BULGARIA Law and Practice Contributed by: Nikolay Cvetanov, Boris Lazarov, Asen Apostolov and Patrizia Foffo, Penkov, Markov & Partners
Specific Requirements Under the AML/CFT Legislation Customer due diligence (CDD) Under the AML Act all banks are required to perform standard CDD before entering into a business relationship or carrying out specific occasional operations or transactions. CDD measures can also be enhanced or simplified depending on the risk level. Simplified CDD can be applied only if certain pre-conditions are met, among which the cus - tomer’s risk assessment must indicate a negli - gible or low risk of money laundering. Enhanced CDD (ECDD) is mandatory when the risk of money laundering is high, such as in the following cases: • the customer is identified as a Politically Exposed Person (PEP); • the customer is based in a high-risk third country; • the product, operation, or transaction involves anonymity risks; • new products, business practices, or delivery mechanisms are deemed high risk; • the transaction is unusually large or complex; and • the bank enters into correspondent relation - ships with a bank or payment provider from a third country. The list is not exhaustive; banks must apply ECDD whenever the risk assessment indicates a heightened risk of money laundering. When conducting CDD on companies or legal entities, the AML Act requires identifying the UBO, who must be a specific individual as defined by the EU AML Directives. Identifica - tion is done through public company registers,
certain registered non-profits) or the BULSTAT Register for other entities. In several sectors, including banking, digital customer onboarding is permitted as long as the identification and verification of customers comply with the AML Act. Furthermore, the Combating Terrorism Financing Measures Act (the “CFT Act”) prohibits Bulgar - ian banks from directly or indirectly providing funds, financial assets, economic resources, or financial services to persons, entities, or groups involved in terrorist activities. This is in accord - ance with lists established by the United Nations Security Council and the Bulgarian Council of Ministers. Bulgarian banks must also implement measures laid down in European Union regula - tions related to sanctions imposed on specific individuals for terrorism or its financing. Regulatory authorities The State Agency for National Security (SANS) serves as the primary body responsible for the AML/CTF oversight in Bulgaria. SANS is tasked with collecting, preserving, examining, analys - ing, and sharing financial intelligence data, as envisaged under the AML and CFT Acts. The BNB also supervises AML/CTF compliance for all banks operating in Bulgaria, including branches of foreign banks and those from other EU member states. While the European Central Bank (ECB) cur - rently holds no direct powers over AML-related issues concerning Bulgarian banks, the BNB is in the process of preparing to collaborate with the upcoming European Anti-Money Laundering Authority (AMLA), a new pan-European supervi - sory body.
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