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Definition of a Non-Profit Organization (NPO) in the Context of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT)

According to the latest publication by the Bulgarian Center for Not-for-profit Law (BCNL), experts have shed light on the definition of a non-profit organization (NPO) in the context of AML/CFT.

Definition of an NPO

The definition of an NPO is formulated in the Model Internal Rules published by the State Agency for National Security (SANS), based on § 1, item 9 of the Money Laundering and Prevention of Financing Terrorism Act (MLIPA).

Hypotheses as Exceptions

Experts at BCNL have highlighted that hypotheses are listed as exceptions in the Model Internal Rules. This means that NPOs must be aware of these exceptions and take necessary measures to ensure compliance.

According to Article 54(2) of the MLIPA, the identification of legal persons and other legal entities, including those registered in a Member State or third country, is crucial for NPOs. This can be done by making a reference in the relevant register to the account of the legal person, requesting and keeping a copy of the memorandum of association, deed or other documents necessary for verification.

Electronic Identification and Certification Services

Electronic identification and certification services can also be used for customer identification and verification, as long as they meet the requirements of Regulation (EU) No 910/2014.

Data Retention Requirements

In addition, NPOs must keep data and information referred to in Article 61(1) for 5 years after dissolution, according to Article 67(8) of the Money Laundering Prevention Act (MIPA).

The Financial Action Task Force (FatF) has also issued a report on high-risk and other monitored jurisdictions, which provides further guidance on AML/CFT measures.

Conclusion

Experts at BCNL stress that NPOs must be aware of these requirements and take necessary measures to ensure compliance with AML/CFT regulations. The full publication can be accessed on the BCNL website.

  • BCNL’s opinion on the MIPA Bill
  • BCNL’s publication on NPOs
  • FatF definition of a non-profit organization (NPO)
  • Model Internal Rules published by SANS
  • Summary matrix of intrinsic risk factor assessment

Source: Bulgarian Center for Not-for-profit Law (BCNL)