fight against money laundering and terrorist financing
Money-laundering is when criminals try to use services of financial institutions to hide funds derived from criminal activities. Terrorist funds, on the other hand, often come from legitimate sources and are used to support act of terrorism. Pursuant to the Hungarian Criminal Code money laundering and financing of terrorism are considered act of crime. The objective of the Hungarian Act no: LIII of 2017 on Prevention and Combating of Money Laundering and Terrorist Financing (Anti-Money Laundering Act”) is to prevent the laundering of the proceeds of criminal activities through the financial system, the capital markets and other areas exposed to potential money laundering operations as well as to help combat the flow of funds financing terrorism. K&H Bank Zrt is subject to that Act. K&H Bank Zrt recognizes money laundering as a significant risk and has established a program for money laundering prevention to mitigate this risk. K&H Bank Zrt makes every effort to ensure that criminals do not use the Bank for the purposes of money-laundering and terrorism financing. K&H Bank Zrt operates a Compliance organization where a dedicated department works to prevent money-laundering and terrorism financing. K&H Bank Zrt cooperates with law enforcement agencies in identifying all suspected money-laundering or terrorism financing cases.
K&H Bank Zrt operates internal procedures that are binding on all employees. The Bank's regulations are in full compliance with the FATF 40+9 recommendations, the European Parliament’s and Council’s directive 849/2015/EC, and regulation no. 847/2015/EC. The declarations required for compliance with international regulations are available on the Bank's website.
identification, due diligence and beneficial ownership
According to the relevant Hungarian legal regulations, a customer due diligence procedure is obligatory in the legally defined cases, particularly upon the establishment of a client relationship, or for cash transactions equal or in excess of HUF 4.5 million, and in case of currency conversion above the equivalent of HUF 300 000, regardless of the type of currency involved. In order to meet these requirements, we kindly ask our clients to present valid identification documents.
The K&H Bank Zrt is obliged to identify the client, his/her authorized person, the person having disposal right over the account and his/her representative as well as the beneficial owner as determined based on the act in the course of the client due diligence.
Identification and beneficial owner declaration is performed in writing by completing the ‘Client data sheet’ form. The document must be filed and stored until the date determined in the Regulation.
K&H Bank Zrt is obliged to execute client due diligence measures as part of which it identifies the client, carries out the verification of the client’s identity, as well as identifies the beneficial owner and performs the verification of the beneficial owner’s identity. In the context of such identification, K&H Bank Zrt is to register the details pertaining to the business relationship and the transaction order and is to monitor regularly the business relationship.
In the course of fulfilling its client due diligence obligation, K&H Bank Zrt shall register the following details in respect of the business relationship and the transaction order:
- for business relationships: the type, subject and duration of the contract,
- for transaction orders: the subject and the amount of the order.
K&H Bank Zrt may also register, in addition to the above, the circumstances of execution (place, time, method) if such is required for preventing and combating money laundering and terrorist financing.
know your customer
To reduce the risk of money laundering and terrorist financing, K&H Bank Zrt must have the clearest possible understanding of the contents of the client’s activities, the nature of their business relationships, business partners, financial habits, domestic and market practices, the origin of the performed debits and credits, the used currencies and the usual transaction size in the course of the regular, active relationship maintained with the client.
For legal entities, the client’s ownership structure, including the beneficial owners (who can exclusively be natural persons), the executives holding decision-making authorities and the persons authorized to act on behalf of the client in a regular way agreed by the service provider must all be known by the K&H Bank Zrt
politically exposed persons
In line with the requirement of the AML Act, all natural clients must provide a written statement in respect of their PEP status and the source of their fund/wealth. Family members or persons known to be close associates of politically exposed persons also have to be considered as politically exposed person. The correctness of such statement must be verified in the World Check database which includes not only the black lists and restrictive lists but also the list of politically exposed persons.
During the existence of the business relationship, clients are obliged to notify the K&H Bank Zrt within 5 business days of having obtained such information of any change taken place in the details indicated under the client due diligence or any change concerning the person of the beneficial owner.
In the balance statement, K&H Bank Zrt continuously calls its clients to report any potential change in their personal details. In these calls special emphasis is laid upon those clients whose accounts kept with the Bank received no credit or debit orders in the period of two calendar years, excluding any transaction with a term of more than two years by nature.
reporting and monitoring and screening
Suspicious or uncommon transactions must be reported through the Anti-money laundering and anti-terrorist financing department of K&H Bank Zrt to the competent official body operating as the Financial Intelligence Department responsible for combating money laundering and terrorist financing.
In line with the legal provisions governing its activities K&H Bank Zrt continuously monitors the business relationship – including the analysis of the transaction orders performed during the existence of the business relationship – to determine whether the given transaction order corresponds to the details of the client made available for the service provider pursuant to the legal regulations.
K&H Bank Zrt - if it is reasonable on risk based approach - monitors the business relationship in enhanced procedure. This monitoring includes the analysis of the occasional transactions carried out during the business relationship.
Prospective clients and transactions are screened on the basis of applicable sanctions; existing clients are screened as applicable sanctions are updated. K&H Bank Zrt is obliged to submit the relevant reports.
To enable employees participating in the pursuit of the K&H Bank Zrt’s activities to familiarize themselves with the legal regulations applicable to money laundering and terrorist financing, to recognize business relationships and transaction orders enabling or realizing money laundering or terrorist financing, and to proceed in compliance with the provisions of the Act in case any data, fact or circumstance arises that indicates money laundering or terrorist financing K&H Bank Zrt arranges trainings for newly recruited employees and employees being absent for a long time (1 year), as well as organize regular follow-up trainings for employees, at least once a year and make arrangements for the registration and documentation of the training as well as the checking of the obtained knowledge.
To ensure that the Bank operates in compliance with all the relevant regulations it is a key requirement that auditing activities should provide efficient support for the fulfilment of legal regulations related to the prevention and combating of money laundering and terrorist financing as well as for the performance of tasks set out in this Regulation.
In order to ensure this: The Compliance Directorate of K&H Bank Zrt checks all specific operative transactions and processes, operates the monitoring system and procedures; performs audits and ex-post monitoring and provides support to the business areas.
The Internal Audit Directorate of K&H Bank Zrt regularly checks the fulfilment of the standard conditions and procedures stipulated
Responsibilities of the organization is regularly reviewing compliance with the regulations on the prevention and combating of money laundering and terrorist financing (even at currency exchange agents), focusing primarily on the accurate performance of the client due diligence procedure and the review of the training and the filtering system as well as reporting to the Top Management and Representative of Shareholders on the findings of the audits. Compliance is also responsible for implementing the KBC Group Rules to local environment.
In order to be compliant with the requirements of AML Act in terms of ongoing due diligence, the Bank operates an automatic monitoring system to monitor all transactions processed in accounts of our customers.
In line with the provisions of Act LII of 2017 - Implementing the financial and asset restraint measures imposed by the European Union and the UN Security Council – as well as the requirements of the EU, UN and OFAC requirements, all client, transactions and SWIFT messages are subject of embargo screening against the applicable lists.