Brutal fine for Hungary’s second largest bank

K&H, Hungary’s second largest bank, has been heavily fined. They also made serious mistakes in the prevention of money laundering and terrorist financing.

The Hungarian National Bank (MNB) has fined K&H more than HUF 20 million for failing to properly carry out its activities to prevent money laundering and terrorist financing.

“Several suspicions of money laundering were not reported at all or were reported late, and in many cases, it was not even possible to know for sure whether the client was the actual owner due to shortcomings in customer due diligence practices,” Privátbankár writes.

The central bank investigation looked at the period from 1 October 2020 to the end of the investigation. The most significant shortcomings were found in the reporting practice and in the identification of the owner, napi.hu writes.

There were also problems with customer due diligence practices and information on the source of funds was not collected in the right way.

The MNB has fined K&H a total of HUF 20.5 million (EUR 53,775) for the breaches detected during the investigation and has imposed deadlines of end-2023 and next December for the bank to remedy the deficiencies. K&H is also required to carry out an internal audit of its internal measures.

When imposing the fine, the MNB took into account K&H’s market share and the recurring shortcomings, the degree of risk and even the impact on safe operation.