Financial Crime World

Hungary Takes Steps to Enhance Financial Institution Security Measures

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Hungary has been making significant strides in strengthening its Anti-Money Laundering (AML) regulations, earning praise from the Council of Europe for its efforts. The country has taken concrete steps to improve transparency and cooperation with international authorities, solidifying its position as a “largely compliant” member state.

Strengthened Regulations

Financial institutions operating in Hungary are required to adhere to strict regulations set forth by Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing. This law mandates:

  • Customer Due Diligence (CDD) procedures
  • Risk assessments
  • Reporting obligations
  • Penalties for non-compliance

Oversight and Enforcement

The Central Management of the National Tax and Customs Administration (NAV) is responsible for overseeing AML compliance, working closely with other government agencies to ensure that financial institutions are held accountable. The NAV also:

  • Analyzes suspicious transaction reports
  • Cooperates with law enforcement authorities

Compliance Requirements

To stay compliant, companies must:

  • Establish internal policies and provide training to employees
  • Perform CDD on customers, including:
    • Verifying personal information
    • Checking for presence on sanctions lists
  • Report suspicious activities to the authority within five business days
  • Keep records of customer transactions for eight years

Consequences of Non-Compliance

Non-compliance can result in severe penalties, including:

  • Fines up to HUF 2 billion (approximately $4.76 million)
  • Seizure of operations
  • Executive officers may face fines ranging from HUF 100,000 to HUF 500 million (approximately $240 to $1.2 million)

Importance of Compliance Solutions

In light of these regulations, it is essential for financial institutions operating in Hungary to implement efficient compliance solutions that navigate local regulations. By doing so, companies can ensure better security for customers and avoid costly penalties.

Conclusion

As the country continues to refine its AML framework, financial institutions must remain vigilant and adapt to shifting changes. With the right tools and strategies in place, Hungary can maintain its position as a leader in financial institution security measures.