Financial Crime World

Title: Hungary’s Bold Stride Forward in Anti-Money Laundering Compliance: AML Law and Regulations

Hungary’s Progress in AML Regulations

According to the Council of Europe, Hungary has made significant strides in enhancing its Anti-Money Laundering (AML) regulations. The country’s efforts to strengthen banking relationships and improve transparency of beneficial ownership information have earned it the “largely compliant” label from the European body.

Hungary adheres to the Financial Action Task Force’s (FATF) 40 recommendations, fully complying with 32 recommendations and partially complying with the remaining eight. This progress becomes increasingly important for financial institutions as regulatory landscapes continue to evolve.

Institutions Affected by AML Regulations in Hungary

Any financial institution operating in Hungary falls under AML regulations, as stipulated by Act LIII of 2017 on Preventing and Combatting Money Laundering and Terrorist Financing (AML Law). Institutions subjected to these regulations include but are not limited to:

  1. Credit institutions
  2. Financial service providers
  3. Casinos
  4. Certified tax experts
  5. Lawyers
  6. Custodian wallet providers

Regulatory Bodies

The Central Management of the National Tax and Customs Administration (NAV) is the primary AML regulatory body in Hungary. Its responsibilities include:

  1. Ensuring regulatory compliance
  2. Analyzing Sus Picious Transaction Reports (STRs)
  3. Collaborating with the Prosecutor General’s Office and the National Courts Office

Additionally, other governmental organizations like the National Bank of Hungary (MNB), the Chamber of Hungarian Auditors, and authorities in charge of gaming are granted the power to check financial institutions under their jurisdiction.

Core Regulations

Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing serves as the main regulation governing AML requirements in Hungary. This law covers procedures for:

  1. Customer Due Diligence (CDD)
  2. Risk assessment
  3. Reporting obligations
  4. Penalties for non-compliant entities

Hungary’s regulations follow the requirements of the European Union’s 4th, 5th, and 6th Anti-Money Laundering Directives.

Maintaining Compliance

Institutions seeking to remain compliant must follow the obligations set out by the AML law:

  1. Internal policies: Creating, approving, and updating policies
  2. Employee training: Providing training programs or hiring relevant experts
  3. Customer Due Diligence (CDD): Conducting CDD during onboarding and throughout the business relationship
  4. Record keeping: Maintaining customer records for a minimum of 8 years
  5. Reporting suspicious activities: Submitting Suspicious Activity Reports (SARs) within five business days

Penalties for Non-Compliance

Ignoring AML regulations in Hungary can result in severe consequences. Penalties depend on the severity of the violation and include fines:

  1. For companies: Up to HUF 2 billion (approximately $ 4.76 million)
  2. For individuals: Up to HUF 500 million (approximately $ 1.2 million)

Conclusion

Hungary’s continuous focus on strengthening its AML regulations signifies a proactive approach towards better security and more stringent rules for financial institutions. To ensure smooth compliance processes, institutions are encouraged to implement efficient solutions offering built-in regulatory support tailored to navigate local regulatory complexities. Stay ahead of the curve with the latest regulations – learn how we can help.