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 large-scale corruption, particularly involving politically connected individuals. Despite having a legal framework and being a party to various anti-corruption conventions, the government has been criticized for its lack of action and transparency, especially regarding public procurement processes, which are often characterized by favoritism towards government-aligned firms. Reports from Transparency International and GRECO highlight the systemic issues in Hungary's corruption prevention efforts, revealing that many recommendations for improvement remain unaddressed, leading to a persistent environment of corruption and a chilling effect on civil society.

Hungary's economy has faced significant challenges, including a contraction of 0.9 percent in 2023 and record-high inflation of 17.5 percent, the highest in the EU. The government has implemented price caps and imposed windfall taxes, which have contributed to economic uncertainty and a weakening currency. Despite these issues, Hungary remains an attractive destination for foreign direct investment, particularly from the U.S. and EU, 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 to foreign investors. However, concerns have arisen regarding the government's preferential treatment of domestic ownership, particularly in key sectors such as banking and telecommunications, leading to a perception of an uneven playing field for foreign investors. Despite these challenges, the presence of approximately 1,700 U.S. companies in Hungary indicates a significant level of foreign investment, particularly in automotive and technology sectors.