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Bulgaria - New anti-money laundering act

Bulgaria
28/03/2018
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The new anti-money laundering act (“Act”) appeared in issue 27 of the State Gazette on 27 March 2018 after being recently passed by Parliament. The final version of the Act contains some changes from its initial draft.

Obliged Entities

After lobbying by the Association of Insurance Companies, the final Act requires insurance companies to apply anti-money laundering (“AML”) measures for health insurance policies only, and not for other types of insurance.

Measures for Preventing Money Laundering

The Act contains the following new AML provisions for non-profit organizations:

  • Non-profit organizations are required to apply measures and internal procedures only in cases of higher risk transactions.
  • If a non-profit organization’s annual turnover exceeds BGN 20,000, it should prepare an assessment based on the criteria provided and published by the State Agency for “National Security”.
  • Non-profit organizations should prepare an assessment if there are concerns their activities might be exploited for money laundering, and funding terrorism.

Sanctions

No changes were made in the size of fines. At the last moment, however, a change in procedure resulted in fines also being imposed by the Registry Agency as administrator of the Central Ultimate Beneficial Owner Register.

Deadlines

Important deadlines surrounding the Act include:

  • January 2019 – when entities must disclose and declare their beneficial owners with the Central Ultimate Beneficial Owner Register.
  • The end of 2018 – when the obliged entities must adopt internal AML rules.
  • August 2018 – when the government must adopt a decree regulating many of the new measures in detail.
  • July 2018 – when banks, financial institutions, insurance companies and investment intermediaries must create special AML departments.

The new Act does not provide for outsourcing customer due diligence, although Article 25 of the EU’s 4th AML Directive grants member states the right to allow this.

Another provision in the initial bill that has remained unchanged in the final Act is the establishment, and the rights and obligations of the Central Ultimate Beneficial Owner Register.

If you have questions or need additional information, please contact the authors.

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