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Bulgarian Non-Profit Organizations Exempt from Anti-Money Laundering and Combating the Financing of Terrorism Obligations

SOFIA, Bulgaria

A recent report by the Bulgarian Center for Not-for-Profit Law (BCNL) has highlighted the exemption of non-profit organizations (NPOs) from anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations. According to Article 11(4) of the AML/CFT Act, NPOs that do not fall under other categories of persons are exempt from applying due diligence measures.

Exemption based on risk assessment

The BCNL report noted that NPOs are required to take appropriate measures to monitor their operations and transactions to comply with their obligations under Articles 47, 72, 76, and 98 of the AML/CFT Act. This exemption is based on the assumption that NPOs do not pose a significant risk of money laundering or terrorist financing.

Definition of an NPO

The report further highlighted the importance of the definition of an NPO in the Model Internal Rules published by the Supreme Administrative Court (SANS). According to the definition, an NPO is a legal person or other legal entity that pursues a non-profit objective and does not have as its main object the pursuit of profit.

Record-keeping obligations

The BCNL report also emphasized the need for NPOs to keep records of their transactions and activities, as required by Article 67(8) of the MIPA (Money Laundering and Terrorism Financing Prevention Act). This obligation applies not only to NPOs but also to other persons who carry out activities related to the dissolution of a legal person or other legal entity.

Increased focus on monitoring non-profit organizations

In recent years, there has been an increased focus on monitoring and regulating non-profit organizations due to concerns about their potential involvement in money laundering and terrorist financing. The Financial Action Task Force (FATF) has listed several countries as high-risk jurisdictions for anti-money laundering and combating the financing of terrorism deficiencies.

Conclusion

The report concluded that while NPOs are exempt from AML/CFT obligations, it is essential for them to take appropriate measures to ensure compliance with their obligations under the AML/CFT Act. Additionally, regulators and supervisory bodies must remain vigilant in monitoring the activities of NPOs to prevent any potential abuse or misuse.

Related Links:

• BCNL’s opinion on the MIPA Bill: https://www.parliament.bg/bg/parliamentarycommittees/3209/standpoint/16107
• Learn more about AML/CFT obligations for NPOs: https://bcnl.org/analyses/zmip-materiali-chetvarta-chast-sobstvena-otsenka-na-riska-i-vatreshni-pravila.html
• FATF’s list of high-risk jurisdictions: https://www.fatf-gafi.org/en/publications/high-risk-and-other-monitored-jurisdictions/increased-monitoring-october-2023.html

Summary Matrix of Intrinsic Risk Factor Assessment: https://www.dans.bg/images/stories/FID/NOR/RA_NPO/Matrix_inherent_risk_factors_bg.pdf