The 2019 amendments to the the Bulgarian Prevention of Money Laundering Act 2018 (AML Act) ensure Bulgarian law is in line with the requirements of the Fourth (*1) and Fifth (*2) AML Directives.
The AML Act adds the following to the list of obliged entities - entities which are required to carry out customer due diligence:
The rationale behind these additions is to address the increasing digitalisation of the financial sector and anonymity on some financial services platforms, which may raise the risk of their use for money laundering.
This is also the first time any Bulgarian legislation gives a legal definition of the term "virtual currencies".
According to this, a virtual currency is the digital representation of a value that is not issued or guaranteed by a central bank or a public body; is not necessarily related to a legally-established currency and does not have the legal status of currency or money, but is accepted by natural persons or legal entities as a means of exchange and can be transferred, stored and traded electronically.
A definition for "wallet provider" is also introduced. This is any natural or legal person or other legal form that provides private cryptographic key protection services on behalf of its clients for the possession, storage, and transfer of virtual currencies.
For AML and anti-terrorism finanancing purposes, cryptocurrency exchanges and crypto wallet providers must register with the National Revenue Agency (*4). The deadline for registration of existing crypto exchanges and wallet providers is 14 October 2020. Although not expressly laid down, failure to meet the deadline would appear to make offering these services in Bulgaria unlawful by such providers until they register.
NBLO regularly assists clients in the fields of cryptocurrencies, AML and financial regulation. Should you need assistance with registration or any other matter related to blockchain technologies, please contact us at the details provided on our website.
(*1) Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC.
(*2) Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU.
(*3) Section 4(38), (39).
(*4) Regulation no. N-9 of 7 August 2020 on the terms and conditions for entry in the register of providers engaged in exchange services between virtual currencies and fiat currencies by occupation, and of the custodian wallet providers.
An ~€1M claim on behalf of real estate consultants
NBLO’s dispute resolution lawyers represented UK-based real estate consultants who had structured a € 40-million-worth commercial property project on the Bulgarian Black Sea coast. In breach of an applicable contractual obligation, the consultants had not been paid the agreed success fees for their services. The then director of the defaulting party had been tragically shot dead in the meantime.
Following a hotly contested first instance, with below-the-belt attempts by the other side (the least untypical perhaps being the claim that the contract had been a forgery and a trial-within-a-trial on the issue), our team succeeded in obtaining a judgment at first instance. The parties were then able to achieve a significant settlement.
The key skills we were able to bring to bear in providing a solution included searching for solutions across the problem domain; appropriately involving representatives of Bulgaria’s EU partner member-states to buttress judicial independence; and resourcefully dealing with heterodox approaches by our judicial opponents.
© New Balkans Law Office 2020