HUNGARY Law and Practice Contributed by: Pál Rahóty, Lakatos, Köves & Partners
the sandbox period, the MNB may grant temporary exemptions or simplified compliance from specific regulatory provisions (certain remote customer iden - tification rules, elements of reporting obligations or internal process requirements), always with continued consumer protection and supervisory oversight. 2.6 Jurisdiction of Regulators In addition to the MNB, there is a regulatory body, the Supervisory Authority for Regulated Activi - ties (SARA; Szabályozott Tevékenységek Felügyele- ti Hatósága – SZTFH) for licensing crypto-asset exchange validation service providers, which CASPs must use in their business. The EU Commission has initiated an infringement procedure against Hungary for imposing additional requirements on CASPs 2.7 No-Action Letters There is no publicly accessible register or specific MNB policy stating that applicants may seek legally binding comfort that the regulator will not enforce cer - tain rules against them for a defined period if they pro - ceed with an innovation. Available information about the MNB’s Innovation Hub and regulatory sandbox emphasises consultation and tailored supervisory support – but not formal no-action letters as a distinct regulatory instrument. Instead, through the Innovation Hub platform, fintech firms can engage with the MNB to “ask the regulator” for regulatory clarity and get guidance on interpreta - tion or compliance expectations for specific innova - tions. 2.8 Outsourcing of Regulated Functions In Hungary, regulated financial institutions (banks, payment institutions, investment firms, insurers, CASPs, etc) may outsource functions, including criti - cal or important functions, but remain fully responsi - ble for compliance. The MNB expects firms to con - duct prior risk assessments and due diligence on the vendor, ensure ongoing monitoring, and maintain the ability to terminate and transition the service without disrupting operations. Vendors themselves are not automatically regulated solely because they provide outsourced services, but they become subject to indirect regulatory obligations
through contract and supervision. Mandatory contrac - tual provisions typically include: • clear description of services and service level agreements (SLAs); • audit and access rights for the regulated entity and the MNB; • data protection and confidentiality clauses; • business continuity and disaster recovery obliga - tions; • sub-outsourcing controls; • security requirements; • incident reporting; and • termination/exit and step-in rights. The MNB must be able to access relevant data and premises where necessary. It is not a legal requirement to outsource to a regulated entity, but in some cases it may reduce risk – particu - larly where the outsourced activity itself is regulated. Outsourcing to a regulated entity does not remove the primary firm’s responsibility, and the MNB will still supervise the outsourcing arrangement. In practice, firms choose regulated vendors where regulatory expertise, compliance infrastructure or passporting advantages are important; otherwise, robust contrac - tual safeguards and oversight are essential. 2.9 Gatekeeper Liability In Hungary, fintech platforms are not automatically treated as “gatekeepers” in a competition law sense, but their regulatory responsibility depends on their functional role: if the platform itself performs regu - lated financial activities (eg, holding funds, initiating payments, granting credit, executing trades, providing investment advice or operating a crypto exchange), it is treated as a regulated service provider and must hold the appropriate licence and comply with all prudential and conduct rules. If it merely facilitates connections between users and licensed third par - ties without controlling the regulated activity, primary responsibility generally rests with the licensed pro - vider, although the platform may still face obligations under consumer protection, disclosure, outsourcing and fraud prevention rules. In practice, Hungarian supervision focuses on substance over form – where a platform meaningfully controls or intermediates regu -
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