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 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 politically connected individuals and for maintaining a weak integrity framework for top officials, leading to a lack of transparency in public procurement and systemic corruption, particularly in EU-funded projects. Recent reports indicate that while some anti-corruption measures have been introduced, the overall compliance and enforcement remain inadequate, with ongoing concerns about the influence of political connections on public contracts.

Hungary's economy has faced significant challenges, including a 0.9% contraction in GDP in 2023, driven by high inflation, currency depreciation, and government-imposed price caps. The corporate tax rate is currently 9%, but Hungary will adopt a 15% minimum tax for large multinational companies starting in 2024. Despite being an attractive destination for foreign direct investment, concerns over government favoritism towards domestic ownership and regulatory unpredictability have raised alarms among foreign investors.

Hungary's investment climate is characterized by its central location in Europe and high-quality infrastructure, which attract 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, leading to a perception of an uneven playing field. Despite these challenges, the corporate tax rate remains competitive at 9 percent, and the government actively promotes FDI, particularly from the United States, which is a significant source of investment in the country.