Proposal for an act for the establishment of a central transparency register in Hungary submitted for approval
By adopting the proposal, Hungary intends to fulfill its obligations under the 4th and 5th EU Anti-Money Laundering Directives, which oblige Member States to establish a central register of transparency, a central register containing the data of the ultimate beneficial owners of local businesses. and a central register of bank accounts and safes. The proposal would be applicable for every professional association (with the exception of public companies limited by shares), civil organizations and administrators registered in Hungary as well as partially state-owned organizations with the participation of the Hungarian state. is less than 25%.
Creation of the central transparency register
According to the proposal, the National Tax and Customs Administration would be the Hungarian authority responsible for the establishment and operation of the Central Transparency Register. Once the first notification to the Central Transparency Register has been made, each entity would receive a national registration number for the entity and a TT index. When registering in the central transparency register, the value of the TT index of each company would be ten points, which means that the status of the entity is reliable.
In addition, the central transparency register will contain the main identification details of the entities and the following data on the ultimate beneficial owners of the entities: full name; full birth name; nationality; place and date of birth; address or place of residence; and the nature and extent of its involvement.
Notification to the central transparency register
According to the proposal, the banks which maintain the accounts of Hungarian companies would be the service providers required to transmit to the Central Transparency Register any information on the ultimate beneficial owners of Hungarian entities, identified during the implementation of the due diligence process. towards customers. This obligation for banks will become effective in two stages:
- from June 6, 2021, banks will be required to transmit data of this type, which they have already obtained from their existing customers on January 1, 2021;
- From October 1, 2021, banks will be required to transmit the data of the ultimate beneficial owners of their new customers.
The proposal does not allow Hungarian entities to notify the person of their ultimate beneficial owners directly to the Central Transparency Register. The proposal only states that Hungarian companies will inform their banks within 15 days if any of their registered data changes and, subsequently, it is the bank that will forward this new information to the Central Transparency Register. However, banks will be required to make monthly notifications (i.e. they must report new data or any change in recorded data within five days of the end of a given month).
Difference between the determined data and the data of the central transparency register
If an authority, court, prosecutor or organization exercising oversight functions over entities falling within the scope of the proposal finds a discrepancy between their data on ultimate beneficial owners and the data in the central transparency register , they can inform the tax authorities. of it, which will cause the entity’s TT index to decrease by two points. If this discrepancy is found by a service provider as part of its due diligence duty to customers, the tax administration must be informed within five working days, resulting in a decrease in the entity’s TT index. concerned with a point.
If the value of an entity’s TT index falls below eight points, the entity will be classified as an uncertain entity as a result of which it should be treated as a high risk customer requiring the implementation of a enhanced due diligence. If the value of an entity’s TT index falls below six points, the entity would be classified as an unreliable customer, which means that the service provider will refuse assistance for any transaction valued above. 4.5 million forints (12,500 EUR). These provisions are expected to come into force on July 1, 2022.
Access to data contained in the central transparency register
According to the proposal, from February 1, 2022, any authority, court, prosecutor or organization exercising oversight functions over entities falling within the scope of the proposal can have access to all data included in the central transparency register. and can transmit this data. to an authority, court, prosecutor or supervisory authority of another EU Member State or of a third country, provided that, in each case, the data are necessary for the purposes of the exercise of statutory functions.
Third parties should have access to the central transparency register from 1 July 2022 and their access will be subject to the presentation of proof of the purpose of this use of the data and of the legal interest linked to this access to the data as well as payment of administrative costs. The conduct of a survey of third party data will need to be approved by the minister responsible for financial markets, capital and insurance.
Although the proposal has not yet been adopted by the Hungarian Parliament and its wording may be subject to further changes, we expect that the method of the notification mechanism to the central transparency register will be adopted as indicated.
While banks that maintain the accounts of Hungarian companies are required to report the data of their clients’ ultimate beneficial owners to the Central Transparency Register, we suggest our clients contact their banks to verify and ensure that the information held by their banks regarding the ultimate beneficial owners is up to date.