Obliged entities under the Measures Against Money Laundering Act (ЗМИП) are required to identify the beneficial owners of their clients where those clients represent companies, associations, foundations or other legal entities. To this end, checks must be carried out and the relevant documents evidencing the identity of the beneficial owner must be collected.
Who is the beneficial owner?
The beneficial owner is always a natural person.
For each natural person identified as a beneficial owner, the following data must be collected:
- Names (full name).
- Date and place of birth.
- An official identification number or another unique identifier from a valid photographic identity document.
- All nationalities held by the person.
- Country of permanent residence and address (a post-office box number is not sufficient).
Methods for identifying beneficial owners
The ЗМИП provides for several principal ways of identifying beneficial owners:
1. Reference to official registers
The beneficial owner's details are verified by reference to the relevant registers:
- For companies, foundations and associations registered in Bulgaria – the check is carried out in the Commercial Register, the Register of Non-Profit Legal Entities (ЮЛНЦ) and the BULSTAT register.
- For trustees of trusts, custodial funds and other foreign legal entities – reference to the BULSTAT register.
- For legal persons and other legal entities registered in another EU Member State – a check in the beneficial owners register of the State concerned.
- For companies and organisations registered in a third country – use of the beneficial owners register or an alternative mechanism for establishing the beneficial owner provided for in the legislation of the country concerned.
2. Requesting documents from the client
The client is obliged to provide the official documents that served for its registration, as well as additional documents evidencing the identity of the beneficial owner and the nature and type of the ownership or control.
Carrying out register checks alone is not sufficient – it is necessary to provide documents that indisputably prove who the beneficial owner is.
The required documents may include:
- An original or a notarised copy of an extract from the relevant register showing the client's current status.
- A certified copy of the instrument of incorporation or company agreement – a document containing the particulars under Article 54(4) of the ЗМИП (name, legal form, registered seat, management address, scope of activity, management and representation bodies, supervisory bodies, etc.).
- A certified copy of the register of shareholders – where the client is a joint-stock company.
3. Submission of a Declaration of Beneficial Ownership
Where the information gathered through register checks and the documents provided is insufficient or contradictory, identification may be carried out by means of a Declaration under Article 59(1)(3) of the ЗМИП.
IMPORTANT:
- The declaration cannot be the primary and principal method for identifying the beneficial owner.
- It must be a supplementary document where the other methods do not provide a definitive answer.
- The declaration is signed by the client's legal representative (manager, executive director, etc.). It may also be signed by an authorised representative.
- Submission may be effected by means of an electronic document, an electronic statement or an electronic signature.
Special cases of identification
In certain cases, the obligation to identify the beneficial owner does not apply.
This is the case where the client is:
- A joint-stock company whose shares are traded on a regulated market – European Union law or international ownership-transparency standards apply.
- A legal person with nominee directors, nominee owners or nominee secretaries – in this case a certificate, agreement or other valid document from the register of the relevant jurisdiction, evidencing the beneficial owners, is required.
Since 16 July 2024, a new obligation has been in force – if a discrepancy is established between the collected data on the beneficial owner and the information entered in the registers, the Registry Agency must be notified within 14 days.
If you need advice or the preparation of documents in connection with the ЗМИП, the Rules for its Implementation and the Measures Against the Financing of Terrorism Act, contact us on telephone 0887550706 or by e-mail: [email protected]
