The National Assembly adopted amendments to the Measures against Money Laundering Act (MAMLA), implementing additional measures to improve the effectiveness and achieve full compliance of the Bulgarian legislation against money laundering and terrorist financing with the European legislation, and transposing the requirements of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018.
The amendments were published in the State Gazette, issue No 60 dated 14 July 2023 and for the most part are effective, as of 14 July 2023.
Below is a summary of the more important amendments:
Mechanism for resolving non-compliance between the data collected on beneficial owners and the data entered into the respective register
As per the new provision of Art. 63a of the MAMLA, all obliged persons under the MAMLA, as well as the respective authorities and administrations under Art. 63, para. 11 (State Agency National Security, National Revenue Agency, etc.), should notify the Registry Agency in case of establishing non-compliance between the data collected by them about the beneficial owners of an entity and the data entered into the respective register about the said beneficial owners. The notification should be made within 14 days as of the establishment of the said non-compliance and should be accompanied by an original, or a copy certified by the person concerned, or a notarised copy of all available documents relevant to the established non-compliance.
On the basis of the received notification, the Registry Agency shall make an entry regarding the presence of a notification of non-compliance at the batch of the respective legal entity/formation (except in cases where no documents have been attached in connection with the established non-compliance), and should send a written notice to the legal entity/formation regarding its obligation to request for entry of a change in the registered circumstances concerning its beneficial owner or to submit the relevant documents. The relevant legal entity or other legal formation shall have an obligation to apply for registration within 7 days of receipt or service of the notification.
The above obligations, which apply from 16 July 2024, will require legal entities and other legal formations registered in the Commercial Register and the Register of Non-Profit Legal Entities or in the BULSTAT Register to duly and promptly update the information on their beneficial owners in the relevant register. Otherwise, there is a risk that the obliged persons, to whom they are customers, will report the identified discrepancies to the Registry Agency.
The law provides for serious penalties both for the obliged persons under the MAMLA in case they fail to notify the Registry Agency and for their clients who fail to request, within the time limit specified above, the entry in the relevant register of accurate and up-to-date information on their beneficial owners.
Registration in a new public register of the persons under Art. 4, item 16 of the MAMLA
Starting from 16 January 2024, a new obligation for entry into a public register at the Minister of Justice is established for the persons under Art. 4, item 16 of the MAMLA, providing corporate secretarial services. This includes services such as the provision of a registered office address, correspondence address, business accommodation and/or other related services for the purposes of registration and/or operation of a legal entity or other legal formation, services comprising formation, registration, organisation of the operation and/or management of a legal entity or other legal formation, services comprising the fiduciary management of assets or of a legal entity.
The obligation to apply for entry in the register is within two months from the adoption and entry into force of a new ordinance that will regulate the requirements for entry.
The public register will serve as a mechanism for identifying persons providing corporate secretarial services.
Additional requirements for certain obliged persons
The new provision of Art. 9b of the MAMLA, effective as of 14 July 2023, introduces additional requirements for individuals who perform activities under Art. 4, items 15, 16 and 18 of the MAMLA, namely provision of legal advisory services, corporate secretarial services, and intermediary services regarding real estate transactions. The persons must meet the following requirements:
- shall not have been convicted for a deliberate criminal offence of a general nature, unless they have been rehabilitated;
- shall not have been members of a management or a control body, or general partners, in a company which has been subject to bankruptcy proceedings, or has been dissolved due to bankruptcy, in the last two years prior to the date of the decision declaring bankruptcy, in case there were unsatisfied creditors;
- shall not fall within the restriction for holding a senior management position as per Art. 124 of the MAMLA;
- shall not be deprived from holding a position of material responsibility, and
- based on the data collected for them, there shall not be grounds for doubting their reliability and suitability.
The above requirements also apply to procurators, managers, members of a management or a control body, or limited partners in entities, carrying out the activities under Art. 4, items 15, 16 and 18 of the MAMLA, as well as to the beneficial owners of these persons.
Additional measures for identification of clients
As of 14 July 2023, the obliged persons have to collect information on shareholders and on their shareholding not only in respect of their clients – public companies whose equity securities are admitted to trading on a regulated market or on a third-country market, but also in respect of the legal entities that own and control the clients, if they are public companies.
With regard to the identification of proxies of clients – individuals, a new provision is envisaged (Art. 53, para. 9 of the MAMLA), which regulates more clearly the obligation for proxies to be identified in the same manner as clients – individuals. In addition, the obliged persons should also request evidence in respect of the proxies’ granted representative powers.
Update of the Internal Rules under the MAMLA
As of 14 July 2023, the obliged persons shall update their Internal Rules under Art. 101 of the MAMLA, by including policies and procedures for checking the professional competence and reliability in the recruitment and ongoing assessment of the specialised service (if applicable) and of other employees whose duties may be relevant to the control and prevention of money laundering and terrorist financing. Also, where applicable, obliged persons must include rules for the exchange of information within their group, for the purposes of the MAMLA.
Mandatory documents to be attached to the UBO declarations submitted to the respective register
Legal entities and other legal formations established in Bulgaria which are obliged to submit declarations regarding their beneficial owners to the relevant register in which they are registered, as of 14 July 2023, shall attach to the said declarations documents from which it can be established that the individuals designated as beneficial owners fall within the scope of the respective definitions under § 2 of the Supplementary Provisions of the MAMLA.
How can we help?
The KPMG team remains at your disposal should you have any questions or need assistance regarding the interpretation and application of the amendments to the Measures against Money Laundering Act.
For information
Juliana Mateeva
Partner
Legal Advisory Services
Tel.: +359 2 9697 600
Nina Shumarova
Manager,
Legal Advisory Services
Tel.: +359 2 9697 600
