One step forward, two steps back: is the Bulgarian Measures against Money Laundering Аct beginning to respond to the actual needs of society?
Further amendments to the Measures Against Money Laundering Act (MAMLA) were promulgated in State Gazette on March 12, 2021. These amendments are part of series of legislative initiatives aimed at combating money laundering
Further amendments to the Measures Against Money Laundering Act (MAMLA) were promulgated in State Gazette on March 12, 2021. These amendments are part of series of legislative initiatives aimed at combating money laundering.
The adoption of the current MAMLA in 2018 triggered widespread public resentment towards the excessive administrative burden imposed on a broad range of entities.
Both the legislator and SANS gradually came to realize that the mere rigidity of lаw would not produce the desired results. The first requirement to be canceled was the one for the training plans prepared by the obliged entities to be sent to SANS after the agency had been literally flooded with hundreds of thousands of letters with plans attached. There were even nonsensical situations where lawyers (also obligated persons) prepared and sent to SANS a plan on how they would train themselves for the purposes of combatting money laundering.
It subsequently became evident that it was quite uncustomary for a trader to prescribe Internal Rules for the control and prevention of money laundering and terrorist financing, containing 18 clauses (as provided for in in Art. 101 of MAMLA). As a result, SANS prepared and published sample internal rules to be used by the obliged entities. This, however, happened only after a significant part of the obliged entities had already invested considerable amount of resources (time, financial, intellectual, and even emotional) to prepare the internal documents on their own or assisted by experts.
Meanwhile, the additional provisions of the act have made it clear that it does not actually apply to all wholesalers, but only to those which do not sell their own products. Furthermore, SANS published on its site instructions stating that a wholesaler within the meaning of MAMLA is only a trader which sells to another wholesaler. An attempt was thus made to further reduce the burden and narrow the range of obliged entities, until a logical conclusion has been reached that wholesalers (regardless of whether they are manufacturers and whom they sell to) are actually to be excluded from the scope of the act. This became a fact at the beginning of 2021, and they were excluded from MAMLA.
As a result of the amendments to MAMLA adopted on March 12, 2021, a number of other categories have been excluded from the scope of the obliged entities: reinsurers, contracting authorities, concessionaires, legal entities with employee mutual aid, trade unions, professional organisations, professional sports clubs with the exception of football clubs, regulated markets, the National Revenue Agency authorities, the customs authorities, etc.
The latest legislative changes are in pursuance of the main European Commission recommendation to the Bulgarian authorities – i.e. to focus their resources on controlling entities and activities where the risk of money laundering is higher. Obviously, the primary focus of attention should be on the financial sector in its various aspects – money transfers, loan services, electronic money, virtual currencies, etc.
Despite the massive negative reaction from the entities concerned, some of them could hardly be excluded from the scope of the regulation. These are, for example, legal and tax consultants, notaries, accountants, real estate brokers, intermediaries in transactions with expensive works of art. Their obligation to follow whether a client of theirs is involved in suspicious transactions is not some sort of a whim of the legislator, but a global trend. These persons are experts in the respective field and are expected to assist their clients in achieving their goals in an efficient and legitimate manner.
According to the information published by the SANS, no sanctions have been imposed on persons outside the financial system so far. It is likely, however, that all obliged persons will be now more closely monitored, especially given the significantly narrowed scope. Considering the fact that the measures are being strengthened at a global and pan-European level, it would be rather naïve to believe that rules can be disregarded. The sooner obliged entities become aware of the need to understand and apply legal measures, the better prepared they will be to respond to a real-world situation in order to prevent money laundering or to demonstrate to regulatory authorities that they comply with the law.