The Act XV of 2003 on the Prevention and Impediment of Money Laundering will set aside Act XXIV of 1994 of the same title and provides extended and more sophisticated regulations against money laundering in Hungary. The new act has been expected since the September 11 terror attacks in New York, and it is also a result of harmonization with EU legislation relating to the same matter. The new act will come into force on June 16 2003.
The new act extends the sphere of service providers that are subject to the legislation. These now include, among others, financial and investment service providers; insurance companies; mutual fund management companies; voluntary pension funds; post offices; and, further, as new subjects, real estate companies; auditors; book-keepers; tax consultants; public notaries; and attorneys-at-law.
Under the former act, service providers were obliged to both identify their clients and report transactions if any sign of potential money laundering arose. Service providers were allowed to engage in any cash transaction the value of which exceeded Ft2 million (€8,200) only after the identification of the client. The new act places a general obligation on service providers to identify their clients, their client's proxy or its representative while engaging in business with them.
If any sign of money laundering arises, the service providers are obliged to report the data of the client and a brief summary of the background and reasons for the filing to the National Police Office. Meanwhile, the clients must inform the service providers of any change in their data, as recorded, during their business relationship.
The new act provides a fairly increased administrative burden both for service providers and for their clients.
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