The Government has submitted two bills to the National Assembly, on reinforcing Hungary’s regulatory system with relation to money laundering and the financing of terrorism, and on creating full harmony with international standards. The adoption of the new legislation will greatly contribute to the protection of the Hungarian financial system from the laundering of income derived from crime, and against attempts to financially support terrorist organisations.

After the consolidation that ensued following the financial and economic crisis, attempts to curtail earnings and proceeds from crime, and tightened measures to hinder their laundering, have again gained strength throughout the world. In addition, as a result of intensified international terrorism (primarily the activities of the Islamic State), the financing opportunities of terrorist organisations must also be further reduced.

The development of the bills concerning new legislation to combat and prevent money laundering and the financing of terrorism occurred in the interests of two key goals. On the one, the new legislation will mean Hungary is complying with EU harmonisation and its commitments with regard to international law: it assures the transposition of the European Union’s new anti-money laundering guidelines into Hungarian law, as well as fully implementing the recommendations preciously adopted by the relative committee of the Council of Europe (Moneyval) on reinforcing Hungary system to combat money laundering. In addition, the Hungarian practical experiences gained so far have also been incorporated into the draft legislation, which is aimed at modernising regulations.

According to the bill, the responsibilities of service providers and authorities will to all intents and purposes remain unchanged in comparison to the current legislation on money laundering. An important change, however, is that the new legislation relies heavily on a risk analysis approach: it requires supervisory authorities and service providers to perform a detailed evaluation and determination of the money laundering risks that exist within their fields and to develop an internal system or procedures that is in line with those risks and is suitable for handling them. This affords supervisory bodies and service providers greater room for movement with relation to professional idiosyncrasies and the weighting of risks, while their responsibility will also increase within this field.

Another important difference is that in harmony with international practices, in addition to strictly maintaining effective action against money laundering and the financing of terrorism, the bill also affords the service providers involved a comprehensive opportunity for secure and certifiable online identification (without a personal presence, but at an equivalent level), providing certain conditions are met.

The bill on the implementation of the financial and asset restriction measures ordered by the European Union and the UN Security Council is aimed at the more effective implementation of existing EU and UN requirements and the simplification of the practical application of regulations. The bill will lead to a marked improvement in the efficiency of the system in place to combat terrorism and the financing of terrorism; preventing terrorists, those who fund them and other persons and organisations that endanger international security will be prevented from accessing their own assets and economic resources, as well as monies received from other persons for the purposes of committing acts of terrorism, in a more effective manner.

The adoption of the new legislation will enable Hungary to further improve is system to combat moneys laundering and the financing of terrorism (which has otherwise been thus far working appropriately) to a significant extent, as well as the systems effectiveness, transparency and operability. In addition, it will fulfil EU and international obligations, proving Hungary’s continued commitment to the fight against money laundering and the financing of terrorism.

Modern legislation and effective implementation continue to be aimed at hindering, and if possible preventing, criminals from laundering the monies they have acquired through economic crimes. it is important that the legislation should protect Hungary’s financial system and law-abiding majority society to an even greater extent, and also support our international cooperation against money laundering. The new legislation also serves to reinforce international action against the financing of terrorism.

(Ministry for National Economy)