Bribery and Corruption: A Likely Blindspot in Hungary

A recent survey has revealed that bribery and corruption may be a more significant issue than initially thought in Hungary. Despite not ranking among the top three most common economic crimes, 19% of respondents reported experiencing corruption at their companies over the past 24 months.

The Hidden Nature of Corruption

The results are concerning, with:

• 44% of respondents unsure if their organization had been asked to pay a bribe
• 59% stating that they lost an opportunity to a competitor who allegedly paid a bribe

This highlights the hidden nature of corruption, which is often difficult to detect.

Compliance Challenges Ahead

The growing number of enforcement actions, updated OECD framework, and newly adopted national anti-corruption legislation are likely to keep compliance departments busy in the coming months.

Money Laundering: Legislation Changes Drive Growth in AML Risk Assessments

The European Parliament’s adoption of the fourth Anti-Money Laundering Directive has driven a significant increase in risk assessments at institutions. However, only 5% of Hungarian respondents reported being under an AML-related enforced remediation program or having received major feedback to address compliance shortcomings.

The Importance of Regular Risk Assessments

While there have been few serious AML-related fines and penalties in Hungary, this may change in the future. It is crucial for companies to perform regular risk assessments to identify potential vulnerabilities.

General Fraud Risk Assessment: Room for Improvement

Despite some progress in fraud detection measures, only 50% of Hungarian organizations reported conducting a general fraud or economic crime risk assessment over the past 24 months. This lack of preparedness may contribute to the high incidence of fraud and corruption.

The Importance of Proactive Risk Management

Companies must prioritize proactive risk management and compliance in Hungary’s business environment to ensure long-term success.

Enhanced Due Diligence: Critical for Acquisitions

Acquiring companies must prioritize enhanced due diligence to identify potential risks and ensure a successful transaction. However, less than half of Hungarian respondents reported performing additional due diligence as part of their acquisition process, including anti-corruption, antitrust, and cybersecurity measures.

The Importance of Proactive Risk Management in M&A Transactions

Companies must prioritize proactive risk management and compliance in Hungary’s business environment to ensure long-term success.

In conclusion, these findings underscore the importance of proactive risk management and compliance in Hungary’s business environment. Companies must prioritize fraud detection, corruption prevention, and enhanced due diligence to ensure long-term success.