Hungary Takes a Risk-Based Approach to Anti-Money Laundering and Combating the Financing of Terrorism

Effective Framework for Fighting Financial Crimes

Hungary has been praised in its latest mutual evaluation for taking a risk-based approach to anti-money laundering (AML) and combating the financing of terrorism. The country’s financial regulatory body has implemented measures to identify and assess risks in the financial sector, and has taken steps to address these risks through targeted supervision and enforcement.

Risk-Based Approach

Hungary’s AML/CFT framework is based on a risk-based approach, which takes into account the specific risks associated with different types of financial institutions and transactions. This approach allows for more effective allocation of resources and ensures that efforts are focused on the areas where they are most needed.

National Cooperation and Coordination Mechanism

One of Hungary’s key strengths in its AML/CFT framework is its national cooperation and coordination mechanism, which brings together various government agencies and financial regulatory bodies to share information and coordinate efforts to combat money laundering and terrorist financing. This mechanism has been effective in ensuring that all relevant stakeholders are working together to achieve common goals.

Robust Legal Framework

Hungary’s legal framework provides for a range of offenses related to money laundering and terrorist financing, including criminal penalties for violations. In addition, the country’s financial intelligence unit is well-equipped to receive and analyze reports of suspicious transactions, and works closely with law enforcement agencies to investigate and prosecute cases.

Areas for Improvement

While Hungary has made significant progress in its AML/CFT framework, there are some areas where it can improve. For example:

• Strengthening customer due diligence requirements for certain types of financial institutions
• Ensuring that supervision and enforcement powers are adequate to address high-risk situations

Conclusion

Overall, Hungary’s risk-based approach to AML/CFT is a key strength of its financial regulatory framework, and demonstrates the country’s commitment to combating money laundering and terrorist financing. By continuing to improve its framework and addressing areas for improvement, Hungary can ensure that it remains effective in preventing and detecting these types of financial crimes.