Bulgaria’s Non-Profit Sector under Increased Scrutiny: New Obligations for Identifying Beneficial Owners
SOFIA, Bulgaria - The Financial Action Task Force (FATF) has placed Bulgaria under enhanced surveillance due to concerns over its anti-money laundering and combating the financing of terrorism (AML/CFT) regime. This move has significant implications for non-profit legal entities (NPOs) registered in Bulgaria, which are now required to identify their beneficial owners.
New Obligations for NPOs
According to Art. 61, par. 1 of the Law on Legal Entities, NPOs must obtain and maintain accurate and up-to-date information on their beneficial owners. This information includes detailed data on the rights held by these individuals. The Bulgarian Center for Non-Profit Law (BCNL) has been advocating for a risk-based approach to identifying beneficial owners, which would focus on NPOs most vulnerable to terrorist financing abuse.
Enhanced Monitoring Plan
The FATF’s enhanced monitoring plan for Bulgaria includes measures to address strategic deficiencies in its AML/CFT regime. One key measure is the identification of NPOs most susceptible to terrorist financing abuse and implementation of risk-based monitoring to prevent such abuse.
Recent Amendments
The recent amendments to the Money Laundering and Terrorism Financing Act (MLIPA) have introduced an obligation for NPOs to keep information on beneficial owners for 5 years after dissolution. This information must be maintained by managing and representing persons, liquidators, and all individuals involved in the dissolution process.
Concerns over the Blanket Approach
The BCNL has expressed concerns over the blanket approach to obliging all NPOs to comply with AML/CFT regulations, rather than focusing on high-risk entities. The organization is calling for a more targeted approach that takes into account the specific risks posed by each NPO.
Recommendations
As Bulgaria’s non-profit sector comes under increased scrutiny, it is crucial that NPOs take steps to ensure compliance with AML/CFT regulations and maintain accurate records of their beneficial owners. Failure to do so could result in penalties and reputational damage.
- Identify beneficial owners accurately and maintain up-to-date information
- Implement risk-based monitoring to prevent terrorist financing abuse
- Focus on high-risk entities rather than obliging all NPOs
Call to Action
In a statement, the BCNL emphasized the need for a risk-based approach to identifying beneficial owners:
“We believe that a targeted approach would allow NPOs to focus on their core activities while minimizing unnecessary burdens. We urge policymakers to consider our recommendations and work towards creating a more effective AML/CFT regime in Bulgaria.”
Timeline
The Bulgarian government has until October 2024 to address the FATF’s concerns and implement the necessary reforms. The outcome will have significant implications for the country’s non-profit sector and its ability to effectively combat terrorist financing and money laundering.