Harmonization of Bulgarian Law with EU legislation

UniCredit Bulbank AD
Mon, 25/09/2023

DLT and AML in the spotlight                                                                                                                                                                                                                                                                                                                       In July 2023, Bulgarian financial market regulations were brought in line with EU legislation concerning crypto-assets markets, specifically Regulation (EU) 2022/858 of the European Parliament and the Council dated May 30, 2022, which introduced a pilot regime for market infrastructures based on distributed ledger technology.

The Local Markets in Financial Instruments Act (MiFIA) underwent amendments to incorporate new provisions. This expanded MiFIA's scope to include financial instruments issued via Distributed Ledger Technology (DLT). Additionally, market infrastructures based on DLT, such as DLT-based multilateral trading facilities, securities settlement systems, or trading and settlement systems, will be authorized to facilitate trading and settlement exclusively for financial instruments issued via DLT. Furthermore, the Financial Supervision Commission has been designated as the national competent authority for matters pertaining to DLT.

In addition, in July 2023 the Bulgarian Act for the Measures against Money Laundering was amended to be further aligned with the related EU legislation after Bulgaria had been formally addressed by the European Commission to accurately transpose Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 (the so-called Fifth Anti-Money Laundering (‘AML’) directive) into its national legislation.

The aforementioned amendments introduced specific additional measures in the context of Anti-Money Laundering (AML). Firstly, there's the implementation of a robust identification mechanism for individuals in charge of company management, accompanied by appropriate procedures to verify employees engaged in providing management services, such as lawyers, accountants, tax advisors, and others. The subsequent measure pertains to the identification of attorneys working with individual clients, to be conducted in the same manner as the client identification process. Lastly, publicly accessible information on the beneficial owners of legal entities within the Commercial Register will now include details regarding the type and extent of beneficial ownership rights or control exercised.