Financial Crime World

Bulgarian Financial Institution Fined for AML Non-Compliance

Bulgarian Financial Institution Hit with €2.5 Million Fine for Anti-Money Laundering Violations

SOFIA, BULGARIA - The Bulgarian financial institution, [Name], has been fined 5 million lev (approximately €2.5 million) for failing to comply with anti-money laundering (AML) regulations.

Investigation Reveals Inadequate AML Practices

According to sources, the financial institution failed to conduct adequate customer due diligence (CDD) and risk assessments, leading to suspicions of money laundering and terrorist financing. The Bulgarian Financial Intelligence Directorate (FID) launched an investigation after receiving a tip-off from another financial institution.

Key Findings

  • The institution did not identify the ultimate beneficial owner (UBO) of several legal entities.
  • It failed to conduct adequate risk assessments on high-risk customers, including individuals from countries known for money laundering and terrorist financing activities.
  • The institution did not maintain accurate records of customer transactions and failed to report suspicious activity in a timely manner.

AML Requirements in Bulgaria

Under the Bulgarian Anti-Money Laundering Act (PMLA), covered institutions are required to:

  • Conduct CDD on all customers, including identifying the UBO of legal entities
  • Perform risk assessments on customers based on their business relationships and transactions
  • Maintain accurate records of customer transactions
  • Report suspicious activity in a timely manner

Sanctions for AML Non-Compliance

Under Bulgarian law, non-compliance with the PMLA can result in:

  • Administrative sanctions, including fines and warnings
  • Criminal charges may be brought against officials who violate the provisions of the PMLA

Conclusion

This incident serves as a stark reminder of the importance of AML compliance for financial institutions operating in Bulgaria. The consequences of non-compliance can be severe, including significant fines and reputational damage.

It is essential that financial institutions operating in Bulgaria prioritize AML compliance and ensure that their systems and procedures are adequate to identify and mitigate money laundering risks.