Financial Crime World

Unlicensed Payment Service Providers Face Heavy Penalties in Bulgaria

A Recent Crackdown on Unlicensed Payment Services

SOFIA, Bulgaria - The Bulgarian National Bank (BNB) and the Communications Regulation Commission (CRC) have launched a recent crackdown on unlicensed payment service providers, sending a stern warning to those operating without proper authorization in Bulgaria.

What is at Stake?

The crackdown targets individuals and companies providing money value transfer services (MVTS) without a license. MVTS providers, also known as other payment service providers (OEs), include:

  • Postal money order (PMO) service providers
  • Electronic money institutions (EMIs)
  • Payment institutions (PIs)

According to Article 4(2) of the Law on Payment Services and Payment Systems (LPSPS), OEs must obtain a license from the BNB or CRC before providing MVTS. Failure to comply can result in severe penalties.

Investigative Powers and Penalties

The BNB has the power to investigate entities suspected of carrying out payment services without a license, including:

  • Accessing premises
  • Compelling the production of information and records

Penalties for unlicensed MVTS providers include:

  • Financial sanctions ranging from BGN 5,000 (approximately EUR 2,500) for natural persons to BGN 80,000 (approximately EUR 40,000) for legal entities
  • Custodial sentences and confiscation of property under Bulgaria’s Criminal Code

CRC Investigations and Penalties

The CRC also investigates unlicensed PMO service providers, imposing:

  • Fines ranging from BGN 10,000 to BGN 20,000 (approximately EUR 5,000 to EUR 10,000) for individuals
  • Proprietary sanctions of BGN 15,000 to BGN 25,000 (approximately EUR 7,500 to EUR 12,500) for legal entities or sole traders who continue to provide services after the termination or revocation of their individual license

Identifying Unlicensed Providers

The Bulgarian authorities have identified unlicensed MVTS providers through:

  • Complaints received at the BNB
  • Warnings from competent authorities
  • Publicly available information

The CRC investigates unlicensed PMO service providers based on:

  • Consumer complaints
  • Whistleblower tips
  • Competitors
  • Competent authorities

Conclusion

Bulgaria’s strict regulations and penalties serve as a deterrent to unlicensed MVTS providers, ensuring that only authorized entities operate in the country’s payment services market.