By virtue of EU anti money-laundering regulations, most European countries created national
registers of ultimate beneficial owners (UBOs) in the previous years. The purpose of such registers is to ensure the availability of data as well as transparency in regard to a certain scope of service
providers as to who the individuals truly standing behind legal entities or company groups as
ultimate beneficiaries are. In Hungary, such a register has not been established yet. For all we know, the electronic system will be available as of spring 2021 at the earliest.
The Hungarian AML Act (i.e. the Act on the Prevention and Combating of Money Laundering and
Terrorist Financing) has already prescribed service providers falling into the scope of the AML Act a
general obligation to report the data of the ultimate beneficial owners of their clients to the register
(once it has been created) since 2017. This obligation was originally due by 1 March 2021.
In December 2019, the legislator amended the above-mentioned provisions of the AML Act, as a
result of which the provisions could not even enter into force (as the UBO register still has not been
set up). In consequence, as of 1 December 2020 (i.e. from the planned date of the register’s
establishment) instead of service providers, companies and other organizations will have the
obligation to report the data of their UBOs to the register (UBO meaning any individual having at
least 25% of direct or indirect ownership or influence in a company). Additionally, they will also
have an obligation to keep their reported data updated, should there be any changes in their UBO
data. Organizations will have five working days to report any changes either from the
commencement of the operation or from the date of change. The current provisions also prescribe
that as of 1 December 2020, a service provider under the scope of the AML Act must obtain, as part
of its client due diligence process, a certificate from each of its new clients stating that the
respective client’s reporting obligations have been duly fulfilled. If a client fails to present such a
certificate, the service provider is not permitted to provide services to the client.
Without the register the above provisions are not interpretable. Therefore, hardly could it be
expected that either service providers or clients will need to face any detrimental legal
consequences or sanctions. Regardless, it would be reassuring if the legislator made a formal
decision to delay the provisions’ entry into force on 1 December 2020. In order for all concerned
parties to properly prepare for the fulfilment of their obligations, it would be of material
importance that the government decree regulating the operation of the beneficial owner register be
prepared as soon as possible and it be clarified how long a transitory period companies and other
organizations would have in hand to provide data and how noncompliance would be sanctioned.
dr. Réka Mihola (firstname.lastname@example.org) attorney,
junior partner of Réti, Várszegi and Partners Law Firm PwCLegal