In July 2024, the Hungarian Government introduced significant changes to the regulations governing online payments, aiming to enhance consumer protection and the security of electronic transactions.
In accordance with EU Directive 2015/849, payment service providers are required to suspend transactions where the involvement of the Financial Intelligence Unit (FIU) is deemed necessary, and they must immediately report such transactions to the designated authority. Building on this procedure, but distinct from it, a new reporting and freezing procedure has been introduced in Hungary on 1 August 2024. This new procedure is designed to facilitate the recovery of wrongfully appropriated funds. It is based on the efficient and rapid exchange of information between clients, payment service providers and authorities, which was not previously possible under the current legal framework.
The process begins when, following the detection of fraud, the client or the investigative authority notifies the client’s bank in order to suspend the transferred funds. Subsequently, the bank informs the payment service provider of the recipient of the transferred funds, providing details such as the notification, the name and account number of the payer, the name and account number of the payment transaction's beneficiary, and the currency, amount, and date of the payment transaction. Simultaneously, the payment service providers report the incident to the FIU and, if necessary, suspend the accounts involved.
Starting in the summer of 2025, a fraud detection system will also start operating in Hungary, which will continuously analyse payment patterns and use self-learning methods to filter out fraudulent payment orders.
By Borbala Maglai, Attorney at Law, KCG Partners Law Firm
