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Compliance Audits for Financial Institutions in Hungary: What You Need to Know
Hungary has made significant strides in improving its Anti-Money Laundering (AML) regulations, earning a “largely compliant” rating from the Council of Europe. The country’s financial institutions must ensure they comply with the regulations and adapt to changing requirements.
Who is Affected?
Financial institutions operating in Hungary that provide services in the country fall under AML regulation. This includes:
- Credit institutions
- Financial service providers
- Casinos
- Certified tax experts
- Lawyers
- Custodian wallet providers
- Others listed in Section 1 of Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing
Who are the Regulators?
The Central Management of the National Tax and Customs Administration (NAV) is the main AML supervising body in Hungary. The NAV ensures affected institutions follow the AML Law, analyzes suspicious transaction reports, and cooperates with other government agencies.
What is the Main Regulation?
Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing (AML Law) is the main regulation governing AML requirements in Hungary. The law covers:
- Customer Due Diligence (CDD) procedures
- Risk assessment
- Reporting obligations
- Penalties for non-compliant companies
How to Stay Compliant?
To stay compliant, companies must follow the obligations set out by the AML Law. This includes:
- Establishing internal policies
- Performing CDD
- Reporting suspicious activities
- Keeping records of customer transactions for eight years or more (as requested by regulators)
What are the Penalties?
Non-compliance with the AML Law can result in penalties ranging from warnings to fines of up to HUF 2 billion (approximately $4.76 million) or even seizure of operations. Executive officers may also face fines between HUF 100,000 and HUF 500 million (approximately $240 to $1.2 million).
Conclusion
Hungary’s continuous efforts to improve its AML regulations ensure better security for customers and stricter rules for financial institutions. To comply with the regulations and avoid penalties, companies operating in Hungary should implement efficient compliance solutions with a built-in compliance solution to navigate local regulations.