Bulgaria’s New Anti-Money Laundering Act

In an effort to combat money laundering, the Bulgarian Parliament is in the process of passing the Measures Against Money Laundering Directive Act (the “Bill”) as ordered by the European Union’s 4th Anti-Money Laundering Directive (4th AMLD).  The Bill, which was approved on October 6, 2017, has been deemed a high priority by the government of Bulgaria and is currently undergoing it’s second hearing.  Once placed into effect, the Bill will replace all other anti-money laundering (AML) rules that were once in effect.

The Bill introduces new measures to help prevent money laundering and terrorism financing including:

  1. Rules for risk assessment, establishing internal policies, training and record keeping practices
  2. Enhanced customer due diligence which includes the source of funds and detailed identification of the beneficial owner
  3. Reporting to the Bulgarian State Agency for National Security in cases of suspicious activity or if an obliged entity knows that funds are the proceeds of criminal activity or related to terrorist financing
  4. Expanded definitions for “beneficial owner” and “politically exposed person” as well as a new definition for “shell bank” that follows the EU directive
  5. Supervision and coordination between authorities

Alongside the 4th AMLD, the Bill utilizes the Central Ultimate Beneficial Owner register which provides important information about the ownership of various foundations, companies, and other associations.  The Bill also establishes sanctions for non-compliance in areas such as record keeping, suspicious transactions and customer checks.  Fines and penalties will also be raised from 500 EUR to 25,000 EUR, with the highest fine reaching 5,000,000 EUR for systematic breaches.

Contrary to the 4th AMLD, the Bill encompasses a more vast definition for obliged entities that includes general and life insurers, political parties, non-profit organizations, and payment services, just to name a few.  In addition, the Bill offers no exemptions to certain obliged entities unless the entity undergoes a national risk assessment as stated by Article 7 of the EU directive and an exemption is agreed upon.  


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