Crypto-funded debit card in Bulgaria

Measures Against Money Laundering Act (MAMLA) (Закон за мерките срещу изпирането на пари - ЗМИП).

This act defines "virtual assets" and "virtual asset service providers" and brings them within the scope of obliged entities. It outlines the specific requirements for customer due diligence, reporting, and record-keeping.

Exchange between virtual assets and fiat currencies.

Transfer of virtual assets.

In Bulgaria, AML/CFT supervision of VASPs is shared among multiple authorities, with the National Revenue Agency (NRA) as the leading registration and enforcement body, the Financial Supervision Commission (FSC) overseeing crypto-asset service providers within its regulatory perimeter, and DANS-FID retaining a role but no longer the sole or primary supervisor.

National Revenue Agency (NRA) (Национална агенция за приходите - НАП)

Natural Persons: Name, date and place of birth, nationality, permanent address, unique identification number (e.g., national ID card, passport number). Identity must be verified using reliable, independent source documents or data (e.g., valid official identification document).

Legal Entities: Company name, legal form, registration number, registered address, and the names of the individuals authorized to represent the company. Verification involves obtaining extracts from commercial registers or similar official documents.

For legal entities, VASPs must identify the natural person(s) who ultimately own or control the customer, typically defined as holding 25% plus one share or more of the voting rights or exercising control via other means. This information must also be verified.

Regular scrutiny of transactions undertaken throughout the course of the business relationship to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Politically Exposed Persons (PEPs): Customers who hold or have held prominent public functions, their family members, or close associates.

High-Risk Third Countries: Transactions involving customers or beneficial owners from countries identified by the EU or FATF as having strategic AML/CFT deficiencies.

Complex, Unusual, Large Transactions, or Unusual Patterns: Transactions that have no apparent economic or lawful purpose.

Keeping customer documents, data, and information up-to-date.

The NRA has issued various clarifications and methodologies on the tax treatment of virtual currencies, but these have been superseded by Bulgaria's full adoption of the EU's MiCAR framework, which now governs crypto-asset regulation and tax treatment.

Tax Rate: 10% flat rate on the positive difference (gain) between the sale price and the acquisition price. This falls under income from the sale of "financial assets" or "other property" under the Personal Income Tax Act (ZDDLF - Закон за данъците върху доходите на физическите лица).

Exchange Services (Fiat-to-Crypto, Crypto-to-Fiat): The exchange of traditional currencies for virtual currencies (and vice-versa) is exempt from VAT (under the ZDDLS - Закон за данък върху добавената стойност). This is because the ECJ ruled that such transactions constitute a supply of services relating to currency, similar to traditional financial transactions, and thus fall under the VAT exemption for certain financial services.

Violation Type: Non-compliance with the Measures Against Money Laundering Act (MAMLA), specifically regarding VASP registration, customer due diligence (CDD), ongoing monitoring, suspicious transaction reporting (STR), record-keeping, internal control rules, etc. Outcome: Administrative fines, cessation of non-compliant activities, and potential criminal investigations in severe cases of money laundering.

Outcome: Administrative fines, cessation of non-compliant activities, and potential criminal investigations in severe cases of money laundering.