Opinion of the European Central Bank of 12 December 2007 at the request of Българска народна банка (Bulgarian National Bank) on a draft law introducing a licensing regime for entities providing money remittance services (CON/2007/40)
Date: 2007-12-12
Institutions: European Central Bank
Subjects: Bulgaria, fight against crime, money laundering, national law, payment system, terrorism financing

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 12 December 2007 

at the request of Българска народна банка (Bulgarian National Bank) 

on a draft law introducing a licensing regime for entities providing money remittance services 

(CON/2007/40) 

Introduction and legal basis 

On  25  October  2007  the  European  Central  Bank  (ECB)  received  a  request  from  the  Governor  of 

Българска народна банка (Bulgarian National Bank) (BNB) for an opinion on a draft law amending the 

Law on funds transfers, electronic payment instruments and payment systems (hereinafter the ‘draft law’). 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European Community and the third indent of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 

on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft  legislative 
provisions1, as the draft law relates to the BNB. In accordance with the first sentence of Article 17.5 of 

the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1.   Purpose of the draft law 

The  aim  of  the  draft  law  is  to  introduce  a  licensing  regime  for  entities  providing  money  remittance 

services  and  thus  to  implement  the  requirements  of  Article  36  of  Directive  2005/60/EC  of 

26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering 
and terrorist financing2 (hereinafter the ‘Directive’). In particular, the draft law specifies: (i) the categories 

of  money  remittance  companies  and  the  requirements  for  operating  such  a  business;  (ii)  the  conditions 

under which a licence is granted, revoked or discontinued; and (iii) the supervisory activities of the BNB 

to  ensure  that  money  remittance  companies  operate  their  business  in  conformity  with  this  draft  law, 

including the BNB’s right to carry out on-site inspections and to obtain information. 

1  
2  

OJ L 189, 3.7.1998, p. 42. 
OJ L 309, 25.11.2005, p. 15.  

 
 
 
 
 
                                                 
2. 

General observations  

2.1  The ECB reiterates its commitment to contributing to the adoption, implementation and execution 

of  measures  preventing  the  use  of  the  financial  system  for  terrorist  activities,  as  expressed  in  its 
public statement of 1 October 20013.  

2.2  The  ECB  welcomes  the  draft  law,  which  will  increase  transparency  with  regard  to  money 

remittance  companies.  The  draft  law  also  provides  for  measures  that  will  enhance  the  BNB’s 

supervisory powers over such entities thus allowing it to play a more active role in the prevention 

of money laundering. It is important to bring the draft law into line with the Directive so as to also 

ensure that money remittance companies do not facilitate terrorist activities in any way. 

2.3  The  ECB  recommends  adding  certain  provisions  to  the  draft  law’s  requirements  for  granting 

licences to money remittance companies, which will bring it into line with the Directive. Under the 

draft law, one condition for granting a licence is that ‘the internal control systems, administrative 

and  accounting  procedures,  risk  management  systems,  and  internal  rules  on  measures  against 

money  laundering  are  adequate  and  proportionate  to  the  nature  and  size  of  the  business  the 
applicant will operate’4. This requirement should also include the internal rules on measures against 

terrorist financing. In particular, Article 26e(1) item 4 of the draft law should be reformulated so as 

to ensure that the internal rules that are to be approved by the Director of the Financial Intelligence 

Agency  must  also  comply  with  the  requirements  of  the  Law  on  the  Measures  against  Terrorism 
Financing5.  

2.4  The ECB welcomes the introduction of a licensing system under which the reliability and financial 

soundness  of  partners  and  shareholders  who  are  owners  of  the  money  remittance  companies  is 
assessed6. In this respect, the Directive  requires that  if the competent authorities are not satisfied 

that ‘the persons who effectively direct or will direct the business of such entities or the beneficial 
owners  of  such  entities’  they  must  refuse  to  license  or  register  such  entities7.  In  the  light  of  the 

above,  and  in  view  of  the  crucial  importance  of  preventing  money  laundering  and  terrorist 

financing, it is essential to introduce more specific and detailed provisions in the draft law relating 

to the identification and verification of all beneficial owners.  

2.5 

In addition, it is important to examine in the licensing procedure that the persons who effectively 

direct an applicant’s business, as well as those persons who are authorised to manage and represent 
the applicant8, are fit and proper persons, and the draft law should be amended accordingly. 

3  

4  
5  

6  
7  
8  

in 

of 

the 

funding 

terrorist 

See  the  Public  statement  of  the  European  Central  Bank  on  its  support  for  measures  to  prevent  the  use  of  the  financial 
system 
at 
activities, 
www.ecb.europa.eu/press/pr/date/2001/html/pr011001.en.html. 
See Article 26b(1) item 6 of the draft law. 
Закон за мерките срещу финансирането на тероризма, published in Darjaven Vestnik issue No 16, 18.02.2003, as 
last amended on 21.07.2006. 
See Article 26b(1) item 7 of the draft law. 
See Article 36(2) of the Directive. 
See Article 26b(1) item 8 of the draft law. 

available 

website 

ECB’s 

the 

on 

2 

 
                                                 
3. 

Provisions on granting a licence to money transmission or remittance entities 

3.1 

It is important to make it clear that the BNB is the sole authority responsible for assessing all the 

conditions  necessary  for  obtaining  a  licence  set  out  in  Article  26b(1)  of  the  draft  law.  The  ECB 

understands  that  Article  26b(2)  is  meant  to  grant  the  BNB  power  of  discretion  over  whether  the 

requirements set out in Article 26b(1) items 5-9 are met. In this respect, it seems appropriate that 

such discretion also covers Article 26b(1) items 1. 

3.2  The  recently  adopted  Directive  on  Payment  Services  in  the  Internal  Market  (PSD)9  sets  out  a 

harmonised set of licensing rules for providers of payment services that are not connected to taking 

deposits  or  issuing  e-money.  Since  the  PSD  should  be  transposed  into  national  law  by 

1 November 2009, it may facilitate the future legislative process if applicable parts of the PSD are 

already taken into consideration. 

4. 

Extension of the BNB’s supervisory powers 

4.1  The ECB welcomes the extension of the BNB’s supervisory powers to include the area of money 

laundering  and  terrorist  financing  and  the  BNB’s  right  to  conduct  on-site  inspections.  However, 

Member  States  may  not  put  their  NCBs  in  a  position  where  they  have  insufficient  financial 
resources to carry out their ESCB- or Eurosystem-related tasks, as applicable10. Therefore, the ECB 

expects that, when extending the BNB’s tasks, sufficient financial and personnel resources will be 

available  to  the  BNB,  both  in  terms  of  quantity  and  quality  to  carry  out  all  its  tasks,  and  in 
particular that its capacity to carry out ESCB-related tasks will not be affected11.  

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 12 December 2007. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

9  
10  
11 

Not yet published. 
See the ECB’s Convergence Report 2007, p. 19, available on the ECB’s website at www.ecb.int.  
See  paragraph  3.2  of  ECB  Opinion  CON/2007/17  of  18  June  2007  at  the  request  of  the  Italian  Ministry  of  Economic 
Affairs  and  Finance  on  a  draft  law  on  the  regulation  and  supervision  of  markets  and  the  functioning  of  the  competent 
independent  authorities,  paragraph  3  of  ECB  Opinion  CON/2007/8  of  21  March  2007  at  the  request  of  the  Czech 
Ministry of Industry and Trade on certain provisions of a draft law amending the Law on consumer protection relating to 
Česká národní banka, paragraph 2 of ECB Opinion CON/2007/23 of 2 August 2007 at the request of Banca Naţională a 
României on a draft law on non-banking financial institutions. 

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