Anti-Money Laundering (AML) regulations and practices are essential for preventing financial crimes and safeguarding the integrity of a country's financial system. Bulgaria, as a member of the European Union (EU), has adopted a robust AML framework to combat money laundering and terrorist financing activities. This guide provides an overview of AML regulations in Bulgaria, including key legislation, regulatory authorities, and compliance requirements.
Key AML Legislation in Bulgaria
- Money Laundering Act (MLA): The Money Laundering Act is the primary legislation governing AML in Bulgaria. It aligns with EU directives and international standards, outlining the legal framework for combating money laundering and terrorist financing.
- Anti-Money Laundering Measures Act (AMLA): The AMLA complements the MLA by specifying detailed measures and procedures for financial institutions to prevent and detect money laundering activities.
- Criminal Code: The Criminal Code of Bulgaria includes provisions related to money laundering as a criminal offense. It defines money laundering, establishes penalties for offenders, and provides a legal basis for prosecuting AML violations.
The following regulatory authorities play a crucial role in overseeing AML compliance in Bulgaria:
- Financial Supervision Commission (FSC): The FSC is responsible for supervising financial institutions, including banks, insurance companies, and investment firms. It ensures that these entities comply with AML regulations and have effective AML policies and procedures in place.
- Bulgarian National Bank (BNB): BNB supervises credit institutions and non-bank payment service providers. It monitors their compliance with AML regulations and conducts inspections to assess their AML controls.
- Financial Intelligence Directorate (FID): FID is Bulgaria's financial intelligence unit responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) and other financial intelligence to law enforcement agencies.
- Ministry of Finance: The Ministry of Finance is responsible for coordinating Bulgaria's AML efforts at the national level, including policy development and international cooperation.
AML Requirements and Compliance
To comply with Bulgarian AML regulations, companies must:
- Reveal UBO Identity: Companies must disclose the identity of their UBOs and appoint a contact person who is a Bulgarian citizen.
- Implement AML Programs: Develop and maintain comprehensive AML programs, including risk assessments, policies, and procedures.
- Know Your Customer (KYC): Conduct thorough KYC checks on customers to verify their identities and assess their risk profiles.
- Customer Due Diligence (CDD): Implement CDD measures to monitor and mitigate the risk of money laundering.
- Enhanced Due Diligence (EDD): Apply EDD for high-risk customers.
- Record Keeping: Maintain records of customer transactions and due diligence documentation for at least five years.
- Transaction Monitoring: Continuously monitor customer transactions for suspicious activities.
- Reporting Suspicious Transactions: Promptly report suspicious transactions to the Financial Intelligence Directorate (FID).
- Provide AML Training: Train employees to understand their roles and responsibilities in AML compliance.
Penalties for Non-Compliance
Bulgaria imposes severe penalties for non-compliance with AML regulations, including fines and imprisonment. Financial institutions may face fines for failing to implement adequate AML controls or for facilitating money laundering activities. Non-compliance with AML regulations in Bulgaria can result in fines and penalties. These penalties are issued monthly until the required identification information is duly recorded in the relevant registry.
Bulgaria actively cooperates with international organizations and other countries in the fight against money laundering and terrorist financing. It is a member of the Financial Action Task Force (FATF) and participates in mutual evaluations to assess its AML regime's effectiveness.
FATF Status for Bulgaria
Bulgaria is not currently listed on the FATF Countries List as having strategic AML deficiencies. This signifies the country's commitment to aligning with international AML standards and combating money laundering and terrorist financing effectively.
Bulgaria's commitment to combating money laundering and terrorist financing is evident through its robust AML legal framework and regulatory authorities. Financial institutions and DNFBPs operating in Bulgaria must adhere to stringent compliance requirements to prevent illicit financial activities. Staying informed about the evolving AML landscape and continuously improving AML controls are essential for businesses operating in Bulgaria to ensure they remain compliant and contribute to the integrity of the global financial system.