Банкеръ Weekly

Briefs

MONEY-CHANGERS FINED AGAIN

In a single day - July 18, 2005, tax authorities inspected a total of 50 exchange bureaux in Sofia and on the Southern Black Sea coast and drew up 23 statements for violations. Eleven of them are for non-fulfilment of the new requirements of Ordinance No 4, disallowing money-changers to place BNB's exchange rates on boards inside or infront of the exchange offices, because in such a way they mislead clients about the prices at which they change currencies. As a result of the inspections 23 exchange bureaux, violating the above-mentioned ordinance, were closed for 24 hours. The boards with BNB's exchange rates on them were confiscated in eleven bureaux. Among the first sealed were those at the Macedonia square and in Exzarh Josif street, near the so-called Women's Market in Sofia. Insiders of the Operative Control department of the Chief Tax Administration commented that some of the sanctioned exchange offices have violated legislative regulations more than once. Violations of the Currency Act are fined by BGN2,000-6,000. The punitive order and the size of the fine are specified by the regional tax director for each individual case. Money-changers may appeal at court the administrative act and are obliged to pay the fine only after the court ruling enters into effect. At the present state of the judicial reform in Bulgaria this process is neither quick, nor easy or unprejudiced. That is why money-changers continue to compete with tax authorities. How? After the inspections they bring out again the boards with BNB's forex rate, while the rate at which they exchange the money is quite lower and the board where it is written is hidden behind the door or in a corner. The new amendments to Ordinance No 4 oblige them to place the boards with their exchange rate in view - in front of the office or inside it, as well as above the counter where the money-changing deals are effected. Exchange bureaux are liable to a registration regime at the Financial Intelligence Agency (FIA) with the Finance Ministry. FIA refuses registration only when the candidates to operate as money-changers do not submit full documentation or are people who have concealed their incomes from the tax authorities or have already been sanctioned under the Currency Act. Registration is refused also to people who have been sentenced for a criminal offence or preliminary legal proceedings have been initiated against them for the same reason. Only in cases of established regular violations tax authorities are able to close the exchange offices for a period longer than a month, while the sanction for one-time offences is closing the office for 24 hours plus a fine. The representatives of the Operative Control department of the Chief Tax Administration are still inspecting the exchange offices. Summarized results from their inspections will be known in the end of this month. However, no matter what measures the tax authorities invent, it is certain that swindlers will be always contriving new ways to cheat their clients. At this situation the logical question would be if it would not be better to place the firms carrying out money-changing activities under a licensing regime. If that is done, the respective controlling body will be able to deprive them of their licences if they establish violations. Of course, there is another option as well. It was launched two years ago by the incumbent BNB Governor Ivan Iskrov. He proposed that only banks, insurance companies and investment intermediaries - all of them structures liable to efficient supervision - should be allowed to open exchange bureaux.

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