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Bulgaria’s Know Your Customer Policy: A Key Aspect of its Anti-Money Laundering Framework

In a bid to combat money laundering and terrorist financing activities, Bulgaria has implemented a robust anti-money laundering (AML) framework that aligns with European Union directives and international standards. The country’s know your customer (KYC) policy is a crucial component of this framework, designed to ensure financial institutions and designated non-financial businesses and professions (DNFBPs) operate in a secure and transparent environment.

Key AML Legislation

The Money Laundering Act and the Anti-Money Laundering Measures Act are two key pieces of legislation that govern AML activities in Bulgaria. The Criminal Code also plays a significant role, outlining money laundering as a criminal offense and providing penalties for offenders.

Regulatory Authorities

Bulgaria’s regulatory authorities, including:

  • Financial Supervision Commission (FSC)
  • Bulgarian National Bank (BNB)
  • Financial Intelligence Directorate (FID)
  • Ministry of Finance

work together to ensure AML compliance across the country. The FSC supervises financial institutions, while the BNB monitors credit institutions and non-bank payment service providers.

AML Requirements and Compliance

To comply with Bulgaria’s AML regulations, companies must:

  • Reveal the identity of their ultimate beneficial owners (UBOs)
  • Conduct thorough KYC checks on customers
  • Implement customer due diligence (CDD) and enhanced due diligence (EDD) procedures
  • Maintain records of customer transactions and due diligence documentation
  • Continuously monitor customer transactions for suspicious activities
  • Report suspicious transactions to the FID

Penalties for Non-Compliance

Bulgaria imposes severe penalties for non-compliance with AML regulations, including:

  • Fines
  • Imprisonment

Financial institutions that fail to implement adequate AML controls or facilitate money laundering activities may face significant fines.

International Cooperation

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.

Conclusion

Bulgaria’s commitment to combating money laundering and terrorist financing is evident through its robust AML legal framework and regulatory authorities. Companies 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 to ensure they remain compliant and contribute to the integrity of the global financial system.