Financial Crime World

Hungary’s Anti-Money Laundering Regime Under Scrutiny

A recent evaluation of Hungary’s anti-money laundering (AML) regime has revealed both positive developments and areas for improvement. The examination, conducted by international experts, highlighted several key changes made to strengthen the country’s AML system.

Key Changes Made to Strengthen AML System

  • Prohibition on opening new savings deposit passbooks and phasing out of existing ones in a graduated procedure to improve customer identification and verification
  • Only registered securities can be offered to the public or issued in series, while credit institutions may only accept savings deposits from clients who are duly identified and registered
  • Regulation of foreign exchange services, restricting currency exchange activities to authorized credit institutions and their agents
  • Enhanced scrutiny for managers and employees of bureaux de change, including verification of their criminal records

Strengthened Financial Intelligence Unit (FIU)

  • The FIU has a significantly increased staff
  • Intensified training for financial service providers

Areas for Improvement

  • Guidance is needed in professions subject to expanded anti-money laundering legislation
  • Reporting of suspicious transactions has improved, but the number of criminal investigations based on these reports remains modest
  • Concerns about lack of effectiveness in criminal justice, including insufficient coordination and focus on criminal assets
  • Recommendation for law enforcement agencies to receive further training in financial investigations to improve outcomes

International Cooperation

  • Much progress made, but recommendations include:
    • Reviewing provisions regarding foreign orders for provisional measures or confiscation
    • Adopting regulations on sharing confiscated assets

Concerns about Offshore Corporate Services

  • Ease with which offshore corporate services can be obtained in Hungary is a concern
  • Recommendation to develop a registry of beneficial owners accessible to law enforcement authorities and require Courts of Registration to obtain the identity of real owners before company registration

The evaluation team believes that implementing these recommendations will contribute to making Hungary’s AML regime more effective and produce better results.