Money Mover Country Reports - Hungary
Posted on the 18th October 2016 by Emily Keates in Country Reports
Following the end of World War II, Hungary became a satellite state if the Soviet Union under communist rule. During this period there were a number of nationwide revolts and revolutiins against the soviet controlled government, but it wasn’t until 1989 with the collapse of communism across Eastern Europe that Soviet troops started to leave Hungary. The last troops left the country in the summer of 1991.
In the wake of the departure of Soviet troops and the collapse of the USSR, Hungary developed close political and economic ties with Western Europe, joining NATO in 1999 and then EU in 2004.
The Hungarian Forint
The forint (Ft/ HUF) is the Hungarian currency. One forint is made up of 100 fillér, although fillér coins are no longer in circulation. The forint was introduced on 1 August 1946 and was a crucial step of the post-WWII stabilization of the Hungarian economy. The currency remained relatively stable until the 1980s until the transition to market economy in the early 1990s deteriorated the value of the forint with inflation peaking at 35% in 1991. Since the early 2000’s however, the currency has remained relatively stable with inflation in single figures.
Since 1989 Hungary has been a parliamentary republic with a multi-party system. The National Assembly, the highest organ of state authority that consists of 199 members, exercises all legislative power. Members of the National Assembly are elected for four years.
The current political landscape in Hungary is dominated by the conservative party Fidesz, who make up over 50% of the members of the National Assembly. Fidesz gained two- thirds parliamentary majority in 2010, which allowed it to throw out the comparatively liberal post- communist constitution. This was replaced with a constitution that critics say cements the governing party's hold on power and removes checks and balances essential for the healthy functioning of a democracy.
Trade and Industry
Hungary has long been an agricultural country, but since World War II it has become increasingly industrialized. While under Soviet control, industry and agriculture was largely nationally owned and production of goods was chiefly for export to the USSR. Hungary's economy underwent difficult readjustment in the 1990s, as it moved towards market-based economy and finding new trading partners. By the end of 1995, almost all retail trade had been privatized and less than half of all economic output originated from state-owned enterprises. Hungary's economy is one of the most prosperous in Eastern Europe and is a leading nation for attracting foreign direct investment in Central and Eastern Europe, with over $110bn being invested in the country in 2015 alone.
About half of Hungary's land is arable. With highly diversified crop and livestock production, the country is self-sufficient in food. Wheat, corn, sunflower seeds, potatoes, sugar beets, and grapes are the major crops. Pigs, cattle, sheep, and poultry are raised.
AML & CTF (Anti-Money Laundering and Counter Terrorist Financing)
Hungary was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).
Key Findings from the report are as follows: -
- Hungary is not considered a major financial center; however, its EU membership and location make it a link between the former Soviet Union and Western Europe.
- The country’s primarily cash-based economy and well-developed financial services industry make it attractive to foreign criminal organizations. Law enforcement has observed an increase in organized crime groups using Hungary and the region as a base of operation for cyber-related fraud, including social engineering fraud, and for laundering criminal proceeds through shell companies and the banking system.
- Hungarian officials believe cash transactions, offshore companies, and front companies are the largest money laundering and terrorism financing risks.
- The use of cash and false information regarding the identity of the accountholder hinders transparency, making it difficult to track funds derived from criminal activity.
- Hungary has been identified as a transit country for illegal drugs coming from Turkey and Asia and moving to other European destinations. Particular vulnerabilities may exist on the Hungarian-Ukrainian border related to tobacco smuggling, which the National Tax and Customs Authority and the Police strive to prevent, and trafficking in persons.
- Authorities believe money laundering cases mostly stem from financial and economic crimes, such as tax-related crimes, cyber-fraud, embezzlement, misappropriation of funds, and social security fraud.
- Illicit proceeds also result from narcotics trafficking, prostitution, trafficking in persons, and organized crime activities. Other prevalent economic and financial crimes include real estate fraud, forgery, and the copying/theft of bankcards.
- There is a black market for smuggled goods, primarily related to customs, excise, and value-added tax evasion.
- No international terrorist groups are known to operate in Hungary.
According to the latest Corruption Perceptions Index, Hungary scores a mid point score of 51 out of 100 (0 being highly corrupt and 100 representing a very clean perception), ranking it 50 out 167 countries and territories.
Money Mover view
Based on the latest Corruption Perceptions Index, Money Mover is happy to process Hungarian Forint payments to Hungary.
Our clients may wish to use our foreign exchange and international payments services for several different reasons such as:
- Transferring business revenues between branches in Hungary and other countries
- The need to make payments to suppliers based in Hungary
- The need to make mortgage payments for a holiday home in Hungary.
Other country reports you might be interested in:
- Money Mover Country Report - South Africa
- Money Mover Country Report - Spain
- The Challenges and Opportunities presented by Brexit
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