Financial Crime World

Hungary: Rising Financial Crimes Amidst Economic Growth

A Thriving Economy with Unresolved Issues

Hungary’s economy has been plagued by financial crimes despite its thriving banking sector and GDP exceeding EUR 110 billion in 2015. The country’s cash-based economy makes it an attractive target for money launderers and other financial criminals.

Primary Dangers Facing Hungary

According to the Hungarian National Risk Assessment, the primary dangers facing the country include:

  • Criminal organization: Involvement of organized crime groups in illicit activities
  • Offshore businesses: Use of offshore companies to conceal illicit transactions
  • Money transfer services: Transfer of funds through money transfer services without proper identification or verification
  • Lack of centralized registration of bank accounts: Difficulty tracking and monitoring financial transactions
  • Shell companies: Use of shell companies to conceal illicit activities

Efforts to Combat Financial Crimes

In 2017, Hungary enacted legislation to combat money laundering and terrorist financing. The law requires reporting entities to:

  • Conduct customer due diligence
  • Verify the beneficial owner
  • Gather and archive information
  • Report suspicious transactions

The Hungarian Financial Intelligence Unit, part of the National Tax and Customs Administration (NAV), is responsible for receiving, analyzing, and publishing suspicious transaction reports.

Ongoing Challenges and Measures to Combat Financial Crimes

Despite efforts to combat financial crimes, Hungary remains a target for money launderers and other financial criminals. The country’s lack of centralized registration of bank accounts and its cash-based economy make it an attractive target.

Examples of financial crimes in Hungary include:

  • Money laundering through offshore businesses
  • Use of shell companies to conceal illicit activities
  • Transfer of funds through money transfer services without proper identification or verification
  • Failure to report suspicious transactions by reporting entities

To combat these crimes, the Hungarian government and other authorities have implemented various measures, including:

  • The establishment of a financial intelligence unit
  • The requirement for reporting entities to conduct customer due diligence
  • The freezing of cash and other financial assets