Банкеръ Weekly

Briefs

MONEY-LAUNDERERS TO BE SCRUTINIZED

Big financial sharks are changing their money-laundering schemes for Bulgaria. This striking news was announced by Vassil Kirov, Head of the Financial Investigation Bureau (FIB).Illegal capital are now said to arrive in Bulgaria through firms from the countries-members of EU, but not directly from the offshore centres as before. Foreign companies are generously financing, even through ficticious commerical credits, totally unknown Bulgarian entities - a newly registered sole proprietor from Novi Khan, for example. After that the Bulgarian businessman transfers the money back to the European company's firm accounts. According to Vassil Kirov the above described scheme is more and more frequently detected in Bulgaria. In 2001 the Bureau received a signal for a case of over USD80MN passed through our firms. The sum had been distributed as financing of a number of sole proprietors and some of the separate transactions topped USD1MN. After a survey FIB's experts defined the case as money-laundering and sent it to the Prosecutors' Office.Financiers comment that investigators work on a similar (as a scheme) case passed last year by FIB. It concerns laundering of just USD8MN through a Bulgarian bank owned by a big West European company. The money had been transferred in 52 cash deposits at the bank and then had been directed to Switzerland as payments for supply of home equipment and consumer commodities, produced by leading international firms. The goods had been invoiced at customs office at lower prices and the difference had been shared among all the participants in the affair. Profits naturally went to their coded bank accounts in Switzerland. No wonder now, after Vassil Kirov's sensational announcements, FIB to finally draw the obvious conclusion that some West European firms have picked up our country for their private money-laundry. Our politicians have been trying in vain to attract the so dreamed-of foreign investments. Now the only soothing fact is that at least the illegal European capitals have cast an eye on Bulgaria. Which is sadly more like a back-door entering of the coveted European Union.EU's business wise men have obviously decided that we are good at laundering illegal capital if not at anything else. Even in 1998 a Dutch criminal group leaded by Kornelis van Seiderweld tried to launder USD4MN through the Shoumen branch of UBB, drained from the accounts of the Amsterdam-based notary's office Caron Stevens/Backer McKenzy at the Dutch bank ABN AMRO. And only the timely signal sent by the Bulgarian bank prevented export of millions of dollars from Bulgaria.For the first half of 2002 FIB has received 105 reports for suspicious deals on money laundering involving USD172MN. In three of the cases capitals are supposedly aimed at supporting terrorist activity. FIB's experts are working together with their American colleagues and this explains the almost complete lack of information on these cases.It's more curious that in the first half of 2002 commercial banks have sent more signals for suspicious deals than for the same period of 2001. More signals than in 2001 have also been sent by the insurance companies and by the privatization authorities. Yet Vassil Kirov declines answering to any questions regarding even the basic schemes for money-laundering when sale of state-owned property is concerned. According to him even the smallest detail can specify clear enough the exact privatization deal and the investor involved.At the same time Mr. Kirov admits that the legitimate business of many Bulgarian capitalists is based on the profits from their illegal operations. He announced to the BANKER weekly that FIB had tracked down the names of several Bulgarian companies and individuals which often appear in the reports about suspicious operations.We've already formed a group of suspicious individuals and firms which still doesn't mean that they are criminals. They don't need to have necessarily committed a crime, in spite of a signal against them. The signal is always checked and the case enters Prosecutors' Office only after enough proofs confirming money-laundering suspicions are collected. Then an investigation procedures are initiated and only after court rules the individual guilty, then he can be named a criminal. So far we have had no such case, explained Vassil Kirov.The Head of FIB says that for the first half of 2002 his department has sent 116 signals to the Prosecutors' Office concerning operations and deals for USD193MN. 48 of them concern operative correspondence kept in 1999, 18 - in 2000, 51 - in 2001 and 21 - in 2002.Signals related to operative correspondence kept in 2002 concern USD90MN, said Kirov. At the Specialized Investigation Service have been filed 14 cases on money-laundering. One of them has been ended, one has been halted and one is submitted to the court with an opinion for a trial. The rest are still under investigation, he added.Kirov is certain that in the four months since he was appointed Head of FIB, his department's activity has become more efficient. He has increased the number of analysts and an organization keeping track of each piece of correspondence has been introduced. The relationships with the Ministry of Home Affairs and with the National Service Fighting Against Organized Crime (NSBOP) have definitely been improved. The Minister of Home Affairs Georgi Petkanov has even ordered a new position to be opened - liaison officer, co-ordinating the work of the Ministry and the Bureau. According to Kirov the lack of such position in the last two years has seriously hampered the necessary co-operation between these two structures.FIB's Head points imperfect legislation as the major obstacle preventing successful fight against laundering of illegal capitals. Sentencing money-launderers now seems almost impossible. In order to deal with the problem new texts must be added to the Criminal Code and the Criminal Proceedings Code which to criminalize (that is define as crimes) money-laundering due to carelessness, as well as instignation and preparation for such operations. The next step is making easier confiscation of property acquired by money-laundering or by means of legalized criminal capitals.A draft amendment of the Criminal Code has already entered Parliament. It aims at improving regulations concerning guarantee measures and a special confiscation of property in favour of the state. A Civil Confiscation Act is being separately developed and the draft Law for measures against financing of terrorist activity is already placed for discussion at Parliament. This law will enable FIB to freely scrutinize financial flows and all operations and deals placed under suspicion for financing of terrorist activity. Vassil Kirov is of the opinion that enforcement of the above mentioned projects will make the fight against money-launderers much more efficient - in other words we might finally have these criminals put in jail.

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