Hungary’s National Bank Fines Two Banks for Anti-Money Laundering Compliance Failures
The Hungarian National Bank (MNB) has taken action against two banks, Takarékbank and Raiffeisen Bank’s Hungarian branch, for failing to properly monitor their partner currency exchanges. This resulted in anti-money laundering compliance issues due to the exchange activities not adhering to local laws and regulations.
Background on the Thematic Review
A thematic review by the MNB examined the currency exchange activities of five exchanges. Unfortunately, all five failed to comply with anti-money laundering regulations, including:
- Failing to report transactions suspected of money laundering
- Not obtaining information from high-risk customers about the source of their funds
Banks Held Accountable for Partner Exchanges
Although the review focused on examining currency exchange activities, the MNB held the banks partnering with these exchanges accountable for the failures. According to the central bank, Takarékbank and Raiffeisen Bank’s Hungarian branch did not properly check on their key currency exchange agents, resulting in them missing deficiencies that would have required corrective action.
Importance of Proper Controls
“It is crucial that banks properly carry out external audits because certain small currency exchanges are exempt from the obligation to have an internal audit process,” the MNB said in a statement. The central bank argued that if banks fail to implement proper controls to identify risks inherent in currency exchange activities, they will not be able to act in a timely manner to inform the exchanges of deficiencies.
Fines Imposed on Banks and Currency Exchanges
The MNB imposed fines on the two banks, totaling HUF108.6 million (approximately $250,000), as well as on four other currency exchanges that failed to comply with anti-money laundering regulations. The fines ranged from HUF12.5 million (approximately $29,300) for Takarékbank to HUF23.75 million (approximately $55,600) for IBUSZ.
Mitigating Factors
The MNB noted that some of the parties involved took measures to correct their compliance failures, which was taken into account as a mitigating factor in determining the fines.
Importance of Preventing Anti-Money Laundering Non-Compliance Issues
The central bank emphasized the importance of banks properly monitoring their currency exchange activities to prevent anti-money laundering non-compliance issues.