Financial Crime World

Hungary Enhances Oversight of Virtual Asset Service Providers

Strengthening Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Regime

In a bid to strengthen its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime, Hungary has made significant strides in regulating virtual asset service providers (VASPs). According to a recent report by the Financial Action Task Force (FATF), Hungary has met several key requirements for effective supervision of VASPs.

Establishment of Dedicated Supervisor

The country has established a dedicated supervisor, the Hungarian Financial Intelligence Unit (HFIU), which is responsible for overseeing these entities. The HFIU has been granted powers to remove service providers from the registry or prohibit them from engaging in their activities for a minimum period of one month and up to 12 months.

Sector-Specific Guidance

Additionally, Hungary has introduced sector-specific guidance for VASPs, developed through a collaborative effort with industry stakeholders. The guidance provides clear expectations for these entities on how to comply with AML/CFT requirements.

Sanctions and Administrative Measures

In terms of sanctions, Hungary has implemented a range of administrative measures, including:

  • Fines ranging from HUF 100,000 to HUF 400,000,000 (approximately EUR 301,000 to EUR 1,012,000)
  • Warnings
  • Fines for the “executive officer, employee or assisting family member” of VASPs

Customer Due Diligence Requirements

Hungary’s AML/CFT regime is also applicable to VASPs, which are required to carry out customer due diligence (CDD) in certain circumstances. The country has set a threshold of HUF 300,000 (approximately EUR 775) for currency exchange and virtual currency exchange, above which CDD must be conducted.

Areas for Improvement

However, Hungary’s compliance with Recommendation 16 is incomplete, as it has not taken national-level action to ensure that VASPs are aware of the obligations regarding information that should accompany transfers of certain crypto-assets. This will be addressed in the future.

Conclusion

Overall, Hungary’s efforts demonstrate its commitment to combating money laundering and terrorist financing, particularly in the context of the virtual asset sector. The country’s progress is expected to continue, with ongoing cooperation with international partners and the FATF to ensure effective implementation of AML/CFT measures.