HOW SETTING UP A BANK ACCOUNT BECAME THE NEW CHALLENGE FOR THE BUSINESS IN BULGARIA

Preventing and combating money laundering and terrorism financing has been a hot topic on EU level for some time now. As a result of the new rules and the implementation 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 national legislation of the Member States, banks and other entities covered by the EU anti-money laundering rules are required to apply increased checks to better identify any suspicious money flows.

 “The road to hell is paved with good intentions” they say. The severe fines provided in the law put so much pressure on the banks and their compliance departments that at present setting up a bank account in Bulgaria has become extremely challenging and time consuming task. The problem arises mainly when the titular of the account is a foreign legal entity or a Bulgarian entity with foreign shareholding participation and/or management. Even shareholders / managing directors established or resident within the EU turn out to be a real issue for the banks in Bulgaria. The practice of the banks differs from one bank to another depending on their internal rules. Some banks do not accept at all the option for opening an account through an authorized person requiring the physical presence of the company managing director. Others tend to accept only PoAs which are certified by the Bulgarian consulate service in the respective country of the authorizer, not recognizing any foreign notary certification nor apostilisation. Some bank officers unofficially admit that currently more than 90% of the applications submitted by companies with foreign directors and shareholders in the process of incorporation are being rejected. There are still some few banks which accept a notary certification made abroad. The question becomes even more complicated when it comes to identification of the ultimate beneficial owners and providing respective documents thereof.

The opening of an accumulative bank account for the paid in capital is a precondition for incorporation of any company in Bulgaria. Thus, from a relatively simple procedure at present setting up a company in Bulgaria became a lengthy process with questionable result. It appears it has to be reminded to the banks in Bulgaria that the real purpose of the new legislation is prevention and combating of money laundering rather than prevention and combating the business and the foreign investments in Bulgaria.