As part of its efforts to be fully compliant with the FATF 40 Recommendations, the Hungarian Authorities have taken the following measures to combat money laundering. The same measures also form part of Hungary's anti-terrorist efforts in the wake of the 11 September tragedies in the U.S.A.

 

On 27 November 2001 the Hungarian Parliament, by a 98% majority, has adopted the 'Act on combating terrorism, on tightening up the provisions on the impediment of money laundering and on the ordering of restrictive measures' (Act LXXXIII of 2001 - Anti-Money Laundering Act). This constitutes one of the basic elements of the Hungarian Government's Action Plan to upgrade its anti money laundering regulation.

 

This new piece of legislation shows the Hungarian Government's strong commitment to combat money laundering and terrorism. The new Act amended a whole range of existing laws (the Act on the Prevention and Impediment of Money Laundering of 1994, the Civil Code, the Criminal Code, the Banking Act, the Securities Act and the Law Decree on Savings Deposits) in order to enhance both the regulatory and enforcement regimes and to create an anti money-laundering environment of a high standard.

 

Although this was the most important single step to upgrade Hungarian regulation concerning the fight against money laundering, further relevant measures have been decided by the Hungarian government in order to create a comprehensive regulatory environment.

 

The executive Government Decree of the 'Act on combating terrorism, on tightening up the provisions on the impediment of money laundering and on the ordering of restrictive measures' (Government Decree No. 299/2001) came into force at the same time as the Act. The Government Decree contains detailed provisions for multiple transactions that are actually linked. Transactions are considered to be linked when a customer initiates or concludes transactions with a financial service provider (or with any of its sub-units) several times, on one or more subsequent (banking) working days involving cash payment below the value of HUF 2 million, as well as transactions to deposit or hold in trust valuables or securities if their aggregate value is equal to or exceeds HUF 2 million.

 

The Government Decree makes detailed provisions for data to be recorded, relating both to the customer as well as the beneficial owner of the assets involved. Provisions also cover the obligation to report changes of key data to the financial service provider, and there must be a mandatory check for any changes in every two years. The Government Decree also regulates the mechanism for the suspension of performance of suspicious transactions. There are special provisions in the Government Decree for the storage of data by financial institutions, and topics to be included in the guidelines and model rules as defined in the Act. The reporting obligation of contact persons is also regulated in detail.

 

A new Government Decree has been adopted on the circulation of money, related services and electronic means of payment (Government Decree No. 232/2001). The Government Decree regulates bank accounts (opening of bank accounts, information to account holders, right of disposal and its limits, right of disposal in case of liquidation and bankruptcy); payment orders (discharging payment orders, international payment transactions, special rules for transfers in the European Union); electronic means of payment (issue and use of electronic means of payment, terms and conditions of the contract, modification of the contract, information requirements on transactions, liability rules, special rules for electronic means of payment).

 

The Anti-Money Laundering Act declares that 'bureaux de change' services shall only be provided by credit institutions and their agents, therefore AML provisions cover all institutions providing 'bureaux de change' services. Companies, continuing or starting this business may only do so as bank agents, falling effectively under double supervision, as they are controlled by the credit institution - for who they act as agents - and the Financial Supervisory Authority. Government Decree No. 297/2001 on 'bureaux de change' activities gives detailed provisions for authorisation by the Supervisory Authority (documents for filing, refusing requests, withdrawing requests, suspension of licenses); staff and technical operating conditions for providing 'bureaux de change' services (price listing, administrative provisions, registers, certificates, internal control, complaint handling).

 

The new Regulation No. 9 of 2001 of the National Bank of Hungary contains detailed customer identification rules for different money transfer services, correspondent banking rules and rules of the monthly collection and transfer of identification data on company accounts for customs and excise, the tax authorities and the court of registry.

 

Act CXXI of 2001 amended the Penal Code especially in respect of money laundering, and provisions now cover negligent money laundering and negligent non-reporting. Self-laundering also became a crime. Lawyers have joined those professionals who may receive more severe punishment if found guilty of money laundering. There are new and more detailed rules for confiscation and confiscation of assets. Financing terrorism is a criminal offence since the entering into force of the Anti-Money Laundering Act. Act CIV of 2001 introduced the notion of corporate liability for money laundering.

 

The Capital Market Act (Act CXX of 2001) replaced the Securities Act from 1 January 2002. Some of its arrangements are significant also from an anti-money laundering point of view. According to the new rules, all publicly issued securities must be registered and dematerialised (issued in a book-entry form), keeping thus an up-to-date record on the owners. All these book-entry data fall under the Anti-Money Laundering Act. Until 31 December 2004 all publicly issued securities have to be dematerialised and have to be kept on a securities account.

 

The model anti-money laundering rules, - based on the Forty Recommendations and tailor-made for the different service providers falling under the recently amended Anti-Money Laundering Act - were prepared, consulted with the interested parties, finalised and distributed by the supervisory authorities, SRO's and other representative professional organisations by 18 January 2002. All entities involved shall submit their own internal anti-money laundering rules to their respective supervisions or equivalent organisations by mid-February 2002 at the latest for approval.

 

The Hungarian Financial Supervisory Authority has ordered supervised institutions to report on the process and results of transforming anonymous passbooks into registered form. This gives the