Anti-Money Laundering and Compliance
Core Concepts
AML/CTF compliance is governed by the Bulgarian Anti-Money Laundering Act (AMLA) and EU directives (AMLD). Key concepts: customer due diligence (CDD), enhanced due diligence (EDD) for high-risk customers (PEPs, correspondent relationships), simplified due diligence (SDD) for low-risk, suspicious activity reports (SARs) to the Financial Intelligence Directorate (FID), and record-keeping (5 years). Candidates must understand the risk-based approach, the role of the compliance officer, and the sanctions for non-compliance. Traps often involve misidentifying PEPs (including family members and close associates), misunderstanding when to apply EDD (e.g., for all non-resident clients from high-risk jurisdictions), and the prohibition of tipping off. Also, the rules on beneficial ownership identification (25% threshold) and the need for ongoing monitoring. Candidates should know the FID's role and the obligation to refrain from carrying out suspicious transactions. Another trap: the treatment of simplified due diligence (not exempt from CDD) and the need to document risk assessments.
Worked Example / Rule of Thumb
A client requests a large cash deposit and is reluctant to provide source of funds. The firm must apply EDD, and if suspicions remain, file a SAR with the FID and consider not executing the transaction. Rule of thumb: if in doubt, report; tipping off is a criminal offence.
Key Points
- Risk-based approach: CDD, EDD, SDD based on risk.
- PEPs: enhanced due diligence required; includes family and associates.
- Beneficial ownership: identify natural persons owning >25%.
- SARs filed with Financial Intelligence Directorate (FID).
- Record-keeping: 5 years after relationship ends.
- Tipping off prohibited; suspicious transactions may be blocked.