Hungary’s Savings Deposit Passbooks Under Scrutiny
In a move aimed at strengthening its anti-money laundering (AML) regime, the Hungarian government has announced plans to phase out savings deposit passbooks in a graduated procedure. This decision is part of a broader effort to improve the country’s financial services sector.
New Regulations
Under the new regulations:
- Credit institutions will only be able to accept savings deposits from clients who have been duly identified and registered.
- Only registered securities can be offered to the public or issued in series.
- The Hungarian Financial Supervisory Authority (HFSA) has authorized credit institutions and their agents to offer currency exchange services.
Enhancing Scrutiny
The government has taken additional steps to enhance scrutiny of managers and employees of bureaux de change, including:
- Verification of criminal records
- Increased staff at the FIU
- Intensified training for financial service providing organizations
Evaluation Report
A recent evaluation report praised Hungary’s progress in implementing its AML regime, noting that most recommendations made in the first round report had been positively responded to. However, it also identified some issues that need further addressing, including:
- Implementation of AML legislation
- Lack of results in the criminal justice area
Areas for Improvement
The report highlighted several areas for improvement, including:
- Need for guidance on the identification of beneficial owners across the financial sector
- Reporting of suspicious transactions
- Potential risk of over-reporting by certain banks
- Power to suspend suspicious transactions delegated to financial service providers
Criminal Investigations
In the area of criminal investigations, the report found that:
- Police staff are highly motivated, but criminal investigations into money laundering are seldom successful due to insufficient coordination and focus on criminal assets.
- Recommended further training in financial investigations and improved coordination within the police force.
Confiscations and Convictions
The report also highlighted the need for Hungary’s criminal justice system to generate more confiscations and convictions. Only one conviction has been obtained since the implementation of the AML regime. The examiners recommended that:
- Prosecution authorities provide unambiguous instructions on the interpretation of the money laundering offense and related evidentiary requirements or amend the definition of money laundering as appropriate.
Commercial Companies
The report noted that commercial companies are increasingly being used in money laundering operations in Hungary, and recommended that the government take steps to identify beneficial owners, particularly foreign ones. Additionally, it advised reviewing the current system of company registration and adopting regulations on the sharing of confiscated assets.
Conclusion
Overall, the evaluation team believes that the proposed adjustments will contribute to making Hungary’s AML regime more effective in producing results.