Financial Crime World

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Hungary’s Financial Sector Faces Money Laundering Dangers

Despite being a cash-based economy, Hungary has made significant strides in its financial sector, with a GDP of around EUR 110.100 billion in 2015. The country’s banking industry, which comprises thirty-two banks, accounts for the majority of the financial sector. However, the Hungarian National Risk Assessment identified several key threats to the nation’s anti-money laundering system.

Key Risks Identified

  • Criminal organizations
  • Offshore businesses
  • Money transfer services
  • Shell companies

In response to these risks, Hungary enacted legislation in 2017 to prevent and combat money laundering and terrorist financing.

Strengthening Anti-Money Laundering Framework

The Financial Action Task Force (FATF) assessed Hungary’s anti-money laundering system, resulting in the country strengthening its framework to adhere to international guidelines, European standards, and Council of Europe Directives.

Reporting Entities and Compliance Measures

  • Reporting entities under the Anti-Money Laundering Act are required to implement various measures, including:
    • Customer due diligence
    • Risk evaluation
    • Information sharing
  • The Hungarian Financial Intelligence Unit (a part of the National Tax and Customs Administration) is responsible for receiving, analyzing, and publishing suspicious transaction/activity information.

Overseeing Compliance

Several agencies are authorized to oversee compliance with the AML Act and the Restrictive Measures Act, including:

  • Government
  • Hungarian Bar Association
  • Other investigating bodies

The NAV works in collaboration with these entities to ensure effective implementation of anti-money laundering measures.

AML Regulations

Hungary’s AML regulations include the Restrictive Measures Act, which mandates the freezing of cash and financial assets, as well as the ban on providing financial services. Service providers must screen their clients’ data against EU and UN sanctions lists and notify the NAV if a match is found.

Combating Financial Crimes

Sanction Scanner has developed AML compliance software that helps organizations meet international anti-money laundering obligations. With its risk-based strategy, Sanction Scanner enables companies to thoroughly analyze their risk and avoid sanctions. Interested parties can request a demo for more information on their AML solution.