Newsletter May 2018

  • 04/05/2018 16:06
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May 2018

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     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.

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