Hungary Fines Banks For Partner Agents’ AML Compliance Failures

November 1, 2021
The Hungarian National Bank (MNB) fined two banks for AML compliance failures at their partner currency exchanges.

The Hungarian National Bank (MNB) fined two banks for AML compliance failures at their partner currency exchanges.

Following a thematic review, the MNB issued a HUF108.6m (£250,000) fine after it found that five currency exchanges did not comply with local anti-money laundering (AML) rules.

Although the thematic review was aimed at examining currency exchange activities, the MNB considered that the banks partnering with the exchanges were also accountable for the AML failures of their agents.

According to the central bank, the currency exchanges repeatedly failed to report transactions suspected of money laundering or reported them with delay. Some exchangers failed to obtain information from high-risk customers about the source of their funds, as required by law, which would have been necessary to carry out a risk assessment. Finally, the MNB identified shortcomings in the documentation of the decisions that the exchanges took during the screening process.

Hungary’s law requires banks to regularly monitor their key currency exchange agents to ensure that they fully comply with their AML obligations, the MNB stressed.

Despite their legal obligation, local bank Takarékbank and the Hungarian branch of Raiffeisen Bank did not carry out proper checks, thus they failed to discover the deficiencies.

“It is crucial that banks properly carry out external audits because certain small currency exchanges are exempt from the obligation to have an internal audit process,” the MNB said. If the bank fails to implement proper controls to identify the risks inherent in the currency exchange activities, it will not be able to act in a timely manner to inform the exchanges of the deficiencies, the central bank argued in the decisions.

Thus, the MNB imposed fines of HUF16.25m (£38,600) on Raiffeisen Bank, HUF12.5m (£29,300) on Takarékbank, HUF36.8m (£86,200) on Ciklámen-Tourist, HUF19.25m (£45,000) on Corner Trade, and HUF23.75m (£55,600) on IBUSZ. The central bank acknowledged and took it as a mitigating factor that certain parties took measures to correct the failures.

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