The Magyar Nemzeti Bank conducted a targeted investigation to check the money laundering and terrorist financing prevention activities of OTP Bank Nyrt. (OTP Bank). The target investigation covered the period from October 1, 2020 to the end of the investigation.
In several areas, OTP Bank did not carry out its money laundering prevention activities in accordance with the supervision’s expectations, the supervision revealed with the involvement of experts. The cause of the deficiencies was basically seen in the less efficient operation of the internal control environment. OTP Bank’s internal control environment needs improvement, as the company does not have effective secondary and tertiary protection functions, the announcement reads, according to
the credit institution did not immediately report certain cases of suspected money laundering to the financial information unit operating within the framework of the NAV, and in several cases it did not fulfill its obligation to report again.
A shortcoming also arose in relation to the credit institution’s monitoring activities, for example regarding the previously reported high-risk customers from a money laundering point of view, as well as the customer base that regularly issues transaction orders.
Due to the incorrect setting of the parameters of the filter system, the filter system signal was only generated in the monitoring system with a delay or intermittently in several cases, so the bank only examined them with a considerable delay and made a report, the announcement says.
It was considered an error in the internal risk assessment that, in the case of several clientele considered to be risky (even though they were identified), the measures were incorrectly determined, not in proportion to the identified risks – they write – and no retrospective screening was carried out for such clientele. There have also been cases where the credit institution did not take into account the geographic money laundering risks published by the MNB during its internal risk assessment.
In the course of customer due diligence, OTP Bank repeatedly failed to adequately verify the information on the source of the funds. For other clients, you did not ascertain the identity of the beneficial owner ─ including an understanding of the client’s ownership and management system ─ and in some cases the information you had about the beneficial owners was not up to date. Although the credit institution classified some of its customers as high risk, it did not carry out enhanced customer due diligence on them.
In some cases, document copies were not available, or their quality was not adequate, the announcement lists.
The MNB established that, despite its internal regulations, the credit institution was unable to present the management decision necessary to establish a business relationship with certain high-risk customers. In addition, in several cases, he was unable to prove that he had kept his employees’ training on the prevention of money laundering and terrorist financing.
Due to the violations, the MNB imposed a total of HUF 49.375 million supervisory fines and obliged OTP Bank to correct the deficiencies with deadlines between February and August 2024 (depending on their type).
Due to certain legal violations, he warned the bank to comply with the law at all times, obliged it to carry out an internal audit of its measures and to provide extraordinary data proving the implementation of the measures.
When determining the fine amounts, the MNB assessed the severity of each violation, the impact on safe operation, the frequency and duration of the violations, and the credit institution’s market share as aggravating circumstances. It was considered a mitigating circumstance that the credit institution had already started to take measures to eliminate several legal violations. As they write, the deficiencies do not endanger the safe operation of the credit institution.
