CMS Expert Guide to the transparency register in AML directive

Transparency Register pursuant to the fourth European Money Laundering Directive – Status of Implementation in Selected EU Member States

The current legal basis of the Bulgarian Transparency Register is Chapter II, Part VI of the Bulgarian Anti-Money Laundering Measures Act (Закон за мерките срещу изпирането на пари) published in State Gazette Issue No 27/2018 on 27 March 2018, effective from 31 March 2018.

Further amendments implementing the Directive were promulgated in State Gazette Issue No 94 dated 29 November 2019.

The current legal basis of the Hungarian Transparency Register is Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing (2017. évi LIII. törvény a pénzmosás és a terrorizmus finanszírozása megelőzésé¬ről és mega-kadályozásáról) (the "Hungarian Act").

The Hungarian Parliament adopted a comprehensive modification of the Hungarian Act, effective as of 10 January 2020, to implement the Directive.

Only upon request.

The UBO is obliged to provide the legal entity with all documents and information required for the purposes of fulfilling transparency obligations upon request.  

Pursuant to the currently effective wording of the Hungarian Act, legal entities are not required to directly submit information to a central register regarding their UBO. However, in the event such entities want to engage in a business relationship with certain service providers (e.g. financial institutions, insurance companies, auditing firms, etc.) they will be required in certain cases to provide certain information to the service providers in accordance with the Hungarian Act as part of the service providers' customer due diligence. Such due diligence will include customer identification and verification procedures, including the identification and verification of the customer’s agent, proxy or other authorised representative. In the context of customer due diligence, customers are required to provide information regarding their UBOs as well. The collected and recorded data on the UBOs of customers (legal persons, unincorporated organisations and fiduciary managers) will then be forwarded to the central register by the service provider (details of which are to be regulated in a separate Act that has yet to be adopted), provided such data is not already recorded in the central register.

According to an upcoming modification of the Hungarian Act, effective as of 1 June 2021, it will be not the service provider but the legal entity itself which shall perform the notification with respect to its UBO to the Transparency Register within five business days following the commencement of its activities. With regard to already existing legal entities, there is no clear deadline for the initial filing. The current wording of the Hungarian Act contains a reference in its closing provisions to the effect that service providers who are already operating shall make notification to the Transparency Register by 1 March 2021; however, it has not yet been clarified how such notifications shall be made. We assume that the exact rules of the notification obligation of existing legal entities will be regulated in the separate Act, yet to be adopted. 

After registration in the Transparency Register, if any change occurs in the person of its UBO, the legal entity must notify the Transparency Register regarding such change within 5 business days following its occurrence. If the service provider, when performing its customer due diligence, notices any discrepancy between the data provided to it and the data registered in the Transparency Register, it must notify the authority that keeps the Transparency Register thereof. 

Yes.

There is an obligation for the legal entity to have and to keep adequate, accurate and up-to-date information on the identity of the UBO.

See the answer to question 2.

The legal entity.

See the answer to question 2.

5. Are there exemptions to the filing obligation?

Yes.

There is an exemption if the required information is already available in the relevant registers.

See the answer to question 2.

6. What is the due date for the initial filing? Is there an obligation to update the filing?

1 February 2019 – 31 May 2019.

Yes, if there is a change in circumstances.

See the answer to question 2.

7. What are the sanctions in case of a breach of the transparency obligation?

Fines range between EUR 250 and EUR 2,500 for responsible managers of a legal entity. Fines for legal entities range between EUR 500 and EUR 5,000.

The supervising authority may apply the following sanctions depending on the severity of the breach: (i) issue a warning, (ii) call on the service provider to terminate the breach, (iii) call on the service provider to revise its internal policy, (iv) in the case of certain service providers, withdraw its operational permit or order its deletion from the register where it is registered, (v) initiate the determination of the liability of the executive officer or the employee of the service provider liable for the breach, (vi) impose a fine the maximum amount of which may be HUF 2 billion in certain cases (the exact amount depends on various factors), (vii) order an extraordinary data provision obligation or (viii) issue a warning to the personally responsible executive officer or employee or impose a fine on him/her of up to HUF 20 million.

8. Is the Transparency Register established as a separate register or part of an existing one?

The Bulgarian Transparency Register is part of two existing public registers: the Commercial Register and the BULSTAT Register.

The Hungarian Transparency Register is not operating yet in Hungary; it is expected to be established in the first half of 2021. The detailed rules of notification to the Transparency Register will be regulated in a separate Act, yet to be adopted, which will presumably set out the details of how the Transparency Register will operate (i.e. separately or as part of an existing register).

9. Notable amendments (including through the Directive)

N/A

  1. Broader definition of service providers;
  2. Increase of threshold for applying customer due diligence in the case of occasional transactions;
  3. Stricter customer due diligence and follow-up measures;
  4. Special measures for politically exposed persons;
  5. Clarification of the risk assessment rules, adding a special category alongside the normal, simplified and enhanced customer due diligence; 
  6. Establishment of the Transparency Register is anticipated in the first half of 2021;
  7. Planned establishment of a Central Bank Account and Safe Deposit Box Registry as of 1 December 2020.