The ultimate beneficial owners’ (“UBOs”) register (“Register”) is introduced, as the 4th and 5th anti-money laundering EU directives have been implemented in Hungary as of May 22, 2021. The UBO Register will work as a central database and will be managed by the Hungarian Tax and Customs Authority (“TA”).
UBO generally means a natural person who directly or indirectly owns or controls at least 25% of a company (other organization, trust or foundation). If there is no such person, then the executive officer will qualify as the UBO. Special definitions apply to UBOs of foundations and trusts.
Data on UBOs must be provided for basically all organizations registered in Hungary.
The data on UBOs must be reported to the TA by the account holder bank. The first reporting is due by June 12, 2021. Going forward, UBOs need to inform their companies of any change in the personal data within 15 days and the companies must update their banks within 5 days. The banks then regularly report to the TA.
From February 2022, law firms, as service providers obliged to perform AML screening, and notify the TA if they find that a UBO’s data is materially different from the data in the UBO Register. Such discrepancy can result in an adverse change to TT index of the relevant companies.
The TT index essentially indicates the trustworthiness of the data in the UBO Register and set at 10 at the first registration. The TT index will go down by 1 point if a service provider (e.g. law firm, accountant, auditor, trustee, real estate agent etc.) and by 2 points if any authority, prosecutor, court reports that there is material inaccuracy in the registered data. If the TT index drops below 8 points, the data will be classified as “uncertain”, and if it drops below 6 points, it will be classified as “unreliable”. An “unreliable” data provider organization shall be considered high risk for AML purposes, and their transactions above HUF 4.5 million (approx. EUR 12,000) will be rejected. Such classification might also be published on the TA’s website. If the correct data is reported to the TA through the bank, the data provider organization’s TT index will be set to 10 points again in the UBO Register.
The data in the UBO Register can be accessed for free by
- the data provider organizations and their UBOs regarding their own data (as of October 2021);
- authorities, prosecutors, courts and supervisory authorities for the completion of their statutory tasks (as of February 2022);
- service providers relating to their AML screening obligations (as of February 2022).
As of July 2022, the UBO Register cab be accessed by anyone, if they have legitimate interest and pay a fee.
As per current plans, by February 1, 2023, other EU member states will have access to the Hungarian UBO Register and Hungarian authorities, courts, service providers (such as law firms) will have access to the UBO databases of other member states.