Financial Crime World

Financial Crime Legislation Updates in Hungary: A Step Towards Improved Security and Compliance

The Council of Europe has recognized significant progress made by Hungary in enhancing its Anti-Money Laundering (AML) regulations, labeling the country “largely compliant” with international standards. This development comes as a result of Hungary’s efforts to strengthen banking relationships and improve transparency of beneficial ownership information.

Key Updates

  • Hungary has fully complied with 32 out of the Financial Action Task Force’s (FATF) 40 recommendations.
  • The country partially complies with the remaining eight recommendations, demonstrating significant progress in improving its AML regulations.
  • Regulatory landscapes continue to evolve, making it crucial for financial institutions to stay compliant.

Financial Institutions Subjected to AML Regulations

According to Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing (AML Law), the following financial institutions fall under AML regulations:

  • Credit institutions
  • Financial service providers
  • Casinos
  • Certified tax experts
  • Lawyers
  • Custodian wallet providers

Regulatory Bodies Overseeing AML Compliance

The Central Management of the National Tax and Customs Administration (NAV) is the primary AML regulatory body in Hungary, responsible for ensuring regulatory compliance, analyzing Suspicious Transaction Reports (STRs), and collaborating with other authorities.

Key Regulations Governing AML Requirements

Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing serves as the main regulation governing AML requirements in Hungary. The law covers procedures for:

  • Customer Due Diligence (CDD)
  • Risk assessment
  • Reporting obligations
  • Penalties for non-compliant entities

Maintaining Compliance

Institutions seeking to remain compliant must follow the obligations set out by the AML law, including:

  • Creating, approving, and updating internal policies
  • Providing employee training programs or hiring relevant experts
  • Conducting Customer Due Diligence (CDD) during onboarding and throughout the business relationship
  • Maintaining customer records for a minimum of 8 years
  • Submitting Suspicious Activity Reports (SARs) within five business days

Penalties for Non-Compliance

Ignoring AML regulations in Hungary can result in severe consequences, including fines. Penalties depend on the severity of the violation and include:

  • Fines of up to HUF 2 billion (approximately $4.76 million) for companies
  • Fines of up to HUF 500 million (approximately $1.2 million) for individuals

Conclusion

Hungary’s continued focus on strengthening its AML regulations signals a proactive approach towards better security and more stringent rules for financial institutions. To ensure smooth compliance processes, institutions are encouraged to implement efficient solutions offering built-in regulatory support tailored to navigate local regulatory complexities. With the latest regulations in place, Hungary is taking a significant step towards improving financial crime legislation and ensuring a safer environment for its citizens.