Hungary

1. Does Hungary have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes. Money laundering and terrorist financing are criminalised under the Hungarian Criminal Code (“HCC”) as standalone crimes.

2. To whom does the legislation apply?

It applies to any natural person who commits the criminal offence. Legal persons might be subject to criminal sanctions (fines) if there is a link to a natural person committing the offence with the aim of creating benefit for the legal person or with the offence merely resulting in such benefit, or if the criminal offence was committed by a representative with the use of the legal person (Art. 2 Act CIV 2001).

3. What does the legislation prohibit?

The legislation prohibits money laundering (for more details please see the next question) and terrorist financing. Preparation of money laundering also constitutes a criminal offence.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Money laundering is defined in Sections 399-400 of HCC. A person commits money laundering if he/she:

• conceals or disguises the origin or location of, or a right on, property originating from a punishable act, or any changes to such origin, location or right;
• receives from another person, hides, transforms, transfers, participates in alienating, uses, or performs a financial activity or utilises a financial service regarding, or disposes of, property originating from a punishable act for the purpose of concealing or disguising its origin, location or a right on it, or any changes to such origin, location or right;
• participates in preventing forfeiture of assets or asset recovery against another person or seeks to prevent forfeiture of assets or asset recovery against another person by receiving from another person, hiding, transforming, transferring, participating in alienating, using, or performing a financial activity or utilizing a financial service regarding, or disposing of, property originating from a punishable act;
• acquires, or acquires a right of disposal over, or safeguards, hides, manages, uses, utilises, transforms, transfers or participates in alienating property originating from a punishable act committed by another person also commits money laundering.

In connection with underlying criminal activity, the terminology used in Section 399 of HCC refers to a “punishable act”, thus excluding any requirement of a previous conviction. The “punishable act” is objective element of the facts of the case and must be proven in the criminal proceedings. It is not necessary for the perpetrator of the offence to have been finally convicted at the time of the money laundering proceedings; it is sufficient to establish the facts of the predicate offence.

5. What level of intent or knowledge is required to establish a violation?

Negligent money laundering also constitutes a criminal offence. It can only be committed by a person who was not involved in the predicate offence. The negligence is linked to the recognition of the criminal origin of the thing. If the money launderer was not aware of the criminal origin of the property (or it cannot be proved), but should have realised it from the circumstances, he/she can be held liable for the negligent form of the criminal offence.

6. What are the potential penalties for infringing the legislation?

The penalties for money laundering and financing terrorism provided in the HCC are imprisonment up to ten years, depending on the severity of the crime.

7. Does the legislation have extra-territorial reach?

No. However, the underlying criminal activity can be a criminal activity committed abroad.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

Yes. The scope of the Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing extends to all economic operators whose service activities enable the legalisation of money laundering assets. Currently, this includes not only financial services organisations, but also, for example, accountancy firms, tax consultants, lawyers, notaries, casinos, etc.

9. What are the potential penalties for failing to comply with these obligations?

According to Section 401 of HCC, a person who fails to comply with his statutory notification obligation regarding the prevention of money laundering and terrorism financing is guilty of a misdemeanour and shall be punished by imprisonment for up to two years.

10. Who are the relevant enforcement authorities in Hungary and what are their contact details?

The central authority in charge of receiving, analysing, disseminating suspicious transactions/activity reports is the Hungarian Financial Intelligence Unit, which is part of the organisation of the Central Management of the National Tax and Customs Administration (in Hungarian: Nemzeti Adó- és Vámhivatal, the “NAV”).

address: 42 Huszti st., Budapest, Hungary 1033

P.O. Box: 307 Budapest 1300

T: +36 143 094 66

fiu@nav.gov.hu