Hungary's economy is predominantly cash-based, with a GDP of around EUR 110.100 billion in 2015. Despite the fact that the country is not a financial center, it boasts a thriving financial services business. The banking industry (which includes thirty-two banks) accounts for the majority of Hungary's financial sector. In general, 1-3 percent of bank customers are considered high-risk.
The Hungarian National Risk Assessment was established in 2015 and was last updated in 2018. The following are the primary dangers that have been identified:
- Criminal organization
- Offshore businesses
- Money transfer services
- The absence of a centralized registration of bank accounts
- Shell companies
In 2017, Hungary enacted legislation to prevent and combat money laundering and terrorist financing. Following an assessment by the Financial Action Task Force (FATF), this legislation was enacted to enhance Hungary's anti-money laundering system. The existing framework adheres to FATF guidelines, worldwide and European standards, as well as Council of Europe and European Union (EU) Directives.
The fundamental responsibilities of reporting entities under the AML Act are outlined in the 4th and 5th AML Directives. The following are some examples:
- Customer due diligence (identity and verification of the customer, etc.)
- The UBO and the person working on the customer's behalf
- The gathering and archiving of information and records
- Risk evaluation and categorization
- Use of a screening system
- The sharing (reporting) of information on suspicious transactions/customers
Hungary's AML Supervisory Authority: NAV
The Hungarian Financial Intelligence Unit, which is a stake of the Primary Management of the National Tax and Customs Administration (Nemzeti Adó- és Vámhivatal, the "NAV"), is the central authority in the responsibility of receiving, analyzing, and publishing suspicious transaction/activity information. The NAV works in collaboration with other investigating bodies, including the Prosecutor General's Office and the National Courts Office.
Other agencies authorized to oversee compliance with the AML Act and the Restrictive Measures Act are:
- The government
- The Hungarian Bar Association, in a rule issued by the Minister of Administration and Justice, concerns individual practitioners and one-person law companies based on Art. 38 of Act CXXXVI of 2007 on the Prevention of Money Laundering and Terrorist Financing ("AMLA")
- Based on Article 38 of the AMLA, law firms with many members draft the rule for themselves, which is accepted by the regional bar.
- The NAV for real estate agency or brokering and associated services; bookkeepers, tax experts, tax counselors, suppliers of exchange services between virtual currencies and legal tenders, custodian wallet providers, and providers of corporate headquarters services.
- The Restrictive Measures Act: The Implementation of Restrictive Measures Imposed by the EU and the UN Security Council Relating to Liquid Assets and Other Financial Interests.
- The AML Act: The Money Laundering and Terrorist Financing Prevention and Combat.
The Restrictive Measures Act mandates the freezing of cash and other financial assets, as well as the ban on providing financial services. To fully implement EU legal actions and relevant United Nations Security Council resolutions imposing restrictive measures on liquid assets and other economic interests, the service provider must compare the personal data of its total clientele on file with the data of the persons named in EU legal actions and relevant UN Security Council resolutions. If the screening results show that a person is subject to a restrictive measure relating to liquid assets or other financial interests, or if their data matches the data of an entity or person on the consolidated list of effective restrictive measures imposed on the European Union or the United Nations, the service provider must notify the NAV.
Comply with the Sanction Scanner
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