Watchdog NBH fines Hungary’s two biggest banks for insufficient remedial measures
The National Bank of Hungary (NBH) has fined OTP Bank and MBH Bank, the country’s two biggest commercial lenders, more than HUF 43m (EUR 103,440) for failing to take all required steps to correct shortfalls regarding the prevention of money laundering and financing of terrorism, the central bank and financial market regulator said on Tuesday.
The NBH had instructed the lenders earlier to take remedial measures because of the regulatory shortfalls. Due to the deficiencies found, the supervisory authority imposed a total of HUF 15 million on MBH Bank and HUF 28.125 million on OTP Bank, and ordered them to correct the deficiencies. The deficiencies do not jeopardise the safe operation of credit institutions, the central bank said.
The MNB found that OTP Bank continued to fail to fully comply with retrospective screening and proper monitoring in its electronic money issuance activities for one product, while the methodology adopted by the bank did not comply with the risk-based approach.
Due to the incorrect setting of the filtering system, OTP Bank’s internal audit did not take into account the reports on trends and risks prepared by its AML/CFT unit when examining the filtering system scenarios, their modifications and the threshold settings, they wrote.
The bank continued to fail to adequately verify information on the source of funds in its customer due diligence for customers subject to the enhanced procedure who had previously been subject to money laundering notifications and whose cash payments were equal to or exceeded HUF 10 million. As OTP Bank did not comply or did not comply adequately with several of the requirements of the Decision, some of the related internal controls required by the Decision could not be properly implemented.
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The investigation revealed that, despite the obligation, MBH Bank still did not provide in its internal rules on screening for specific processing rules for alerts generated on the accounts of fiduciary clients and the sub-accounts used to record the assets managed by them, nor did it ensure that alerts based on the same risk basis were treated in the same way, due to a lack of adequate controls.
Furthermore, despite the previous obligation, it did not employ sufficient staff to guarantee the analysis and evaluation of the transactions filtered when processing the alerts generated by the filtering system within the time limits laid down by the legislation.
In addition, MBH Bank did not establish adequate policies and practices for obtaining information and documentation on the source of funds by the previously established deadline,” they wrote.
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