The Client Who Wants to Pay Cash for a Property
Notary Petrova is asked to certify a deed of sale of a commercial building in Sofia for 480,000 BGN. The buyer, a newly incorporated company whose sole director, Mr. X, is a foreign national resident abroad, insists on paying 300,000 BGN in cash on the day of signing and the balance by transfer from a third company's account. The company was incorporated three weeks ago with capital of 2 BGN, and Mr. X refuses to identify the ultimate beneficial owner, saying only that he 'represents investors'. The seller is eager to complete and offers the notary a 5,000 BGN 'fee for speed'. The notary's assistant notes that a similar purchase by the same director was certified last month in another office.
1. What anti-money-laundering obligations arise, and what must the notary do before certifying?
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Notaries are obliged entities under the anti-money-laundering legislation. Before the transaction the notary must: (1) identify the client and verify identity using reliable documents; (2) identify the beneficial owner and take reasonable measures to verify that identity, which Mr. X's refusal makes impossible; (3) obtain information on the purpose and intended nature of the transaction; (4) conduct ongoing monitoring, including scrutiny of the source of funds. Red flags here include the shell company with 2 BGN capital, the foreign director, the third-party payer, the large cash element and the refusal to disclose the beneficial owner.
The notary must not certify while beneficial ownership is undisclosed. He should request the ownership and control structure in writing, the source of the cash and the reason for third-party payment, and consider filing a suspicious transaction report to the Financial Intelligence Directorate before completing or abandoning the transaction. Tipping off the client is prohibited. The 5,000 BGN 'fee for speed' is itself a bribery red flag and must be refused and recorded.
2. What are the consequences of certifying anyway, and how does the cash element interact with the payment rules?
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Certifying without identifying the beneficial owner is a breach of anti-money-laundering duties and exposes the notary to administrative penalties, disciplinary proceedings and, in serious cases, criminal liability for facilitating money laundering. The notary may also face civil liability to parties harmed by a transaction that is later annulled. The suspicious circumstances must be documented in the file even if the transaction is refused.
On payment: cash payments above the statutory threshold are restricted, and a 300,000 BGN cash payment cannot be accepted. The notary should require the price to be paid through a bank transfer from an identified account in the buyer's name, with documentary proof before or at certification. Payment by an unrelated third company must be explained and documented, because it may indicate layering. The notary should refuse the cash and the unexplained third-party payment, and should not certify a deed whose price is not demonstrably paid in a compliant manner.