As of 20.03.2018

29 March 2018

The National Assembly has adopted the long-awaited Measures Against Money Laundering Act

The National Assembly of the Republic of Bulgaria adopted at a second reading the new Measures Against Money Laundering Act (MAMLA) which implements the requirements of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing in the Bulgarian legislation (the 4th Anti-Money Laundering Directive).

The range of the persons obliged under the new MAMLA is similar to the one provided for in the previously applicable law. Besides the main subjects for which the act imposes obligations – the companies operating in the financial sector (credit, financial and payment institutions, electronic money companies, etc.), a wide range of persons, including non-profit legal entities (associations and foundations), wholesalers, registered auditors, persons who provide professionally accounting services or certain types of legal advice, notaries, private enforcement agents, etc. are also obliged. 

A significant innovation is the creation of a register of the beneficial owners of the legal entities established within the territory of the Republic of Bulgaria who are obliged to provide and dispose with appropriate, accurate and up-to-date information about the natural persons who are their beneficial owners. It is envisaged that this information (names, citizenship, PIN etc. of the beneficial owner) shall be filled in the Commercial Register, respectively in the BULSTAT register, and shall lead to a disburden of the persons obliged upon performance of their obligation to identify the beneficial owner of their customers.

A fundamental principle enshrined in the new act (as well as in the 4th Anti-Money Laundering Directive) is related to the so-called risk-based approach which should be applied by the persons obliged. On this basis, the persons supervised are obliged to apply the measures for customer due diligence at such an intensity that corresponds to the risk typical for the particular business relationship or occasional operation or transaction. Thus, in theory, the persons obliged could apply simplified measures for customer due diligence in situations characterized with lower risk and on the contrary shall be obliged to apply measures for expanded verification in situations with a higher risk.

Along with the above mentioned, the new act introduces other changes compared to the previously existing legal framework in the sector – the creation of a National Risk Assessment is envisaged, on the basis of which the persons obliged will have to prepare their own internal risk assessments, the range of the persons falling under the notion of politically exposed persons has been expanded, a more detailed legal framework has been developed regarding the criteria and procedures for performance of expanded and simplified customer due diligence, etc.

The adoption of the new legal framework requires a wide range of persons to update their internal rules against money laundering and terrorist financing, to prepare and / or update their internal risk assessments defining risk factors, transactions, clients, etc. which are characteristic for the activity of the particular persons, as well as to comply with the new procedures provided for in the law.