Under the Hungarian AML Act, the UBO is the natural person who ultimately owns or controls a legal entity. For corporations, a UBO is typically identified in two main ways. Firstly, through material ownership, which is defined as a person who directly or indirectly owns or controls at least 25% of the shares or voting rights. Secondly, through control, which refers to a person who exercises effective control via other means or has dominant influence, such as the right to appoint or recall the majority of executive officers. If, after exhausting all reasonable efforts, no UBO can be identified based on the criteria above, the law establishes a substitute mechanism. In such cases, the senior managing official (e.g., the executive officer) of the entity is registered as its UBO.

Which Entities Must Register Their UBO?

The obligation to identify a UBO applies to nearly all business entities and non-governmental organizations registered in Hungary, as well as fiduciaries and partially state-owned entities. The law provides for limited exemptions, primarily for companies listed on a regulated market that are subject to equivalent EU transparency disclosure requirements.

The UBO Identification and Registration Process in Hungary

Hungary’s registration process is distinct from that of many other EU countries. It operates on an indirect model. Companies do not file UBO data directly with the NAV. Instead, they are required to provide this information to their obliged service providers (primarily their account-holding banks) as part of Know-Your-Customer (KYC) procedures. These obliged service providers are then legally required to report the UBO data to the NAV on a monthly basis. The company itself must notify its UBOs of their status, and the UBOs have a duty to inform the company of any changes within 15 days, which the company must then relay to its service providers.

Public Access to the Hungarian UBO Register

The Hungarian UBO register does not offer general public access. Access is restricted and limited to competent authorities (like NAV and law enforcement), obliged service providers (e.g., banks, law firms, auditors) for their due diligence, and the registered entity itself. Third parties may apply for access upon demonstrating a “legitimate interest” and paying a fee, but this is not a public search portal.

Consequences of Non-Compliance in Hungary

Hungary employs a unique sanctioning mechanism centered around a reliability score known as the “TT index.” The primary consequences of non-compliance are operational rather than direct fines:

The “TT Index” (Reliability Score)

The NAV assigns a “TT index” score to each entity. If an obliged service provider or a public authority finds a discrepancy between the data in the register and the information they have, they must report it to NAV. These discrepancy reports lower the entity’s score.

“Unreliable” Classification and Transaction Restrictions

If an entity’s TT index falls below a certain threshold, it is classified as “unreliable.” This classification is visible to all obliged service providers. Once an entity is deemed unreliable, service providers are legally required to refuse the execution of any business transaction exceeding HUF 4.5 million (approx. €11,500). This can severely disrupt a company’s ability to conduct business, make payments, or receive funds.

Business Relationship Termination

Continued non-compliance or an unreliable status can lead obliged institutions, such as banks, to terminate the business relationship, potentially resulting in the closure of bank accounts.

Ensure Your Compliance and Avoid Penalties in Hungary

Correctly identifying your Ultimate Beneficial Owner and ensuring their proper registration is a critical legal requirement. Our team of experts provides a comprehensive service that covers both the UBO identification based on your specific corporate structure and the complete handling of the registration process. By entrusting this task to us, you can be confident in your compliance and avoid the severe penalties associated with any errors.