Instruction Number 02/2023 for Specified Businesses (Bulgaria)

Summary

This Instruction, issued by the GFSC under Section 49AA(6) of the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999, responds to the FATF placing Bulgaria on its list of jurisdictions under increased monitoring and Bulgaria's removal from Appendix C (Equivalent Jurisdictions) of the Handbook for Countering Financial Crime and Terrorist Financing. It requires specified businesses to reassess risk on existing Bulgaria-related relationships and, where CDD concessions were relied on, to apply full customer due diligence.

• Identify affected relationships: By 31 March 2024, identify all business relationships where reliable introducer, intermediary, or Appendix C simplified due diligence provisions (Schedule 3, paragraphs 6 or 10) were used because the introducer, intermediary or business is Bulgarian.
• Reliable introductions: For relationships relying on an introducer under paragraph 10, ensure the full CDD measures under paragraph 4 of Schedule 3 and the Handbook are met.
• Appendix C businesses: For relationships where simplified due diligence was applied under section 9.6 of the Handbook, ensure verification measures under paragraph 4 of Schedule 3 are met.
• Intermediary relationships: Where an intermediary was treated as the customer under paragraph 6, either meet correspondent relationship requirements (paragraph 5(1)(b) and Handbook section 8.6) or apply full CDD to each of the intermediary's underlying customers.
• Notification of non remediation: If a business relationship cannot be remediated under points 2, 3 or 4 by 31 March 2024, notify the Commission detailing additional risk controls put in place.
• Risk assessment review: By 31 March 2024, review relationship risk assessments for all business relationships where Bulgaria is a relevant risk factor and apply mitigating measures where risk has increased.
• Fallback for incomplete CDD: Where CDD ultimately cannot be completed, terminate the business relationship in accordance with paragraph 9 of Schedule 3 and section 4.7 of the Handbook, and consider making a disclosure to the Financial Intelligence Unit.

The Commission has stated it will review compliance with this Instruction through on site inspections and other supervisory means.

Key obligations

• By 31 March 2024, identify all business relationships where reliable introducer, intermediary or Appendix C concessions under Schedule 3 paragraphs 6 or 10 were used due to a Bulgarian introducer, intermediary or Appendix C business
• By 31 March 2024, apply full customer due diligence measures (paragraph 4 of Schedule 3) to identified relationships relying on reliable introducer arrangements
• By 31 March 2024, apply verification measures under paragraph 4 of Schedule 3 to identified Appendix C business relationships previously subject to simplified due diligence
• By 31 March 2024, for intermediary relationships either meet correspondent relationship requirements under paragraph 5(1)(b) of Schedule 3 or apply full CDD to each of the intermediary's customers
• Notify the Commission where a business relationship cannot be remediated by 31 March 2024, detailing additional risk controls applied
• By 31 March 2024, review relationship risk assessments for all business relationships where Bulgaria is a relevant risk factor and apply mitigating measures if risk has changed
• Terminate business relationships where CDD ultimately cannot be completed and consider disclosure to the Financial Intelligence Unit

Applies to

specified businesses

Deadlines

• 31 March 2024: Deadline to identify affected business relationships, complete remediation under points 2, 3 or 4, notify the Commission of any relationships that cannot be remediated, and review relationship risk assessments where Bulgaria is a relevant risk factor