Financial Crime World

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Hungary Embarks on Risk-Based Approach to Anti-Money Laundering Regulations

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Despite being a predominantly cash-based economy, Hungary has taken significant steps to strengthen its anti-money laundering (AML) regulations. The country’s financial sector, which includes 32 banks, is considered high-risk, with around 1-3% of customers deemed high-risk.

Primary Dangers and Legislation

Hungary’s Hungarian National Risk Assessment was established in 2015 and updated in 2018, identifying primary dangers such as:

  • Criminal organizations
  • Offshore businesses
  • Money transfer services
  • Lack of centralized registration of bank accounts
  • Shell companies

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

Adherence to International Standards

Hungary’s AML framework adheres to Financial Action Task Force (FATF) guidelines, worldwide and European standards, as well as Council of Europe and European Union Directives. Reporting entities under the AML Act are required to:

  • Conduct customer due diligence
  • Perform risk evaluation and categorization
  • Comply with other responsibilities

Oversight and Compliance

Hungary’s AML Supervisory Authority, the National Tax and Customs Administration (NAV), is responsible for:

  • Receiving suspicious transaction information
  • Analyzing and publishing suspicious transaction information
  • Working closely with investigating bodies, including:
    • Prosecutor General’s Office
    • National Courts Office

Other agencies authorized to oversee compliance include:

  • Government
  • Hungarian Bar Association
  • Real estate agency or brokering services

To fully implement EU legal actions and relevant United Nations Security Council resolutions, service providers must:

  • Screen their client data against restrictive measure lists
  • Notify the NAV if a match is found

Sanction Scanner, a leading provider of AML software, offers a risk-based approach to help organizations meet international obligations and avoid sanctions.

Commitment to Combating Financial Crimes

Hungary’s move towards a risk-based approach to AML regulations demonstrates its commitment to combating financial crimes and protecting its economy from illicit activities. As the country continues to implement these measures, it is likely to attract more investment and foster greater economic stability.