Hungary – Know Your Customer (KYC) Rules

 

 

Hungary is not considered a major financial center; however, its European Union (EU) membership and its pivotal location in Central Europe – as a link between the former Soviet Union and Western Europe – as well as its cash-based economy and well-developed financial services industry make it attractive to foreign criminal organizations. Money laundering cases mostly stem from financial and economic crimes, such as fraud, embezzlement, tax evasion, and tax and social security fraud, although narcotics trafficking, prostitution, trafficking in persons and organized crime activities also contribute.

Other prevalent economic and financial crimes include real estate fraud and the copying/theft of bankcards. There is a black market for smuggled goods in Hungary, primarily related to customs, excise, and value-added tax evasion. No international terrorist groups are known to operate in Hungary.

KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: NO

Hungary – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Hungarian Law:

    • Banks
    • Investment service providers, employer pension services, and commodity exchange services
    • Insurance intermediary and mutual insurance fund services
    • Sellers and issuers of domestic and international postal money orders
    • Real estate agents and brokers
    • Auditors
    • Accountants
    • Tax consultants and advisors
    • Casinos or other gambling services
    • Precious metal and high value goods traders
    • Lawyers
    • Notaries

Hungary – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: 3,144 from January to July 2011

Number of CTRs received and time frame: Not applicable

The following is a list of STR covered entities covered by Hungarian Law:

    • Banks
    • Investment service providers, employer pension services, and commodity exchange services
    • Insurance intermediary and mutual insurance fund services
    • Sellers and issuers of domestic and international postal money orders
    • Real estate agents and brokers
    • Auditors
    • Accountants
    • Tax consultants and advisors
    • Casinos or other gambling services
    • Precious metal and high value goods traders
    • Lawyers
    • Notaries

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: Nine from January to May 2011
Convictions: Five from January to May 2011

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In September 2011, in a government resolution, Hungary adopted an action plan to address noted deficiencies in its anti-money laundering/counter-terrorist financing (AML/CFT) regime. The action plan establishes a road map for the relevant authorities responsible for AML/CFT issues. As of November 2011, Hungarian authorities had started implementing tasks as determined by the action plan.