Newsletter for May 2018

In March this year was adopted the new Measures against Money Laundering Act
(MMLA), which was designed to meet fully the requirements laid down in Directive (EC)
2015/849 of the European Parliament and the Council of May 20, 2015 on the prevention of the use of
the financial system for the purposes of money laundering or terrorist financing, amending
Regulation (EU) No 648/2012 of the European Parliament and of the Council, and
repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission
Directive 2006/70/EC. Changes in the MMLA field are significant, which necessitated the adoption of
a new statutory law.

In contrast to the old MMLA, where the legislator seemed to want to outline
comprehensively and in detail all measures for preventing the use of the financial system for money
laundering purposes, the new MMLA adopts a new approach, indicating the same measures in a more
abstract way and adds to them two further ones, namely: 1. Control over the activities of the
entities required to implement these measures; and 2. National and international cooperation in the
field of money laundering prevention. In this sense, the new MMLA uses a new concept in terms of
customer verification, that is a complex verification of the “measures relating to customer due
diligence”. General and specific rules for the application of this assessment are
foreseen. The general rules repeat the requirements for the identification of clients in the sense
of the old MMLA, however in addition the new MMLA provides for a hitherto unknown
regulation regarding additional specific rules relevant to beneficiaries of trustee ownership,
including trusts, trusteeships and other similar legal entities. The new MMLA envisages a
simplified comprehensive check as well as exceptions to the application of the comprehensive
verification measures. The new Act does not exclude the application of the measures in relation to
situations which present a “higher” risk, once this risk has already been assessed, according to
Art. 95 of the MMLA.

The new MMLA expressly specifies the categories of persons who are “politically exposed persons”,
as opposed to the old MMLA, to whom enhanced due diligence measures should apply. The previous MMLA
does not contain definitions of some notions such as “correspondent relations” and “phantom bank”,
etc., which concepts are already legally defined in the new MMLA.
One of the most significant changes in the MMLA is the establishment of an explicit obligation for
all legal entities established on the territory of the Republic of Bulgaria and their contact
persons, as well as all natural and legal persons and other legal entities operating on the
territory of the Republic of Bulgaria in their capacity as trustees of trusts and other similar
foreign legal entities established and existing under the jurisdiction of the jurisdictions
admitting such forms of trust property, and their contact persons to receive, make available and provide, in the
cases specified in law, appropriate, accurate and up-to-date information about the natural persons
who are their actual owners, including details of the rights they hold. The term “beneficial owner”
is legally defined in § 2 of the Act. According to Art. 63, para. 1 of the MMLA the actual owners
shall be entered in the files of the legal entities established in the territory of
the Republic of Bulgaria and other legal entities in the commercial register, in the register of
the non-profit legal entities and in the BULSTAT register. The new MMLA explicitly introduces the
possibility for the Directorate for Financial Intelligence of the State Agency for National
Security, the Bulgarian National Bank, the Financial Supervision Commission and the
competent state bodies to have direct access to this information.

The results of the implementation of the new obligations under the new legislation will become
clear in the near future.

Nina Boteva Law Office
Bulgaria, 1142 Sofia, 2 Nikolay Pavlovich Street, floor 1
Office phone/Fax: +359 2/ 986 19 38 Email: [email protected]
http://www.nbotevalaw.com/