In March 2018, the fourth EU Money Laundering Directive was
implemented. Known as MLD4, the Directive came into force in
June 2018, and saw Bulgaria adopt new anti-money laundering
Among the main innovations in MLD4 and the Bulgarian AML Act
is the obligation to collect and file information on the
ultimate beneficial owners (UBOs) of companies, and any other
entities that directly or indirectly control them.
For that purpose, all EU member states must organise central
databases (registers) where they will maintain information on
UBOs of all corporations, including trust ventures of UK and/or
US origin. Once set-up, central registers will considerably
increase the quality of the available data for identification
of the beneficial owners and therefore also meet the demand of
the Financial Action Task Force (Groupe d'action
Financiere) for stronger transparency when it comes to the
identity of the UBOs.
As a result, businesses operating in Bulgaria need to
identify and provide such information, while international
businesses must appoint local contact persons for that
Entities that do not have at least one legal representative
with a registered permanent residence in Bulgaria are obliged
to appoint one. Failure to comply with such legal obligations
would lead to financial sanctions for the appointed contact
It should be noted that the UBO's details are very likely to
be required by banks, notaries, lawyers and other "obliged
entities". The information should be entered in the Commercial
Register and Register for Non-Profit Legal Entities (or the
BULSTAT Register) by February 1 2019.
Declarations in these registers will be made through a
designated application form, with the official supporting
documentation attached. The final form is yet to be approved by
the Ministry Council, along with the new rules for
implementation of the Act. The New Rules for the Implementation
of the Act will enter into force shortly after, thus launching
the UBO disclosure procedures.
To ensure compliance, companies must carefully consider
whether they are subject to the newly introduced requirements.
This means that they should:
- Disclose the ID of the UBO and the
entities that directly or indirectly control it; and/or
- Appoint and register a contact person
(with registered permanent residence in Bulgaria, or a
Concept of a beneficial owner
Another important issue for consideration is the meaning of
the term "beneficial owner" in the Act and the Directive. As
for the term "control", the Act refers to the interpretation of
the term in the Commercial Act.
An equally important consideration is when the beneficial
owner cannot be identified, or if the person declared and
identified is not the beneficial owner. In such cases, the
individual who acts as a senior managing officer in the
respective company will be considered the beneficial owner.
Non-compliance with these obligations within the announced
deadline may lead to penalties ranging from BGN 500-5,000
($290-$2,900) for individuals, and BGN 1,000-10,000 for legal
entities. The penalties are to be applied monthly until the
requested information is duly registered.
Rossitza Koleva (firstname.lastname@example.org)