Beneficial Ownership Registers: Registration, KYC Discrepancies and Sanctions

Corporate transparency does not end with registration in the Bulgarian Commercial Register and Register of Non-Profit Legal Entities. Banks and other obliged entities conduct their own customer due diligence. Where a discrepancy is identified between information obtained through KYC procedures and registered beneficial ownership information, the specific procedure under Article 63a of the Bulgarian Measures Against Money Laundering Act applies. 

Beneficial ownership compliance is therefore an ongoing process. Changes in ownership, control, corporate structure or beneficial owner information may require updates both to registry filings and to KYC information held by financial institutions. 

Who Qualifies as a Beneficial Owner under Bulgarian AML Law? 

A beneficial owner is the natural person or persons who ultimately own or control a legal person or other legal arrangement, or on whose behalf or for whose account the relevant transaction, operation or activity is carried out. 

For legal persons, the principal test is direct or indirect ownership of 25% or more of the shares, equity interests or voting rights. The threshold includes exactly 25%. Bulgarian law also recognises control by other means, including the ability to exercise decisive influence over material decisions of the legal person. Indirect control may also arise through rights exercised through third parties under a power of attorney, contract or other legal arrangement. 

A nominee director, secretary, shareholder or holder of capital is not treated as the beneficial owner merely because of the nominee status where another natural person has been identified as the actual beneficial owner. Where nominee arrangements are used, Bulgarian AML law requires appropriate documentation enabling the beneficial owner to be identified. 

Where all possible means of identifying the beneficial owner have been exhausted and the statutory conditions are satisfied, the senior managing official fallback applies. The fallback should not be used as a substitute for a genuine examination of the ownership and control structure. 

Companies whose shares are traded on a regulated market subject to the applicable transparency standards are subject to specific treatment under the statutory definition. This exception should not be interpreted as a general exemption from all AML/KYC obligations imposed on banks and other obliged entities. 

When Must Beneficial Ownership Be Registered? 

Bulgarian legal persons and other legal arrangements, other than sole traders, must register their beneficial owners where those individuals are not already recorded as partners, shareholders or sole owners of the capital on the entity's own registry file. 

Where the ownership chain includes other legal persons, a separate beneficial ownership filing is required if the beneficial owners cannot be established through existing registrations concerning Bulgarian entities within the ownership chain or where the relevant intermediate entities are incorporated outside Bulgaria. 

The information under Article 63(4) includes identifying information concerning the beneficial owner, information about intermediate legal persons or arrangements through which control is exercised, the type and extent of the relevant rights and any changes to those circumstances. Documentary evidence must accompany the declaration and demonstrate that the identified natural persons satisfy the statutory definition of beneficial owner. 

Where no legal representative who is a natural person permanently resident in Bulgaria is registered on the entity's file, a contact person permanently resident in Bulgaria must also be registered and provide notarised consent. 

Who Can Access Beneficial Ownership Information? 

Following the 2025 amendments, access to beneficial ownership information is differentiated. 

Competent authorities under the Bulgarian AML legislation and the Financial Intelligence Directorate of the State Agency for National Security have unrestricted access. Obliged entities, including banks and other financial institutions, have access for customer due diligence purposes. Other persons and organisations may obtain access where they demonstrate a legitimate interest. 

Beneficial ownership information is therefore not unrestricted public information available to every third party, while remaining accessible to competent authorities and obliged entities where required for the performance of their statutory functions. 

What Happens When KYC Information Does Not Match the Register? 

Where a bank, another obliged entity or a competent authority identifies a discrepancy between beneficial ownership information obtained through its own procedures and the information recorded in the relevant register, Article 63a establishes a specific discrepancy procedure. 

The Registry Agency must be notified within 14 days from identification of the discrepancy, together with the available relevant supporting documents. The Registry Agency records the existence of the discrepancy notification on the legal person's registry file and sends a notice to the entity. 

If the written notice is not received by the legal representative or an authorised representative, it is deemed served one month after the discrepancy notification was recorded on the entity's file. The entity then has 7 days from receipt or deemed service to apply either for correction of the registered beneficial ownership information or for deletion of the discrepancy notification, supported by the required evidence. 

The recording of a discrepancy notification does not, by itself, constitute a final determination that the registered information is incorrect. The statutory procedure allows the entity either to correct its filing or to establish through documentary evidence that the existing registration should remain unchanged. 

What Banking Consequences Can a UBO Discrepancy Have? 

A discrepancy between KYC information and registry data does not automatically result in attachment or freezing of funds. It may, however, require additional verification because a bank cannot discharge its own beneficial ownership identification obligations merely by relying on registry information. 

Where an obliged entity is unable to complete the required customer due diligence measures, Article 17 of the Bulgarian Measures Against Money Laundering Act requires it to refuse the relevant operation or transaction or to refuse to establish the business relationship, including the opening of an account. Where a business relationship already exists, inability to complete the required due diligence may result in termination of that relationship. 

For businesses, the practical requirement is that registry information and the data supplied to banks during KYC reviews should reflect the same underlying ownership and control structure. 

What Liability Can Arise from False Information? 

Inaccurate information does not automatically give rise to criminal liability. Criminal exposure may arise where all elements of the relevant offence under Article 313 of the Bulgarian Criminal Code are established, including where a person knowingly confirms false information or conceals the truth in a declaration that is required by law to certify particular circumstances. The principal offence carries imprisonment for up to three years or a fine. 

An ordinary factual error, technical discrepancy or subsequent change in circumstances should therefore not, by itself, be equated with a criminal offence. The specific facts, the content of the declaration and the required form of intent remain material. 

What Administrative Sanctions Apply? 

Failure to file the information required under Article 63(4) or Article 63a(4) within the statutory period is subject under Article 118(4) to a fine for a natural person or a property sanction for a legal person in the statutory amount of BGN 5,000. If the required filing has still not been made one month after the first sanction is imposed, a further sanction in the same amount is imposed for each month until the filing is completed. 

Since 1 January 2026, the euro has been Bulgaria's official currency at the irrevocably fixed conversion rate of EUR 1 = BGN 1.95583. Statutory fines and sanctions that continue to be expressed in Bulgarian lev are applied in accordance with the conversion rules under the Bulgarian Euro Introduction Act. Accordingly, the statutory amount of BGN 5,000 converts to EUR 2,556.46 after the applicable conversion and rounding. 

How Can Businesses Reduce Beneficial Ownership Compliance Risk? 

Corporate ownership structures should be reviewed not only against the formal 25% threshold but also for contractual or factual mechanisms through which an individual may exercise ultimate control. 

International holding structures should maintain current documentation concerning intermediate entities, shareholder or partner rights and the individuals exercising ultimate control. Nominee arrangements should be properly documented and cannot replace identification of the ultimate beneficial owner. 

Registry information should also be periodically reconciled with banking KYC records. Where a discrepancy notification is received, the company must act within the 7-day period under Article 63a(4), either by correcting the registered information or by submitting the evidence required to seek deletion of the discrepancy notification. 

Legal Assistance with Beneficial Ownership and KYC Discrepancies 

Vassilev & Chisuse Law Firm provides legal assistance with reviews of ownership and control structures, preparation and review of beneficial ownership documentation, KYC discrepancies and representation in connection with the applicable registry and banking procedures. 

This material is provided for general information purposes only. It does not constitute individual legal, financial, tax or other professional advice. Specific obligations and consequences should be assessed by reference to the ownership structure, the factual mechanisms of control and the circumstances of the particular case.