When identifying the beneficial owner of an organisation that is a legal entity or an organisation without legal personality, service providers in Hungary subject to Act LIII of 2017 on the Prevention of Money Laundering and the Financing of Terrorism (hereinafter: “new Pmt.”) – including, in particular, credit institutions, financial service providers, lawyers, and those performing audit, bookkeeping or tax consultancy activities – not only have to record and check the beneficial owner data defined by law, as has been the case so far. If the relevant law enters into force they must also immediately forward such data to the central register of beneficial owner information, provided that the beneficial owner data is not yet included therein.
The legal regulation creating the central register of beneficial ownership information has not yet been promulgated
The legal regulation in Hungary creating the central register of beneficial owner information and setting out the detailed rules for data forwarding has not yet been promulgated, so service providers in Hungary cannot yet fulfil their data forwarding obligation relating to beneficial owner data.
Compliance with EU law
The data forwarding obligation affecting beneficial owner data is designed to comply with the provisions of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (hereinafter: the “Directive”). The Directive stipulates that “With a view to enhancing transparency in order to combat the misuse of legal entities, Member States should ensure that beneficial ownership information is stored in a central register located outside the company, in full compliance with Union law. Member States can, for that purpose, use a central database which collects beneficial ownership information, or the business register, or another central register.”
Which beneficial owner data is affected by the service providers’ obligation to forward data?
The service providers’ data forwarding obligation will affect the following beneficial owner data:
- surname, first name
- surname, first name at birth
- date and place of birth
- address, or for lack of this, habitual abode
- nature and extent of ownership interest.
If the beneficial owner qualifies as a politically exposed person, the central register of beneficial ownership information to be created will also include this.
Those authorised to request data – principle of limited disclosure
The following will be authorised to request beneficial ownership information from the central register:
- without any limitations, financial intelligence units, investigating authorities, counter-terrorist agency, national security services, prosecutor’s office and courts;
- the service provider’s supervisory agency, in the interests of the tasks included in the new Pmt.;
- the service provider, for the purposes of performing the customer due diligence measures;
- to the extent absolutely required for use, third parties, where such third party shall verify the purpose of the data use with a document along with its justified interest in gaining access to the data in relation to the fight against money laundering and terrorist financing.
Good practice – transparency register in Germany
Germany transposed the provisions of the Directive into its national law in a manner where it is not the service provider but the customer who is obliged to forward the data. However, legal persons, senior executives of partnerships with legal capacity, asset managers and fiduciary asset managers only have to report the beneficial owner data to the so-called transparency register if the beneficial owner is not included in any other publicly available records (e.g. company register).
If the service provider cannot perform the customer due diligence measures, it shall refuse to carry out a transaction through a payment account based on the customer’s order, to establish a business relationship, to fulfil a transaction order, or it shall terminate the existing business relationship with the respective customer. In light of this it is important that the customer meets its data reporting obligation accurately and in full, covering the beneficial owner data as well.