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 for the past two years, with significant shortcomings in combating high-level corruption despite existing legal frameworks. The government has been criticized for failing to investigate corruption cases involving politically connected individuals and for restricting the operations of NGOs that promote transparency. Reports from Transparency International and GRECO indicate a persistent lack of compliance with anti-corruption recommendations, highlighting systemic issues in public procurement and the influence of government-affiliated firms.

Hungary's economy has faced challenges, with a GDP contraction of 0.9 percent in 2023 and an average annual inflation rate of 17.5 percent, the highest in the EU. The government has implemented price caps and imposed windfall taxes, contributing to economic uncertainty and a weakening currency. Despite these issues, Hungary remains attractive for foreign direct investment, particularly from the U.S., with a corporate tax rate of 9 percent, although concerns about government favoritism towards domestic ownership persist.

Hungary's investment climate is characterized by its strategic location in Europe and a corporate tax rate of 9%, which is attractive for foreign direct investment (FDI). However, there are growing concerns among foreign investors regarding the government's preferential treatment of domestic ownership, particularly in key sectors such as banking and telecommunications, which has led to a perception of an uneven playing field. Despite these challenges, the presence of approximately 1,700 U.S. companies in Hungary, primarily in the automotive and software sectors, indicates ongoing interest and investment from foreign entities.