Financial Crime World

Bulgarian National Bank Issues Ordinance on Licensing and Permissions for Banking Business

Effective March 31st, 2009

The Bulgarian National Bank (BNB) has issued an ordinance on licensing and permissions for banking business, aimed at ensuring the stability and reliability of the financial system in Bulgaria.

Requirements for Obtaining a Licence

To conduct banking business in Bulgaria, a licence is required. To obtain such a licence, applicants must submit:

  • Articles of Association and other instruments of incorporation
  • Details on subscribed capital and contributions
  • Business plan
  • Management and organisational structure
  • Internal control systems
  • Risk management systems
  • Anti-money laundering programme

Additional Requirements

Applicants must also provide information on:

  • Names and addresses of Supervisory Board and Management Board members (or Board of Directors)
  • Qualifications and professional experience of Supervisory Board and Management Board members
  • Declarations from natural persons who have subscribed for more than 3% of the voting shares or are among the 20 largest shareholders, including:
    • Origin of funds used to purchase shares
    • Taxes paid during the last five years
    • Other relevant information

New Requirements for Subsidiaries

Banks that will be subsidiaries of banks licensed in another EU member state, insurance companies, or investment intermediaries must meet new requirements. The BNB will hold preliminary consultations with the competent authorities before granting a licence.

Verification Process

Before pronouncing on any application for licence, the BNB will:

  • Verify the validity of submitted documents
  • Establish the financial position of the applicant
  • Ensure compliance with corporate management principles and best practices
  • Verify sufficient capital
  • Confirm the reliability and financial stability of the applicant’s activity

A licence will only be granted if the applicant meets these strict conditions.

Conclusion

The new ordinance aims to ensure that banks operating in Bulgaria are reliable, financially stable, and comply with all applicable regulations. The BNB believes that this will contribute to a more stable and secure financial system in the country.