Based on a bill submitted on 20 April 2021, the new law establishing the ultimate beneficial owner register (UBO) may enter into force on 15 May 2021. According to the bill, the UBO will be based on data obtained by banks in the course of the customer due diligence under the Hungarian Anti Money Laundering Act (AML Act), which data will be passed on to the body maintaining the UBO (i.e. the Hungarian tax authority). After the system is set up, each organization involved will receive a registration number and a TT index.
The TT index evaluates the organizations based on their reliability, which will be 10 points at the time of the first data recording. However, this value may change (decrease) when the authority maintaining the UBO detects discrepancy from the data at UBO on the basis of the information passed on by another authority or service provider pursuant to AML Act. If the TT index of an organization falls below 8 points, its status becomes “unstable”, and when it falls below 6 points, it becomes “unreliable”. In both cases, it is possible to return to “reliable” status (i.e. regain the 10 points) by changing or confirming the data within the statutory deadline. The “unreliable” status will have certain disadvantages, such as publishing the name of these organizations by the Hungarian Tax Authority, or service providers will consider them as high risk organizations and refuse to carry out transactions over HUF 4.5 million.
The organizations will be entitled to access and reconcile their own data.
By Gabriella Galik, Partner, KCG Partners Law Firm