An amendment to the Measures against Money Laundering Act (“The Act”), approved by the Parliament on June 29, 2023, has been officially published in the State Gazette on July 14, 2023.
The purpose of the amendment is to include in the legislations certain measures that meet the requirements of the Action plan following the entry of Bulgaria in the European Exchange Rate Mechanism (ERM II) and the Action plan for anti-money laundering and counter-terrorist finance; of the recommendations in the Fifth Round Mutual Evaluation Report of the committee of experts on the evaluation of anti-money laundering measures and the financing of terrorism (MONEYVAL); as well as the requirements under the European Union law.
The main changes envisioned by the Act concern several areas, including:
- Introducing an identification mechanism for people providing corporate management services and vetting procedures for employees engaged in the provision of corporate management services (such as attorneys, accountants, tax advisors ) – persons falling under the conditions of Article 4, items 15, 16 and 18 of the Measures against money laundering Act. In order to carry out their functions, they are required to meet certain criteria imposed with the Act – they have to be a person who has not been convicted of an intentional crime of a general nature; is not deprived of the right to hold a materially responsible position etc.
- For some persons in this category (under Article 4, item 16 of the Measures against money laundering Act) a mandatory entry in a public electronic register with the Minister of Justice is to be introduced. Even though the Act does not address the creation of this register, it is provided that the Council of Ministers will adopt an ordinance with further regulations by January 2024.
- Another essential point in the Act is the widening of the scope of persons that should be subjected to identification. It is required not only for the clients – legal entities, to be identified, but also for their owners.
- The Act also envisions additional requirements for the entry of ownership and control data, as well as the introduction of amendments to improve the mechanism for resolving discrepancies between the beneficial ownership data entered in the Commercial register and register of non-profit legal entities and the beneficial ownership data, collected through other channels. A specific entry in the register regarding the presence of a notice of discrepancy is also established by the Act along with the following procedure for notifying the person on whose account the entry has been made.
- With the amendments the functions of the Financial Supervision Commission and the Bulgarian National Bank regarding the exercise of supervisory powers over banks – investment intermediaries are regulated in a way that guarantees a clear distinction between the powers of the different institutions and does not allow the duplication of such.
The Act has entered into force on the date of its publication in the State Gazette, except for two categories of provisions. Firstly, the ones related to the introduction of a public electronic register, that is to be created with the Minister of justice – they shall enter into force six month after the initial publication of the Act (i.e., January 2024). In relation to these provisions, persons subjected to registration in the relevant register will have to apply for that purpose within two months of the entry into force of the Ordinance, adopted by the Council of Ministers in accordance with the Act. The second category of provisions that will enter into force from a later point in time are those regarding the detection of discrepancies between the data, entered in the Commercial register and register of non-profit legal entities and the data, collected by other means. They are envisioned to enter into force 1 year after the initial publication of the Act in the State Gazette (i.e., July 2024).
Given that the Act has entered into force not long ago and that certain implementation actions are yet to be adopted, it remains to be seen how effective the amendments in the legislation in the area will be.
The full text of the Act can be read here.
The news above is for information purposes only. It is not a (binding) legal advice. For a thorough understanding of the subjects covered and prior acting on any issue discussed we kindly recommend Readers consult Ilieva, Voutcheva & Co. Law Firm attorneys at law.
