Financial Crime World

Hungary Takes Steps to Strengthen Financial Crime Legislation

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Hungary has made significant progress in improving its anti-money laundering (AML) regulations, earning a “largely compliant” rating from the Council of Europe. The country has implemented measures to enhance transparency and cooperation with international organizations.

Compliance with FATF Recommendations

According to the Financial Action Task Force’s (FATF) recommendations, Hungary fully complies with 32 out of 40 requirements. However, it partially complies with recommendations related to non-profit organizations, new technologies, and cash couriers.

AML Framework and Enforcement

The Hungarian government has established a comprehensive AML framework, which is enforced by the Central Management of the National Tax and Customs Administration (NAV). The NAV is responsible for supervising financial institutions and analyzing suspicious transaction reports. Other governmental bodies, such as the National Bank of Hungary and the Chamber of Hungarian Auditors, also play a role in ensuring compliance.

Key Provisions of the AML Law

Act LIII of 2017 on Preventing and Combating Money Laundering and Terrorist Financing (AML Law) is the primary regulation governing AML requirements in Hungary. The law outlines:

  • Customer due diligence procedures
  • Risk assessment processes
  • Reporting obligations
  • Penalties for non-compliance

Company Obligations

To stay compliant, companies operating in Hungary must:

  • Establish internal policies
  • Familiarize employees with AML regulations
  • Perform customer due diligence
  • Report suspicious activities
  • Keep accurate records
  • Implement ongoing monitoring procedures

Customer Due Diligence Requirements

Companies must verify customer information through government-issued documents, check customers against sanctions lists, and monitor transactions for suspicious activity.

Reporting Suspicious Activities

Companies must submit Suspicious Activity Reports (SARs) within five business days of detecting suspicious activity.

Consequences of Non-Compliance

Failure to comply with the AML Law can result in severe penalties, including:

  • Fines of up to HUF 2 billion (approximately $4.76 million)
  • Seizure of operations
  • Criminal charges against executive officers

Conclusion

Hungary’s efforts to strengthen its financial crime legislation aim to ensure a safer environment for customers and stricter regulations for financial institutions. Companies operating in Hungary should prioritize compliance with AML regulations to avoid penalties and ensure the integrity of their operations.