A new law amending the Bulgarian Anti-Money Laundering (AML) Act was published on 14th of July 2023. It introduces a number of measures, some of them upon the recommendations of certain European institutions. We have selected and presented below those we find most important.
I. Notifications to the Registry Agency in regards to incorrect UBO data
The obliged entities under the AML Act (banks, insurers and insurance brokers, lawyers, notaries public, other credit institutions, etc.) now have an additional obligation.
In particular, when such entities detect a discrepancy between the data concerning the ultimate beneficial owner (UBO) of their clients entered in public registers (the Commercial Register and the BULSTAT register) and the UBO data collected by the obliged entities in the course of the performance of their AML duties, e.g., in the course of an AML customer due diligence, they shall be obliged to file a notification on the discrepancy to the Registry Agency. It’s worth noting that the AML Act contains an express rule that such notification may not result in liability for a breach of a confidentiality obligation by the respective obliged entity or its employees.
The filing of a notification would trigger a special procedure within which the respective company should either prove to the Registry Agency that the registered UBO data is correct or take the necessary steps to modify the registered data to reflect the correct status in the register. A failure of the company concerned to act in accordance with the said procedure may result in a fine and, if following its imposition, the company does not act in accordance with the law, the Registry Agency may keep fining the company for each month of non-compliance.
The new mechanism shall be effective as from 16 July 2024. It’s recommendable for all companies to check the UBO data in their files with the respective register and, if needed, adjust or update the data by then in order to avoid the potential triggering of the described procedure and risks of the associated sanctions.
II. Storage of UBO data
Up until now the obligation to store the information concerning clients’ UBOs for a certain period of time applied to the obliged entities under the AML Act.
The amendments introduce the obligation for all legal entities and other entities established in Bulgaria, including for their managers, liquidators and contact persons, to store the data for the UBO of the relevant entity for a period of 5 years from the termination of this entity.
III. Listed companies and UBOs
Thus far, the AML Act has stipulated that if a client is a listed company, instead of identifying the UBO, the AML obliged entity must collect certain information on shareholding exceeding the threshold subject to disclosure as per the rules of the jurisdiction where the client is listed.
The law was not sufficiently clear when it comes to a controlling listed company, i.e., when it is not the client but instead another entity in the group which controls the client that is a listed company.
The amendment makes it clear that the same approach also applies to controlling entities by inserting an express reference to this end.
IV. Identification of natural persons
As a matter of principle, AML obliged entities must apply measures for identification to all their clients before commencing to work with them.
Regardless if a natural person is the client or he/she is the UBO of a legal entity which is the client, upon performance of an AML identification, the natural person should provide certain personal data (such as name, date and place of birth, country of permanent residence, etc.).
The amended law envisages that this obligation shall apply not only to the natural person subject to identification but to his/her statutory representatives (in the case of individuals with limited legal capacity) and/or proxies.
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This article was prepared by Ivana Ilcheva, Associate at PETERKA & PARTNERS for Bulgaria.
No information contained in this article should be considered or interpreted in any manner as legal advice and/or the provision of legal services. This article has been prepared for the purposes of general information only. PETERKA & PARTNERS does not accept any responsibility for any omission and/or action undertaken by you and/or by any third party on the basis of the information contained herein.