Financial Crime World

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Hungary Strengthens Financial Crime Legislation to Meet International Standards

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Budapest, Hungary - In a bid to enhance its anti-money laundering (AML) system, Hungary has updated its financial crime legislation to align with international standards set by the Financial Action Task Force (FATF).

Economic Growth and Financial Services Sector

Hungary’s economy, which is predominantly cash-based and worth around EUR 110.100 billion in 2015, has seen significant growth in its financial services sector.

Key Threats Identified

The Hungarian National Risk Assessment identified several key threats, including:

  • Criminal organizations
  • Offshore businesses
  • Money transfer services
  • Lack of centralized registration of bank accounts
  • Shell companies

In response, Hungary enacted legislation in 2017 to prevent and combat money laundering and terrorist financing.

AML Act Requirements

Under the AML Act, reporting entities are required to:

  • Conduct customer due diligence
  • Verify the identity of customers
  • Gather and archive information and records
  • Evaluate and categorize risk
  • Use a screening system
  • Share suspicious transaction information

The Hungarian Financial Intelligence Unit (HFUI), which is part of the National Tax and Customs Administration (NAV), plays a central role in receiving, analyzing, and publishing suspicious transaction information.

Monitoring Compliance

The NAV works closely with other investigating bodies, including:

  • Prosecutor General’s Office
  • National Courts Office

to oversee compliance with the AML Act. The government, Hungarian Bar Association, and other agencies are also authorized to monitor adherence to the legislation.

Restrictive Measures Act

The Restrictive Measures Act mandates the freezing of cash and other financial assets, as well as the ban on providing financial services to individuals and entities subject to EU or UN sanctions. Service providers must screen their clients’ personal data against EU legal actions and UN Security Council resolutions and notify the NAV if a match is found.

AML Compliance Software

To help organizations meet international AML obligations, Sanction Scanner has developed AML compliance software that uses a risk-based strategy to analyze companies’ risk profiles and avoid sanctions. The company offers demo requests for its AML solution features.

Conclusion

With these updates, Hungary aims to strengthen its financial crime legislation and improve transparency in the financial sector.