Financial Crime World

Hungary Takes Steps to Improve Anti-Money Laundering Regulations

Enhanced Compliance Efforts Recognized by the Council of Europe

Hungary has made significant strides in strengthening its banking relationships and transparency of beneficial ownership information, earning recognition from the Council of Europe as a “largely compliant” member state. The country has fully complied with 32 out of the Financial Action Task Force’s (FATF) 40 recommendations.

Key Aspects of Hungary’s Anti-Money Laundering Regulations

  • Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing (AML Law): This law affects various financial institutions, including credit institutions, financial service providers, casinos, certified tax experts, lawyers, and custodian wallet providers.
  • Central Management of the National Tax and Customs Administration (NAV): The NAV is the primary AML supervising body in Hungary, responsible for ensuring that affected institutions follow the AML Law and analyzing suspicious transaction reports.

Requirements for Companies to Stay Compliant

To stay compliant with the AML Law, companies must:

  • Establish internal policies: Develop and maintain effective anti-money laundering policies and procedures.
  • Provide AML training: Ensure all employees undergo regular AML training to understand their roles and responsibilities.
  • Conduct Customer Due Diligence (CDD): Verify personal information from customers through government-issued documents.
  • Implement ongoing monitoring procedures: Regularly review customer transactions for suspicious activity.
  • Report suspicious activities: Report any suspicious activities to the authority within five business days.

Consequences of Non-Compliance

Failure to comply with the AML Law can result in:

  • Penalties: Fines up to HUF 2 billion (approximately $4.76 million) or even seizure of operations.
  • Executive liability: Executive officers may be held liable for non-compliance.

Conclusion

Hungary’s efforts to improve anti-money laundering regulations demonstrate a commitment to customer security and stricter rules for financial institutions. Companies operating in Hungary must implement efficient compliance solutions to navigate local regulations and avoid penalties, ensuring a secure and compliant environment for their customers and operations.