Directive 2015/849/EU, the Fourth Anti-Money Laundering Directive, has been implemented in Hungary by the new anti-money laundering act (Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing, the “Act”). A central register will be established on ultimate beneficial owners of legal entities (“Transparency Register”), details of which are to be regulated in a separate act that has yet to be adopted.
When engaging in a business relationship, customers (legal persons, unincorporated organizations and fiduciary managers) will be obliged to disclose information to service providers (e.g. credit institutions, accountants, auditors, notaries, lawyers, etc.) on their Hungarian and non-Hungarian beneficial owners,but will not submit information directly to the Transparency Register.
Pursuant to the Act, the definition of the beneficial owner is as follows:
a. any natural person who possesses at least twenty-five per cent shares or voting rights in a legal person or an unincorporated organization directly or indirectly, as defined in Subsection (4) of Section 8:2 of Act V of 2013 on the Civil Code (“Civil Code”); who is able to exercise effective control over the legal person or unincorporated organization via other means, if that legal person or unincorporated organization is not listed on a regulated market and is subject to disclosure requirements consistent with Community legislation or subject to equivalent international standards. b. any natural person who has a dominant influence in a legal person or unincorporated business association as defined in Subsection (2) of Section 8:2 of the Civil Code. c. any natural person on whose behalf a transaction is being conducted, or who is able to exercise effective control over the activity of a customer via other means. d. in case of foundations: d.a where the future beneficiaries have already been determined, the natural person who is the beneficiary of twenty-five per cent or more of the property of the foundation. d.b where the individuals that benefit from the foundation have yet to be determined, the natural person in whose main interest the foundation is set up or operates, or d.c the natural person who exercises control in the management of the foundation or exercises control over at least twenty-five per cent of the property of a foundation, and/or who is authorized to represent the foundation. e. in case of fiduciary asset management contracts: e.a the principal, and the beneficial owner referred to in Paragraph a. or b. thereof. e.b the fiduciary, and the beneficial owner referred to in Paragraph a. or b. thereof. e.c the beneficiaries or class of beneficiaries, and the beneficial owner referred to in Paragraph a. or b. thereof. e.d any natural person exercising effective control over the trust fund via other means. f. in the absence of the natural person referred to in Paragraphs a. and b., the executive officer of the legal person or unincorporated business association.
The collected and recorded data on the beneficial owners of customers will then be forwarded to the Transparency Register by the service provider, provided this data is not already recorded there. The Transparency Register will contain the beneficial owner’s name, date and place of birth, nationality, address or residence and the nature and extent of the economic interest.
If the data of the beneficial owner is not provided, the service provider shall refuse to establish a business relationship with the customer, shall not carry out an operation through a payment account or transaction order given by the customer, or shall terminate the business relationship with the respective customer.
The competent authorities and financial intelligence units will have direct and unrestricted access to the data recorded in the Transparency Register. In certain circumstances third persons may also request data from the Transparency Register by way of an individual data disclosure request.