Title: Hungary’s Anti-Money Laundering Laws: Strengthening the Regulatory Framework in Hungary

Overview

With a GDP of approximately €110.1 billion in 2015, Hungary’s financial services industry has experienced growth. However, the Eastern European country has identified potential risks with regard to money laundering and terrorist financing. In this article, we provide a closer look at Hungary’s regulatory framework.

Concerns Identified in the Hungarian National Risk Assessment

Criminal organizations
Offshore businesses
Money transfer services
Absence of a centralized registration of bank accounts
Shell companies

Fortifying the Anti-Money Laundering System: The 2017 Legislation

In response to concerns raised by the Financial Action Task Force (FATF), Hungary passed legislation in 2017 to prevent and counter money laundering and terrorist financing. The legislation addresses these concerns:

Customer due diligence (identity verification)
Understanding the actual beneficiary (UBO) and the person acting on their behalf
Gathering and archiving information and records
Risk evaluation and categorization
Implementing a screening system
Sharing (reporting) of information on suspicious transactions/customers

Key Players in Enforcing Hungarian Anti-Money Laundering Laws

The Hungarian Anti-Money Laundering and Terrorist Financing Supervisory Authority (NAV): Handles receiving, analyzing, and publishing of suspicious transaction/activity information.
The Prosecutor General’s Office and the National Courts Office: Collaborate with NAV in investigations.
The Government, Hungarian Bar Association, and various service providers: Enforce the AML Act and the Restrictive Measures Act in Hungary.

The Restrictive Measures Act

The Restrictive Measures Act mandates the freezing of assets and the denial of financial services if there is a EU or UN Security Council imposed sanction against a person or entity. Service providers must compare their clientele data against the data provided in the EU legal actions and UN Security Council resolutions. If a match is found, service providers must report to the NAV.

Ensuring Regulatory Compliance

To help organizations meet international AML obligations, Comply with the Sanction Scanner offers an AML Compliance Software. Contact us to learn more about our features and request a demo.

Key Takeaways

Hungary recognized potential risks regarding money laundering and terrorist financing.
In response, Hungary passed legislation in 2017 to strengthen its anti-money laundering system.
Reporting entities must adhere to the guidelines set forth in the 4th and 5th Anti-Money Laundering Directives.
Key players in enforcing Hungarian anti-money laundering laws include NAV, Prosecutor General’s Office, National Courts Office, and various service providers.
The Restrictive Measures Act mandates the freezing of assets and denial of financial services if there is a EU or UN Security Council imposed sanction against a person or entity.
Comply with the Sanction Scanner offers an AML Compliance Software to help organizations meet international AML obligations.