The European Union's executive has urged the bloc's newest members, Bulgaria and Romania, to do more to fight corruption and organised crime.
There are fears the EU has lost leverage over the new members
A report by the European Commission did not recommend penalties, but warned it might do so if the two states failed to meet reform targets by 2008.
The report said neither country was doing enough to prosecute those guilty of high-level corruption.
It added that contract killings were of great concern in Bulgaria.
Bulgaria and Romania joined the EU on 1 January.
The draft report, seen by the BBC, warned the new members that there was no room for complacency.
"Progress in the judicial treatment of high-level corruption is insufficient", it said.
The document says Romanian judges have failed to show they understand their role in tackling the problem.
Judges there hand down suspended sentences or refer the most important cases, including one against a former prime minister, to the constitutional court.
The report also highlights contract killings in Bulgaria, which "continue to be of great concern"
It said that there had been no prosecutions or convictions since January in cases involving killings of local politicians.
The European Commission says it is too early to trigger sanctions, or "safeguard clauses", and it will continue to monitor both countries for at least another year.
"The Commission has not proposed at this stage the use of safeguard clauses as sufficient progress has been made to suggest that in time the benchmarks can be met," a statement said.
EU Justice Commissioner Franco Frattini warned that he expected to see results by the time the next report is issued.
"I would expect from now till summer 2008 (to see) Bulgaria and Romania meeting the benchmarks," he told journalists in Brussels.
But the BBC's Oana Lungescu in Brussels says many fear that by admitting Bulgaria and Romania, the EU has lost most of its leverage over them to reform.