Financial Crime World

Hungary’s Compliance with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Standards

Financial Institutions

Hungarian financial institutions have made significant strides in improving their AML/CFT systems since joining the EU. However, there is still room for improvement in this area.

  • Strong Supervision: Regular on-site checks are conducted to ensure compliance with international standards.
  • Need for Improvement: Despite progress, there are still concerns regarding the effectiveness of these measures.

Designated Non-Financial Business and Professions (DNFBPs)

DNFBPs are not uniformly aware of their AML/CFT responsibilities, which may lead to non-compliance. This highlights the need for targeted awareness initiatives and enhanced oversight.

  • Varied Supervision: Casinos receive the most vigorous supervision, while other professions have varying levels of oversight.
  • Gaps in Awareness: DNFBPs require more effective education on their AML/CFT obligations.

Hungary has not yet conducted a review of its NPO sector’s vulnerabilities, making it non-compliant with international standards. This lack of assessment contributes to the sector’s susceptibility to illicit activities.

  • Inadequate Oversight: The current regime relies heavily on prosecutorial authority, which may not be adequate for the current size of the sector.
  • Need for Review: A comprehensive review is necessary to address vulnerabilities and ensure compliance with international standards.

National and International Cooperation

Hungary has taken steps to combat money laundering and terrorism financing by establishing an interministerial committee. However, there are still areas that require attention.

  • Ratification of Conventions: Hungary needs to ratify the Palermo Convention and implement UNSCRs 1267, 1269, 1333, and 1390.
  • Freezing Real Goods: There are issues concerning the freezing of real goods and imposing sanctions for violating EU CFT obligations.

General Information on Hungary

Hungary is a republic with a parliamentary democracy system, having joined NATO in 1999 and the European Union in 2004. The country has made significant economic and political reforms since transitioning from a centrally planned to a market economy.

  • Reforms and Progress: Despite challenges, Hungary has made notable progress in various areas.
  • Future Directions: The country continues to work towards strengthening its AML/CFT regime and addressing vulnerabilities in key sectors.