Hungary Country Summary

FATF Status

Hungary is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The latest follow up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Hungary was undertaken in 2024. According to that Evaluation, Hungary was deemed Compliant for 5 and Largely Compliant for 33 of the FATF 40 Recommendations. It remains Highly effective for 0 and Substantially Effective for 2 of the Effectiveness ratings.

Hungary has been ranked as the most corrupt country in the EU by Transparency International for two consecutive years, with significant concerns regarding the government's failure to investigate high-level corruption and politically connected individuals. Despite having a legal framework to combat corruption, the implementation is lacking, and recent reports indicate that Hungary has not satisfactorily addressed many anti-corruption recommendations from GRECO. The government's increasing hostility towards NGOs and transparency watchdogs, coupled with systemic issues in public procurement, has further exacerbated the corruption crisis, leading to a lack of accountability and transparency in the country's governance.

Hungary's economy has faced challenges, including a GDP contraction of 0.9% in 2023 and record-high inflation of 17.5%, driven by government price caps, currency weakening, and high energy costs. The corporate tax rate is set at 9%, but Hungary will implement a 15% minimum tax for large multinational companies starting in 2024. Concerns about government favoritism towards domestic ownership have led to a decline in foreign investment, despite Hungary's strategic location and infrastructure.

Hungary's investment climate is characterized by its strategic location in Europe and a corporate tax rate of 9%, which attracts foreign direct investment (FDI). However, concerns have arisen regarding the government's preferential treatment of domestic ownership over foreign investors, particularly in key sectors like banking and telecommunications. Despite these challenges, the presence of approximately 1,700 U.S. companies in Hungary, primarily in the automotive and software sectors, indicates a significant level of foreign investment.