Financial Crime World

Financial Crime Reporting Requirements in Hungary: Staying Compliant Amidst Regulatory Evolution

Hungary has made significant strides in strengthening its Anti-Money Laundering (AML) regulations, earning a “largely compliant” rating from the Council of Europe. With 32 out of 40 Financial Action Task Force (FATF) recommendations fully implemented, Hungary is taking concrete steps to combat financial crime.

Overview of AML Framework

The country’s AML framework is overseen by the Central Management of the National Tax and Customs Administration (NAV), which works closely with other government agencies, including the Prosecutor General’s Office and the National Courts Office. The NAV is responsible for ensuring that financial institutions comply with regulations and reporting suspicious transactions.

Compliance Requirements

Companies operating in Hungary must adhere to Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing (AML Law), which outlines customer due diligence procedures, risk assessments, reporting obligations, and penalties for non-compliance. The law follows the European Union’s 4th, 5th, and 6th AML Directives.

To stay compliant, companies must:

  • Establish internal policies and familiarize employees with them through regular training programs.
  • Conduct customer due diligence, including verifying personal information and monitoring customers’ transactions.
  • Report suspicious activities to the authorities within five business days of detection.
  • Keep accurate records of all customer transactions for eight years, with potential extensions to ten years.

Key Compliance Requirements

  • Establishing internal policies: Companies must establish internal policies and familiarize employees with them through regular training programs.
  • Customer due diligence: Conducting customer due diligence, including verifying personal information and monitoring customers’ transactions.
  • Reporting suspicious activities: Reporting suspicious activities to the authorities within five business days of detection.
  • Maintaining accurate records: Keeping accurate records of all customer transactions for eight years, with potential extensions to ten years.

Consequences of Non-Compliance

Non-compliance 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 personal penalties ranging from HUF 100,000 to HUF 500 million (approximately $240 to $1.2 million).

Staying Compliant in an Evolving Regulatory Landscape

As Hungary continues to evolve its AML regulations, companies operating in the country must remain vigilant and adapt to changing requirements. Implementing efficient compliance solutions is crucial for navigating local regulations and avoiding costly penalties.

Conclusion

By staying informed about Hungary’s financial crime reporting requirements, businesses can ensure a secure and compliant environment for their customers while also mitigating the risks associated with non-compliance. Stay up-to-date on the latest regulatory developments to maintain a strong compliance program and avoid costly penalties.