Financial Crime World

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Customer Due Diligence in Hungary

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Overview

Banks in Hungary are required to perform customer due diligence (CDD) on their customers, including companies and organizations. The CDD process involves verifying the identity and background of customers.

What is Customer Due Diligence?

  • Verifying the identity and background of customers
  • Following guidelines set by the Hungarian Financial Supervisory Authority (MNB)

High-Risk Jurisdictions

Hungary’s anti-money laundering legislation identifies high-risk third countries with strategic deficiencies. These countries include:

  • Afghanistan
  • The Bahamas
  • Barbados
  • Botswana
  • Cambodia
  • Ghana
  • Iraq
  • Jamaica
  • Mauritius
  • Mongolia
  • Myanmar/Burma
  • Nicaragua
  • Pakistan
  • Panama
  • Syria
  • Trinidad and Tobago
  • Uganda
  • Vanuatu
  • Yemen
  • Zimbabwe

Bank Procedures for CSO Clients

If a bank has reason to suspect that a customer is from a high-risk jurisdiction, it must conduct additional due diligence. The bank may withhold transactions or transfers for a period of time or reject them if the CDD process reveals suspicious activity.

Additional Due Diligence Measures

  • Conducting enhanced customer background checks
  • Monitoring transactions and reporting any suspicious activity
  • Withholding transactions or transfers until the CDD process is complete

Reporting Obligations and Data Protection

Banks in Hungary are required to provide information to regulatory authorities, investigating bodies, public prosecutors’ offices, and courts upon request. This includes personal data, business relationship information, and other relevant data for a period of 8 years after the end of the business relationship or transaction order.

Data Protection Principles

  • Respect applicable legislation on data protection
  • Ensure transparency in data collection and processing
  • Implement adequate security measures to protect personal data

Specific Reporting Obligations

There are no specific reporting obligations for banks to inform governments on civil society banking in certain circumstances. However, banks may be required to report suspicious transactions or activity to regulatory authorities as part of their anti-money laundering obligations.