Hungary Takes Steps to Improve Anti-Money Laundering Regulations
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Hungary has been actively working to enhance its Anti-Money Laundering (AML) framework, with positive steps taken in banking relationships and transparency of beneficial ownership information. As a result, the country is considered “largely compliant” by the Council of Europe.
Who is Affected?
The AML Law applies to financial institutions established in Hungary or other EU member states that provide services in Hungary. This includes:
- Credit institutions
- Financial service providers
- Casinos
- Certified tax experts
- Lawyers
- Custodian wallet providers
You can find the complete list of affected institutions in Section 1 of the AML Law.
Who are the Regulators?
The Central Management of the National Tax and Customs Administration (NAV) is the main AML supervising body in Hungary. The NAV cooperates with the Prosecutor General’s Office and the National Courts Office to ensure compliance with the AML Law.
What is the Main Regulation?
Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing (AML Law) is the primary regulation dealing with AML requirements in Hungary. The law covers Customer Due Diligence (CDD) procedures, risk assessment, reporting obligations, and penalties for non-compliant companies.
How to Stay Compliant
To stay compliant, companies need to follow the obligations set out by the AML Law, including:
- Establishing internal policies
- Performing Customer Due Diligence (CDD)
- Reporting suspicious activities
- Keeping records
Companies must also familiarize their employees with these policies and provide AML training programs or hire employees with suitable prior knowledge.
What are the Penalties?
If a company fails to comply with the AML Law, it can be subject to penalties, including fines of up to HUF 2 billion (approximately $4.76 million) or even seizure of operations. Executive officers may also face penalties ranging from HUF 100,000 to HUF 500 million (approximately $240 to $1.2 million).
Conclusion
Hungary’s efforts to improve its AML regulations are a positive step towards ensuring better security for customers and stricter rules for financial institutions. Companies working in Hungary should implement efficient compliance solutions to navigate local regulations and avoid penalties.