You are an obliged entity under the AML Act if... Context
Since its entry into force in 2018 the Bulgarian AML Act (Anti-money Laundering), which transposes the Fourth EU AML Directive (4AMLD), has been regularly amended. The legislator most frequently has made amendments in the list of obliged entities under the AML Act. These are the subjects under Art. 4 of the AML Act for which the implementation of anti-money laundering measures like customer due diligence (e.g. identification and verification of identity), information disclosure, etc. is mandatory.

The list of obliged entities was expanded in 2019 to include, among others, persons trading or acting as intermediaries in the trade of works of art as well as crypto-related service providers. The list was significantly narrowed in 2021, thus excluding persons such as wholesalers, reinsurers, trade unions, professional organisations, etc.

Who’s impacted?
The AML Act concerns entities both in the public and the private sector. Generally, they can be grouped either as persons from the financial sector or persons from the non-financial sector. The tendency is imposing more stringent measures as well as focusing on the financial actors as well as on activities characterised with a higher risk of money laundering. The following categories of entities can be distinguished (non-exhaustively):

1. market participants from the banking and non-banking financial sector – credit institutions, financial institutions, e-money institutions, payment institutions and other PSPs (payment services providers), investment firms, managers of alternative investment funds (AIFMs) etc.;
2. legal professionals – legal and tax consultants, notaries, private enforcement agents, etc.;
3. business persons and/or other persons from the non-financial sector – estate agents, licensed providers of gambling services, etc. The 2019 amendment to the AML Act (transposing the 5AMLD) stirred up the crypto community in Bulgaria since the amended list of obliged persons encompassed crypto-related service providers as well.

For what’s the additional obligation under the AML Act envisaged for crypto-related service providers, check here.

The up-to-date list of obliged entities is accessible here on the State Agency for National Security official website.

The measures under the AML Act have become an unavoidable aspect of conducting your regular business activities should you come under its radar. The obliged persons should therefore organise the core of their business and/or professional practice in such a way so as to comply with the specific legal requirements. Stringent sanctions are put in place and stricter supervision envisaged.

An approach, on the one hand, based on the understanding that more and more effective AML/CFT measures are needed, and, on the other hand, on not imposing an excessive administrative burden on the obliged persons is needed.

What’s next?
The fight against money-laundering and financing terrorism, especially in light of innovative technologies, is on the EU legislator’s agenda. The European Commission proposed a new AML package consisting of four legislative proposals, including a new 6AMLD.

You can read more about the new EU AML legislative package here.

This material is not exhaustive and does not constitute legal or financial advice. For legal advice and assistance regarding compliance of your business with the AML obligations do not hesitate to contact us here .

Pavla Tsvetkova

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Tags: AML