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Created
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05SOFIA2036
2005-12-12 14:41:00
UNCLASSIFIED
Embassy Sofia
Cable title:  

BULGARIA: 2005-2006 INTERNATIONAL NARCOTICS

Tags:   SNAR  KCRM  EFIN  KTFN  PTER  KSEP  BU 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
						UNCLAS SECTION 01 OF 08 SOFIA 002036 

SIPDIS

DEPT FOR EUR/NCE AND INL
JUSTICE FOR OIA, AFMLS, AND NDDS
TREASURY FOR FINCEN
DEA FOR OILS AND OFFICE OF DIVERSION CONTROL

E.O. 12958: N/A
TAGS: SNAR KCRM EFIN KTFN PTER KSEP BU
SUBJECT: BULGARIA: 2005-2006 INTERNATIONAL NARCOTICS
CONTROL STRATEGY REPORT (INCSR)

REF: (A) STATE 209561, (B) STATE 210351

UNCLAS SECTION 01 OF 08 SOFIA 002036

SIPDIS

DEPT FOR EUR/NCE AND INL
JUSTICE FOR OIA, AFMLS, AND NDDS
TREASURY FOR FINCEN
DEA FOR OILS AND OFFICE OF DIVERSION CONTROL

E.O. 12958: N/A
TAGS: SNAR KCRM EFIN KTFN PTER KSEP BU
SUBJECT: BULGARIA: 2005-2006 INTERNATIONAL NARCOTICS
CONTROL STRATEGY REPORT (INCSR)

REF: (A) STATE 209561, (B) STATE 210351


1. Per reftels, Post provides its submission for the 2005-
2006 International Narcotics Control Strategy Report for
Bulgaria.

Begin text of 2005-2006 INCSR for Bulgaria:

Part I - DRUGS AND CHEMICAL CONTROL


I. Summary

Bulgaria is a major transit country, as well as a producer
of illicit narcotics. Strategically situated on Balkan
transit routes, Bulgaria is vulnerable to illegal flows of
drugs, people, contraband, and money. Heroin moves through
Bulgaria from Southwest Asia, while chemicals used for
making heroin move from the former Yugoslavia to Turkey and
beyond. It is thought that much of the heroin distributed
in Europe is transported through Bulgaria. Marijuana and
cocaine are also transported through Bulgaria.

The Government of Bulgaria has continued to make progress in
improving its law enforcement capabilities and customs
services, closure of some illegal drug-producing
laboratories and a notable increase in seizures. However,
while major legal and structural reforms have been enacted,
effective implementation remains a challenge. The Bulgarian
government has proven cooperative, working with many U.S.
agencies, and has reached out to neighboring states to
cooperate in interdicting illegal flow of drugs and persons.
Nevertheless, Bulgarian law enforcement agencies,
investigators, prosecutors and judges require further
assistance to develop the capacity to investigate, prosecute
and adjudicate illicit narcotics trafficking and other
serious crimes effectively. Bulgaria is a party to the 1988
UN Drugs Convention.

II. Status of Country

In the past year, Bulgaria has continued to move from
primarily a drug transit country to an important producer of
narcotics. According to the Bulgarian Government, Bulgaria
has surpassed Turkey as a center of synthetic drug
production, and synthetic drugs have overtaken heroin as the

most widely used drugs in Bulgaria. Amphetamines are
produced in Bulgaria for the domestic market as well as for
export to Turkey and the Middle East.

The Government of Bulgaria has emphasized its commitment to
combat serious crime including drug trafficking. Despite
some progress towards this goal, there were no major
convictions for drug trafficking, or other serious related
crimes, including organized criminal activity, corruption or
money laundering during 2005. Among the problems hampering
counter-narcotics efforts are poor inter-agency cooperation,
inadequate equipment to facilitate narcotics searches,
widespread corruption, and an often ineffective judicial
system.

III. Country Action against Drugs

Policy Initiatives

The Bulgarian government has continued to implement the
National Strategy for Drugs Control adopted by the Council
of Ministers in 2003. In 2004, amendments to the Criminal
Code abolished a provision which had decriminalized
possession of one-time doses of illegal drugs for personal
use. The effect of this policy has been to extend harsh
penalties for drug possession to users as well as producers
and distributors. NGOs, government bodies, and European
institutions have disputed the effectiveness of this
legislation, with some studies claiming that drug use has
actually increased since its adoption.

Additional measures started in 2002 and continuing through
2005 included engaging NGOs in counter-narcotics
partnerships and the establishment of 16 provincial
prevention and education centers throughout the country.
Unfortunately, national programs for drug treatment and
prevention, including the National Center for Addictions,
have been consistently under-funded.

Accomplishments

The National Drugs Intelligence Unit, founded in October
2004, has improved coordination between law enforcement
agencies by gathering and analyzing information relating to
illegal drugs production and distribution. To date, the
center has compiled data on over 300 suspected drug
traffickers.
Law Enforcement Efforts
From January to November 2005, Bulgarian law enforcement
agencies closed three illegal drug-producing laboratories
and seized 2240 kg of drugs, including 395 kg of heroin, 61
kg of marijuana, 142 kg of cocaine, 1327 kg of synthetic
drugs and 2000 vials and 27598 tablets of other psychotropic
substances. Also seized were 192 kg of dry and 157 liters
of fluid precursor chemicals. Bulgarian services report
that the 12.5% increase in seizures of synthetic drugs over
the same period in 2004 is due to increased demand for
Bulgarian-produced synthetic drugs in Southwest Asia.

Corruption

In 2002, the government unveiled an "action plan" to
implement its 2001 anti-corruption strategy. Despite some
progress, corruption in various forms remains a serious
problem. The Customs Service is widely considered the most
corrupt government agency. In November 2005, 24 Customs
officers, including the Deputy Chief of the Customs Service,
resigned over allegations of corruption. Despite this,
there was no evidence that senior government officials
engaged in, encouraged or facilitated the production,
processing, shipment or distribution of illegal narcotics,
or laundered the proceeds of illegal drug transactions.

Agreements and Treaties

Bulgaria is a party to the 1988 UN Drug Convention, the 1961
Single Convention and its 1972 Protocol, the 1971 Convention
on Psychotropic Substances and the 1990 Convention on
Laundering, Search, Seizure and Confiscation of Proceeds
from Crime. Bulgaria has also ratified the UN Convention
Against Transnational Organized Crime and its Protocols.

Bulgaria is also party to the 1957 Council of Europe
Convention on Extradition, the 1959 European Mutual Legal
Assistance Treaty on Penal Measures and the 1983 Council of
Europe Convention on Transfer of Sentenced Persons. The
Bulgarian Customs Agency has signed memoranda of
understanding on mutual assistance and cooperation with
several European counterparts and is negotiating or updating
others. Bulgaria coordinates with INTERPOL and EUROPOL.

The 1924 U.S.-Bulgarian Extradition Treaty and a 1934
supplementary treaty are in force although the agreement is
generally agreed by both sides to be outdated and
ineffective. It covers a limited list of enumerated
offenses which do not include drug-related crimes. Some
bilateral extradition issues have been addressed following
the United States' ratification of the UN Convention against
Transnational Organized Crime. This agreement provides for
extradition for many previously non-extraditable offenses,
including narcotics violations involving organized crime;
however, this new legal basis for extradition has yet to be
tested. In an effort to resolve remaining issues
surrounding extradition, the Bulgarian Government in October
2005 submitted a formal request to enter into negotiations
with the U.S. on an updated bilateral extradition treaty.

Cultivation and Production

The only illicit drug crop known to be cultivated in
Bulgaria is cannabis, but the extent of cultivation is not
known. It is certainly not very extensive, and is not a
significant factor in abuse beyond Bulgaria's own borders.
There has been a steady increase in the indigenous
manufacture of synthetic stimulant products such as captagon
(fenetylline).

Drug Flow/Transit

Synthetic drugs and heroin are the main drugs transported
through Bulgaria. Heroin from the Golden Crescent and
Southwest Asia (primarily Afghanistan) has traditionally
been trafficked to Western Europe through the Northern
Balkan route from Turkey through Bulgaria to Romania.
However, Bulgarian authorities have noticed a recent shift
in heroin trafficking to more circuitous routes through the
Caucasus and Russia to the north and through the
Mediterranean to the south. Other trafficking routes
crossing Bulgaria pass through Serbia and Montenegro and the
Republic of Macedonia. In addition to heroin and synthetic
drugs, smaller amounts of marijuana and cocaine also transit
through Bulgaria. Precursor chemicals for the production of
heroin pass from the Western Balkans through Bulgaria to
Turkey and the Middle East. Synthetic drugs produced in
Bulgaria are also trafficked through Turkey to markets in
Southwest Asia. Principal methods of transport for heroin
and synthetics include buses, vans, and cars, with smaller
amounts sent by air. Cocaine is primarily trafficked into
Bulgaria by air in small quantities.

Domestic Programs

Demand reduction has received government attention for
several years. The Ministry of Education requires that
schools nationwide teach health promotion modules on
substance abuse. The Bulgarian National Center for
Addictions (NCA) provides training seminars on drug abuse
for schoolteachers nationwide. The NCA is in the process of
opening prevention and education centers in each of
Bulgaria's 28 administrative districts, 16 of which are
currently operational. Three universities provide
professional training in drug prevention. For drug
treatment, there are 35 outpatient units, including 5
specialized methadone clinics which provide treatment to 770
patients. Twelve inpatient facilities nationwide offer 209
beds for more intensive addiction-related treatment.
Specialized professional training in drug treatment and
demand reduction has been provided through programs
sponsored by UNODC, EU/PHARE and the Council of Europe's
Pompidou Group.

IV. U.S. Policy Initiatives and Programs

DEA operations are managed from the U.S. Consulate General
in Istanbul. The United States also supports various
programs through the State Department, USAID, the Department
of Justice (DOJ) and the Treasury Department to support the
anti-narcotics efforts of the Bulgarian legal system. These
initiatives address a lack of adequate equipment (e.g., in
the Customs Service), the need for improved administration
of justice at all levels and insufficient cooperation among
Bulgarian agencies. A
DOJ resident legal advisor works with the Bulgarian
Government on law enforcement issues, including trafficking
in drugs and persons. An American Bar Association/Central
and East European Law Initiative criminal law liaison
advises Bulgarian prosecutors and investigators on cyber-
crime and other issues. A Treasury Department
representative supports Bulgarian efforts to investigate and
prosecute financial crimes, including money laundering.
USAID provides assistance to strengthen Bulgaria's
constitutional legal framework, enhance the capacity of
magistrates and promote anti-corruption efforts. An FBI
Legal Attache Office, opened in 2005, works closely with
Bulgarian law enforcement on high-profile investigations and
prosecutions, including those involving illegal narcotics.


V. Statistical Tables

Crop Cultivation
(1) Coca: N/A
(2) Potential Coca leaf: N/A
(3) Opium: N/A
(4) Potential Opium Gum: N/A
(5) Cannabis: (need Washington data)
(6) Potential Cannabis: (need Washington data)
(7) Drug Seizures: (awaiting end-of-year GOB data)
(8) Illicit labs destroyed by type: 3, all producing
amphetamines.
(9) Domestic consumption of illicit drugs: (awaiting
GOB data)
(10) Arrests: (awaiting end-of-year GOB data)
(11) Users: See text under Domestic Programs




PART II - FINANCIAL CRIMES AND MONEY LAUNDERING

Bulgaria is not recognized as "an important regional
financial center," nor has it been identified by the
Financial Action Task Force or other such authorities as
having specific money laundering issues requiring critically-
needed reform. Its significance in terms of money
laundering arises from its geopolitical position; well-
developed financial sector relative to other Balkan
countries; and lax regulatory controls and law enforcement.

There are few indicators of terrorist financing connected
with Bulgaria. It is unknown whether drug trafficking
constitutes "the" primary generator of criminal proceeds and
subsequent money laundering in Bulgaria, but it is certainly
a contributing factor. Financial crimes, including fraud
schemes of all types; smuggling of persons and commodities;
and other organized crime offenses also generate significant
proceeds susceptible to money laundering. The sources for
money laundered in Bulgaria likely derive from both wholly
domestic as well as international criminal activity.
Financial crimes -- including significant tax fraud, credit
card fraud, and counterfeiting of currency and negotiable
instruments -- are prevalent.

Smuggling remains a problem in Bulgaria and is undoubtedly
sustained by ties with the financial system. There is
significant demand for black market goods smuggled both
within and through Bulgaria. Excise goods -- to include
fuel and cigarettes -- are transported from Asia to Western
Europe and elsewhere. Ties between the smuggling of both
goods and contraband such as narcotics likely exist,
particularly where they rely on the same channels.

All financial sectors are susceptible to money laundering.
There are 29 categories of reporting entities under the
Bulgarian Law on Measures Against Money Laundering ("LMML").
Each category represents possible facilitators of the
illicit movement of funds. To date, only the banking sector
has substantially complied with the law's requirement to
file Suspicious Transaction Reports ("STRs") in cases of
suspected money laundering. Lower rates of reporting
compliance by exchange bureaus, casinos, and other non-bank
financial institutions can be attributed to a number of
factors, including a lack of understanding of or respect for
legal requirements, lack of inspection resources, and the
general absence of effective regulatory control over the non-
bank financial sector. While counterfeiting has
historically been a serious problem in Bulgaria, joint
activities of the Bulgarian Government and the U.S. Secret
Service have contributed to a decline in counterfeiting in
recent years. Bank and credit card fraud remains a serious
problem. Post has no information to indicate that Bulgarian
financial institutions engage in narcotics-related currency
transactions involving significant amounts of U.S. currency
or otherwise affecting the United States.

Since the end of 2003 the Financial Intelligence Agency
(FIA) has completed a comprehensive assessment of the Anti
Money-Laundering and Counter-Financing of Terrorism
(AML/CFT) compliance in the Bulgarian financial and non-
financial sectors. While the assessment showed a
satisfactory level of AML/CFT compliance in general and
particularly in the banking and the non-banking financial
sectors, it also noted a lower level of compliance by
casinos and designated non-financial businesses and
professions (particularly notaries, lawyers and
accountants). Following up on these findings the FIA took
some awareness raising measures and organized joint on-site
inspection and trainings with the State Gambling Commission
(SGC). Based on the experience gathered the FIA and the SGC
published in August 2005 a Handbook on Joint AML/CFT On-site
Inspections of Casinos. In September 2005 the Minister of
Finance adopted additional measures for improving AML/CFT
awareness and reporting of suspicious transactions by
casinos. Also in September 2005 similar measures,
concerning lawyers, notaries and accountants, were approved.

There are no indicators that government policy or practice
encourages, facilitates or engages in money laundering or
terrorist financing. It is entirely possible that money
derived from predicate criminal activity (including
international drug trafficking) makes its way through the
Bulgarian financial system into the international financial
system. The U.S. dollar has historically been a favored
currency in Bulgaria, but has recently been replaced by the
Euro as a favored currency for financial transactions.

OFFSHORE FINANCIAL CENTERS

Bulgaria is not considered an offshore financial center,
though offshore zones are likely used by Bulgarian-based
money launderers. The FIA has negotiated Memoranda of
Understanding with offshore jurisdictions (such as Cyprus)
and taken other steps to permit more effective information
sharing and analysis with counterpart financial intelligence
units. There are few if any indications of terrorist
financing through Bulgaria.

FREE TRADE ZONES

Since 2003, the operation of duty free shops has been
targeted by the MOF as part of its efforts to address the
gray economy and the smuggling of excise goods. Duty free
shops play a main role in cigarette smuggling in Bulgaria,
as well as smuggling of alcohol, and to a lesser extent
perfume and other luxury goods. Attempts by the MOF to
close down shops operating in Bulgaria have been
unsuccessful, in part due to political opposition within the
ruling coalition.

The focus of the Bulgarian government has been on the use of
the duty free shops to violate customs and tax regimes. It
is wholly possible that the shops are used to facilitate
other crimes, including financial crimes. Credible
allegations have linked many duty free shops in Bulgaria to
organized crime interests involved in forced prostitution,
the drugs trade, and human trafficking. There is no
indication, however, of links between duty free shops or
free trade areas and terrorist financing.

MOF customs and tax authorities have supervisory authority
over the duty free shops. According to these authorities,
reported revenues and expenses by the shops have very
clearly included activities other than duty free trade.
Identification procedures are also lacking. MOF
inspections have revealed that it is practically impossible
to monitor whether customers at the numerous duty free shops
have actually crossed an international border.

LAWS AND REGULATIONS

Article 253 of the Bulgarian Penal Code criminalizes money
laundering. The article was adopted in 1997 and amended in
1998 and 2004. The most recent amendments, among other
things, broaden the list of activities giving rise to a
money laundering charge; increase penalties, including in
cases of conspiracy and abuse of office; and clarify that
predicate crimes committed outside Bulgaria can support a
money laundering charge brought in Bulgaria. Article 253 is
an "all offense" money laundering provision; drug
trafficking thus is a recognized predicate offense.

The Financial Intelligence Agency (mentioned above) is an
independent unit of the Ministry of Finance that serves as
Bulgaria's financial intelligence unit (FIU).

Banks and 28 other reporting entities are required to apply
"know your customer" standards and to identify "transactions
suspected of money laundering." The LMML was amended in
2003 to include provisions to require listed reporting
entities to demand an explanation of the source of funds for
"operations or transactions in an amount greater than 30,000
BGL (approximately USD 18,072) or its equivalent in foreign
currency; or exchange of cash currency in an amount of
10,000 BGL (approximately USD 6,024) or its equivalent in
foreign currency." Reporting entities are also required to
notify the FIA "of each payment made in cash, in an amount
greater than 30,000 BGL or its equivalent in foreign
currency, conducted by or for their client."

The LMML requires reporting entities -- including banks and
other financial institutions - to maintain records on
clients and their transactions for five years. Those
institutions may also be subject to internally-established
recordkeeping requirements. The degree to which such
information can be provided expediently to law enforcement
is impacted by bank secrecy provisions that limit
dissemination, absent a court order based on evidence of a
committed crime. FIA is exempted from this requirement,
however, which facilitates FIU-to-FIU information sharing.
The LMML provides that disclosure of information by
reporting entities "shall not give rise to liability for
breach of other laws."

Financial institutions and others entities (e.g., notaries,
privatization bodies, political parties, tax and customs
authorities, certain merchants) are among the listed
reporting entities in the LMML. They are obligated to
report upon the occurrence of any "suspicious transaction of
money laundering" and certain currency transactions (see
response to item 28). Compliance by banks has been
exemplary. Compliance by non-bank financial institutions
continues to improve. From January to November 2005, the
FIA received 662 STRs and 130,631 currency transaction
reports (CTRs). The STRs had a total combined value of
approximately USD 280 million. On the basis of the
forwarded reports, 646 cases were opened. During the same
period, the FIA referred 74 cases to the Supreme
Prosecutor's Office of Cassation and 265 cases to the
Ministry of Interior. FIA also forwarded 33 reports to
supervisory authorities for administrative action.
Bulgaria has strict and broad bank secrecy laws. While the
FIA is exempt from these provisions, they otherwise apply to
all government institutions and are sometimes cited as an
impediment to the performance of legitimate law enforcement
functions. For example, a court order upon the request of a
prosecutor, and based on evidence of a committed crime, is
required to lift bank secrecy. It is not uncommon, however,
to have a situation where the very information sought by law
enforcement and deemed secret is required as a basis for
issuance of an order to lift secrecy. Moreover, courts have
inconsistently applied standards for issuing the court
order. There is a strong lobby that has prevented amendment
of bank secrecy provisions by Parliament.

Customs rules require the declaration of all Bulgarian and
foreign currency in cash in excess of 5000 BGL
(approximately USD 3125). Due to inefficiency and
corruption, enforcement of this requirement is questionable.
Customs officials have acknowledged that cross-border
currency transfers of significant amounts are common. To
comply with recent Financial Action Task Force
recommendations regarding cross-border currency transfer,
Bulgaria will need to improve bilateral information sharing
with neighboring countries. Although there have been
information-exchanges of customs data with Greece, Serbia
and Romania, those exchanges have not been regularized.

There also is a significant counterfeiting problem in
Bulgaria of currency (USD, EUR, BGL), negotiable
instruments, and identity documents. The U.S. Secret
Service maintains a full-time presence in Bulgaria, and
through joint efforts with Bulgarian officials, has
contributed to a continued decrease in this activity in

2005.

Penal Code Article 253b was enacted in 2004 to establish
criminal liability for officials who violate, or through non-
action fail to comply with, LMML requirements.

Until 2004, there had been few investigations and
indictments for money laundering and no convictions under
the money laundering provisions of Penal Code Article 253.
That negative trend appears to be changing, however. In
2005, the prosecution service has reported indictments of
organized crime figures for money laundering. These figures
are expected to increase in 2006 following a recent
directive by the Prosecutor General instructing Bulgarian
prosecutors to use multiple count indictments, including
indictments that charge money laundering in addition to
predicate offenses. This directive purports to change the
current practice of charging only the predicate offenses.
To date there have been no convictions for money laundering.

TERRORIST FINANCING

Bulgaria enacted the Law on Measures Against Terrorist
Financing ("LMATF") on February 5, 2003, and also amended
its Penal Code at Article 108a to criminalize terrorism and
terrorist financing. Terrorist acts and financing qualify
as predicate crimes under Bulgaria's "all crimes" approach
in Penal Code Article 253, which criminalizes money
laundering.

The LMATF and Penal Code provide for identification,
freezing and seizing terrorist finance-related assets. The
precise mechanisms for doing so have not been tested.

The various lists generated by the UN, EU, and U.S. of
individuals and entities associated with terrorism have been
circulated by the FIA in cooperation with the Bulgarian
National Bank to the commercial banking sector and
elsewhere. To date, no suspected terrorist assets have been
identified, frozen or seized by Bulgarian authorities.

Bulgarian officials have not acknowledged existence or use
of alternative remittance systems, such as hawala. As a
general matter, however, regulatory controls over non-bank
financial institutions remain lacking, with some of those
institutions (e.g., pawnshops) engaging in banking
activities (e.g., loan making with real estate as
collateral) absent any regulatory oversight. Similarly,
exchange bureaus, though ubiquitous, are subject to minimal
regulatory oversight. The Bulgarian government - with
assistance and support from U.S. and European technical
assistance providers -- committed itself in 2005 to
addressing these deficiencies as part of its ongoing effort
to strengthen its anti- money laundering and counter
terrorist financing measures, however results have been
mixed. In early 2005 FIA began using Dunn and Bradstreet
databases in its analysis. FIA completed the development of
its electronic reporting system, managing both STRs and
CTRs, and successfully linked its database to its Analyst's
Notebook software platform.

In late 2002, the Bulgarian press reported on efforts by the
Ministry of Finance ("MOF") to oversee and control the
transfer of funds to Muslim charities in Bulgaria. In
subsequent years, the issue did not receive sustained
attention, and in practice little governmental oversight was
exercised over the activities of Islamic charities.
Anecdotal evidence indicates that charitable and non-profit
legal status is frequently abused. In 2005 a joint task
force between the FIA and the National Security Service was
established to identify possible terrorist financing
activities and terrorist supporters. Bulgaria ratified the
1999 UN International Convention for the Suppression of the
Financing of Terrorism on January 31, 2002.

ASSET FORFEITURE AND SEIZURE LEGISLATION

A new Criminal Assets Forfeiture law, targeted at
confiscation of illegally-acquired property, came into
effect in March 2005. The law permits forfeiture
proceedings to be initiated against property valued in
excess of 60,000 BGN (approximately USD 36,145), if the
owner of the property is the subject of criminal prosecution
for enumerated crimes and a reasonable assumption can be
made that the property was acquired through criminal
activity. The enumerated crimes include, among others,
terrorism, drug trafficking, human trafficking, money
laundering, bribery, major tax fraud, and organizing,
leading or participating in a criminal group. The law
requires the establishment of a Criminal Assets
Identification Commission, which has authority to institute
criminal asset identification procedures, as well as request
from the court both preliminary injunctions and ultimately
forfeiture. Although the Commission has been appointed it
had not started actual work by year's end because of
logistical problems.

Other key players in the process of asset freezing and
seizing, as prescribed in existing law include the Ministry
of Interior ("MOI"); MOF, including FIA; Council of
Ministers; Supreme Administrative Court; Sofia City Court;
and the Prosecutor General.

INTERNATIONAL COOPERATION

The European Convention on Laundering, Tracing, Seizure and
Confiscation of the Proceeds of Crime (the "Strasbourg
Convention") was ratified by Bulgaria in April 1993. The UN
Convention Against Illicit Trafficking of narcotic Drugs and
Psychotropic Substances (the "Vienna Convention") was
ratified by Bulgarian in July 1992. The UN Convention
Against Transnational Organized Crime was ratified by
Bulgaria in April 2001. Bulgaria ratified the 1999 UN
International Convention for the Suppression of the
Financing of Terrorism on January 31, 2002. In addition,
Bulgaria's FIU is a member of the Egmont Group and its
director is a deputy chair of the Council of Europe's Select
Committee of Experts for the Evaluation of Anti- Money
Laundering Measures ("MONEYVAL"). For purposes of EU
accession, Bulgaria has been deemed in full compliance with
anti-money laundering requirements, although the development
of case law remains weak.

Bulgaria is a party to the 1988 UN Drug Convention and the
Council of Europe Convention on Laundering, Search, Seizure,
and Confiscation of the Proceeds from Crime. Bulgaria is a
party to the UN Convention against Transnational Organized
Crime and the UN International Convention for the
Suppression of the Financing of Terrorism. In December
2003, the GOB signed the UN Convention against Corruption
but has yet to ratify it. Bulgaria is currently analyzing
its domestic legislation and the legal implications linked
to the ratification of this Convention.

Bulgaria withdrew on February 4, 2004, the reservations made
in 2001 at the ratification of the Criminal Law Convention
on Corruption. On the same day, Bulgaria ratified the
Additional Protocol to the Council of Europe Criminal Law
Convention on Corruption, which was signed on May 15, 2003.
Thus, Bulgaria became the second state to ratify the
Additional Protocol. The OECD Anti-bribery Convention
entered into force in Bulgaria on February 15, 1999,
following its ratification by Parliament on June 3, 1998.
Instruments of ratification were deposited with the OECD
Secretary-General on December 22, 1998.

SIPDIS

The U.S. does not have a bilateral mutual legal assistance
treaty (MLAT) with Bulgaria. Information has to date been
exchanged formally through the letter rogatory process,
which can be inexpedient and inefficient. However, the
United States' December 3, 2005, ratification of the UN
Convention against Transnational Organized Crime (TOC
Convention) establishes an MLAT-like relationship between
the United States and Bulgaria for most criminal activity
involving three or more people. Given the presence of
operational U.S. law enforcement officers, there is also
opportunity for informal information exchange with
counterparts. Additionally, the LMML provides for
information exchange between FIA and other FIUs including
FinCEN. Currently, Bulgaria has bilateral memoranda of
understanding (MOU) regarding information exchange relating
to money laundering with 27 countries. Negotiations with 5
more states are currently in progress. FIA is authorized by
law to exchange financial intelligence on the basis of
reciprocity without the need of a MOU. Between January and
December 2005, the FIA sent 332 requests for information to
foreign FIUs and received 83 requests for assistance from
foreign FIUs (the FIA has replied to 87% of the requests so
far). Bulgaria has also entered into an intergovernmental
agreement with Russia that promotes anti-money laundering
cooperation.

Bulgarian authorities have a good record of cooperation with
USG counterparts. In 2005, Bulgarian law enforcement and
prosecutors, joined by international counterparts, took part
in international operations that have resulted in arrests
and prosecutions in both Bulgaria and the United States for
significant financial crimes, including money laundering,
credit card fraud, and counterfeiting. With support from
the US Treasury Department and USAID, a joint Task Force was
established to allow representatives of FIA, the Financial
Supervision Commission, and the Bulgarian National Bank to
coordinate regulatory and supervisory AML/CFT activities.
BEYRLE