian legislation concerning money laundering is in its initial state of development and we have so far introduced only the first type of notification - in cases when the deals cause suspicion. The tendency in the European Union (EU) is to close this cycle, i.e. introduce reports about operations exceeding a certain threshhold, notwithstanding if they are paid in cash or not. If Parliament now approves the draft bill, we'll reach the second stage of this development, concerning deals effected in cash above a fixed threshhold.Which are the most frequently used mechanisms for money laundering? Are purchases of flats worth more than BGN30,000 and paid in cash among them?- We'll certainly not investigate deals in flats. They are of no interest to us. Moreover, we are not entitled to give the information we possess to the other institutions which might be interested in it, as the taxation authorities for example. Our task is to investigate all information we get and if it is not connected with money laundering, we do not send it anywhere. The fact that you have had to pay BGN1,000 tax and you have not done that is not a crime. Does this mean that if payment of taxes amounting to BGN10MN has been evaded you'll say nothing?- Yes, if it is only tax evasion. But when such an amount is concerned, the money has been usually laundered somewhere. So, the case goes to the respective authorities, but on other grounds. As far as the most frequent mechanisms for money laundering are concerned, the oldest one of them is the investment in privatisation deals of funds coming from off-shore zones. This is usually money from various criminal sources, taken out of the country. We have also established an influx of money from Europe into Bulgaria and back to Europe again. That is, Bulgaria is a POBox where the money sometimes stays for 24 hours only.Are there cases when money from drugs trafficking has been laundered through privatisation?- We have established a case when considerable funds have been invested in privatisation and we suspect a crime connected with grugs trafficking. The person who operates the money (not a Bulgarian citizen) was once sentenced for drugs trafficking.What else in addition to your word will guarantee that the gathered information will remain within the financial system and shall not be used for economic or repressive purposes?- Laws that could intervene deeply into the citizens' private sphere have been passed recently. In this respect I have always upheld the thesis that when we grant certain rights to the administration we should also set up a mechanism to control the execution of these rights on the part of the administration. We cannot proceed from the assupmtion of the administration's unscrupulousness, but we can neither presuppose conscienciousness. There should be an objective stimulus for the administration to be scrupulous - these are its resposibility and the control over its activities. This control should be executed by the judiciary which is undoubtedly independent. Some even believe it is too independent of the government. The judiciary should have the competence to sanction those administration officials who have in a way abused their authority and misused the information they possess.Is revealing of information a subject to penal prosecution?- Yes, it depends on the concrete deed. This may be abuse of power under art. 282, or revealing of circumstances which are official secret under art. 284 of the Penal Code.Are there levels of access, rules for control, or other similar mechanisms to guarantee that the gathered information won't be misused?- Yes, a level of access should be set. We have established such a mechanism and presently the information we possess and is some kind of a secret is accessible only to our officials. It is known who of our officials has access to it and he signs a declaration that he has been notified that he is answerable for the revelation of information. At the same time there is only one way out for this information - to the prosecutor's office. We present it data only when we gather sufficient additional information to confirm the suspicion which has initially arisen in the bank or any of the other subjects which are obliged to inform us. The question about the level of access will arise when a centralized informational bank is set up (as projected). A panel of experts is already working on the establishment of a national centre for combatting drugs. The idea is to set up an informational bank in that centre with data from the tax administration, the customs, the financial investigation service, the police, and other institutions. The problem is about the level of access to that information. We cannot set up a free database accessible for everyone with all the information we have - from the police, customs, and tax administration.In western countries the so-called internal departments function in such cases. Their task is to prevent the officials from getting information which is none of their business. Everybody is afraid of these departments. Do you think you need such a structure too?- You say frightful departments. Yes, this is right. But the curruption of officials working in these institutions is more awful. I could also speak as a member of the governmental anti-corruption committee, headed by the Minister of Justice Anton Stankov. One of the main things we are trying to introduce is exactly such a system of internal control to guarantee the exposure of cases of corruption. The Act on Protection of Classified Information contains quite a number of requirements to the people who have access to state secrets, but there are no such provisions for people who have access to official secrets. Why?- Indeed, the law stipulates a higher degree of investigation regarding persons who have access to state secrets. In our service we have adopted the practice to make the same investigations as required for people who have access to state secrets, although we work mostly with information, classified as official secret. This procedure of investigating the officials has already begun. We have set up a structure - you may call it internal security. One of its aims is to monitor (together with the Interior Ministry's specialized service - the National Investigation Service) the activities of the Bureau for Financial Investigation Agency's officials, including those of its Director as well. It must be said to the credit of the Bureau for Financial Investigation that there has not been even a case of suspicion about outflow of information so far.How would you comment the right of regional departments of the Interior Ministry to have access to companies' taxation files? Are there such practices in any democratic country?- The issue is a bit complicated. The state repressive bodies are not centralized in most of the democratic countries. In the USA the Interior Ministry is responsible for the protection of parks. There is a number of other institutions which are not under a single umbrella and carry out functions, included in the Interior Ministry's system. Perhaps, the citizens' interests are protected in that way, because the functions of each service are limited and it cannot use the information it has for other purposes. There are also services that have unlimited access to information, for example the US financial investigation service, but its functions are extremely limited. However, the US system is quite different from the Bulgarian one. Even if proven that investigation into a certian company is going on, what are the guarantees that the information would be used solely for that purpose? The investigation procedures might be cancelled at a certian moment and files have been heaped up from which much money could be made.- You are right. But if anybody does that, this would constitute a crime.

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