Hungary: recent efforts to strengthen legislation and domestic anti‐money laundering agency capabilities

Pages46-51
DOIhttps://doi.org/10.1108/13685200310809400
Publication Date01 Jan 2003
AuthorTrifin J. Roule
Journal of Money Laundering Control Ð Vol. 6 No. 1
Hungary: Recent Eorts to Strengthen Legislation
and Domestic Anti-Money Laundering
Agency Capabilities
Tri®n J. Roule
INTRODUCTION
The inclusion of Hungary, a leading candidate for
EU membership, on the Financial Aid Task Force's
(FATF) list of non-cooperative countries and terri-
tories (NCCTs) published in Paris on 22 June 2001,
resulted in signi®cant changes in the anti-money
laundering regime in Hungary. In an eort to assuage
Western regulators and law enforcement agencies,
1
Hungary adopted stringent anti-money laundering
legislation on 27th November, 2001, including
measures that prohibit ®nancial institutions to open
anonymous accounts, and require existing anon-
ymous account holders to reveal their identities
before accessing the funds in their accounts.
Additionally, the legislation mandates customer
identi®cation for purchases exceeding HUF2m, the
registration of securities purchased after 30th June,
2002, and the restriction of foreign currency
exchange to speci®c credit institutions and their
agents. These recent changes to the Hungarian anti-
money laundering regime were a signi®cant addition
to anti-money laundering initiatives implemented
after the ®rst round FATF evaluation on Hungary
was published in 1999. The changes implemented
after the issuance of the 1999 FATF report, which
included intensi®ed training of ®nancial service
personnel, and increased the eciency of the report-
ing system of non-banking ®nancial institutions,
initiated a signi®cant period of change that culmi-
nated in the passage of substantial amendments to
the Hungarian money laundering regime in late
November 2001.
OVERVIEW OF CURRENT LAWS AND
REGULATIONS
In 1977 Hungary criminalised the laundering of illicit
proceeds of drug tracking.
2
The ®rst eort to con-
struct a comprehensive money laundering regime
was initiated with the implementation on 8th May,
1994 with Act 303(1) of the Prevention and Impeding
of Money Laundering. Under this Act, Hungary
criminalised money laundering related to all serious
crimes that receive penalties of more than ®ve
years' imprisonment. The 1994 Act on the Preven-
tion and Impeding of Money Laundering applies to
a broad range of credit and ®nancial institutions,
including ®nancial or complementary ®nancial ser-
vices, post oces, brokerage and consulting houses,
investment fund management services, and voluntary
mutual insurance funds.
3
Under Act XXIV of the
1994 law, these institutions are obliged to institute
procedures of internal control for the purpose of
preventing money laundering,
4
and sta training of
employees to familiarise them with methods to
detect suspicious transactions.
5
The 1994 law man-
dates a range of obligations including identi®cation
procedures, record keeping procedures,
6
and internal
reporting procedures.
7
The legislation also contains
preventative measures, including the mandatory
reporting of suspicious or unusual ®nancial
transactions.
8
Predicate oences
As stated above, with the implementation of Act
XXIV on the Prevention and Impeding of Money
Laundering in 1994, Hungary criminalised money
laundering related to all serious crimes that are
liable to imprisonment for more than ®ve years.
The criminalisation of money laundering was
widened in March 2000 by an amendment to the
Hungarian Penal Code, which states that the predi-
cate oence for money laundering includes any
oence that is punishable by imprisonment under
the Criminal Code. This amendment to the
Hungarian legislation ful®ls the `all crimes approach'
to predicate oences, which is a central mandate of
the 40 FATF Recommendations.
9
The new law
also signi®cantly enhances predicate oences by
including negligent money laundering in Article
303/A of the criminal code. The amended article
extends the liability for money laundering to indivi-
duals who fail to determine the origin of the assets
derived from illicit actions.
10
The new law also
Page 46
Journalof Money Laundering Control
Vol.6, No. 1, 2002, pp. 46 ±51
#HenryStewart Publications
ISSN1368-5201

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