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New Anti-Money Laundering Act Provides For Announcing Of Ultimate Beneficial Owners Until 31 May 2019

A new Anti-Money Laundering Act was promulgated on 27 March 2018 and entered into force on 31 March 2018. The law transposes into the Bulgarian national legislation 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 (the “Anti-Money Laundering Directive”), the International standards on combating money laundering and the financing of terrorism (the “FATF Recommendations”) and the Convention on laundering, search, seizure and confiscation of the proceeds from crime and on the financing of terrorism (CETS 198).

The new law introduces in Bulgaria entirely new anti-money laundering regulation and some amendments to the Act on the measures against financing of terrorism.

Preventive measures and liable persons

The measures for prevention of the use of the financial system for the purpose of money laundering, as provided in the law include:

  • comprehensive client verification;
  • collection and preparation of documents and other information;
  • storage of the collected documents, data and information;
  • money laundering risk valuation;
  • disclosure of suspicious transactions and clients;
  • disclosure of other information;
  • control over the activity of the liable persons;
  • information exchange and interaction at national level as well as with the competent authorities of other countries.

The measures are mandatory for many public authorities, financial, leasing and insurance companies, notaries, non-profit legal entities, registered auditors, tax advisers, wholesalers, independent legal professionals (in the cases specified in the law), persons who professionally assist in the planning or carrying out of real estate transactions, persons who professionally carry out accounting services, etc. The full list of the liable persons is available here: (https://www.lex.bg/bg/laws/ldoc/2137182924).

Beneficial owner

As part of the comprehensive client verification the law provides identification of the beneficial owners of the legal entities, including application of appropriate measures for clarifying the capital ownership structure and control. New definition of “beneficial owner” is provided in the law according to which beneficial owner is:

  • Any natural person(s) who ultimately owns or controls directly or indirectly a legal entity and / or
  • Any natural person(s) on whose behalf a transaction or activity is being conducted.

A direct or indirect shareholding by a natural person of more than 25 % in legal entity shall be an indication of ownership.

Control shall be in place where a natural person has the possibility to exercise dominant influence over a legal entity during the process of appointing the management or control bodies, reorganization of the legal entity, termination of its activity and other substantial matters related to the activity of that entity.

In the cases where no other beneficial owner may be identified, a beneficial owner may be considered to be the natural person (s) who is (are) nominal directors, secretaries, shareholders or owners of the capital of a legal entity.

Publishing

Information about the beneficial owner of the legal entities established on the territory of Bulgaria should be published on their company file with the Commercial registry and the registry of the non-profit legal entities and with the BULSTAT Registry.

With regards to the natural persons and legal entities who act on the territory of Bulgaria as trustees of trust, custodian funds or other similar foreign legal entities, incorporated and existing under the laws of the jurisdictions which allow such forms of property – with information should be published with the BULSTAT Registry.

The information shall be published by 31 May 2019. 

Information about the beneficial owners does not need to be published for companies the sole owner of the capital of which is a natural person or where the shareholders owning at least 25% of the shareholding participation are natural persons.

Fines

The non-fulfillment of the obligation for publishing information on the beneficial owner within the statutory deadline may trigger fines within the range of BGN 500 to BGN 5,000 – for the natural persons who manage and represent the legal entity and within the range of BGN 1,000 to BGN 10,000 for the legal entity.

The failure to comply with the other obligations provided in the law may trigger various fines, which may reach a maximum amount of BGN 10,000,000 or up to 10% of the annual turnover for systemic violations of the law committed by a certain category of liable persons (credit institutions, insurers and others).