Identifying the ultimate beneficial owner is a key aspect of the client due diligence to be carried out by service providers (banks, solicitors, notaries, estate agents, trustees, auditors, etc.) in accordance with Hungarian Act LIII of 2017 on the Prevention and Combating of Money Laundering and the Financing of Terrorism (the AML Act).
1. Introduction
In many cases, identifying the ultimate beneficial owner is a significant step in the fight against money laundering; often, the identity of the ultimate beneficial owner alone, or the complexity of establishing that identity (the complexity of the chain of ownership, management and control), may be sufficient to give rise to suspicion and, consequently, to warrant a money laundering report.
In practice, identifying ultimate beneficial owners often presents numerous difficulties, particularly in the case of complex corporate networks or asset management structures.
The very first step in identifying the ultimate beneficial owner is, in every case, to uncover the full ownership chain of the legal entity being screened and, in addition, to determine whether there are any other persons exercising control or supervision over the legal entity.
Here and now, we outline the rules – and certain aspects thereof – relating to the identification of the ultimate beneficial owner of the most common company forms in Hungary: the limited liability company (kft.), the private limited company (zrt.), the public limited company (nyrt.), and, also, the private equity funds.
2. The first steps in identifying the beneficial owner
The very first step in identifying the ultimate beneficial owners of a legal entity is for the person conducting the due diligence to understand the legal entity’s entire ownership and control structure.
Sections 9(1) and (1a) of the AML Act require all service providers falling within the scope of the AML Act to uncover the entire chain of ownership and to understand the ownership and control structure.
In the course of that, the relevant documents should be requested; whilst the client is not obliged to provide it, the group-level organisation chart is of the greatest assistance, whilst other parts of the documentation consist partly of statements made and documents provided by the client, and partly of documents and information obtained from official registers accessible in accordance with the rules governing the legal entity in question. As a result of the due diligence, we must satisfy ourselves – supported by officially authenticated data – that we have been able to form an accurate, comprehensive and complete picture of the ownership and control structures of the entities subject to the due diligence.
The new Section 9/C(1) of the AML Act, which came into force on 29 June 2026, imposes a further, specific obligation on the party conducting the due diligence in relation to investment funds, as it precisely stipulates which documents must be requested in such cases. This provision states that ‘[i]f the client is a closed-end investment fund (including a private equity fund and a venture capital fund), the service provider is obliged – in addition to the identification measures set out in Section 9 – to ascertain: (a) the closed-end investment fund’s management regulations and articles of association; (b) the fund’s capital (the aggregate capital contributions) and the proportion of each investor’s capital share; (c) the investor base – in particular whether investors are professional or retail investors –, the rights and obligations of investors as set out in the management regulations, and the material obligations arising from the legal representatives’ status in relation to the fund manager.”
Once the ownership and governance structure has been examined and understood, the beneficial owner of the legal entity in question can be identified; guidance on this is provided by Section 3(38) of the AML Act, as well as by the interpretative provision set out in the new Section 48 relating to capital funds, in connection with sub-section (g) thereof.
The most important point to note is that, according to the definition in the AML Act, ultimate beneficial owner can only be a natural person; thus, in any case where the chain of ownership ends with a legal person based on the data provided, it can be stated with certainty that the tracing of the chain of ownership requires further investigation.
It should also be noted that, under the rules governing the calculation of shareholdings for ultimate beneficial owners, it is often the case in more complex structures that the total shareholding of the ultimate beneficial owners exceeds 100 per cent.
3. The beneficial owner of a limited liability company (kft.) and a private limited company (zrt.)
In the case of limited liability companies (kft.) and private limited companies (zrt.), sub-paragraphs (a), (b) and (f) of Section 3(38) of the Pmt. are most commonly applicable.
Under sub-point (a), an ultimate beneficial owner is a person who is entitled, directly or indirectly, to 25 per cent of the voting rights or dividends, or who otherwise exercises control or supervision over the company in question (with the exception of companies listed on a regulated market, i.e. a stock exchange, in respect of which less stringent provisions apply when determining the ultimate beneficial owner due to strict supervisory and disclosure rules).
Under sub-paragraph (b), an ultimate beneficial owner is also any person who exercises a controlling influence as defined in Section 8:2(2) of the Civil Code, Section 8:2(2) of the Civil Code, where ‘decisive influence’ is understood to mean a situation where (i) a member of a limited liability company (kft.) or a shareholder of a private limited company (zrt.) is entitled to appoint or dismiss the majority of the members of the management or the supervisory board, or (ii) pursuant to a members’ or shareholders’ agreement, several members or shareholders jointly exercise the majority of voting rights.
In practice, therefore, any additional rights associated with membership or shareholding must be assessed in each case: differing voting ratios, rights relating to the appointment of members of the management or members of the supervisory board, and rights to dividends that differ from the proportion of the shareholding, as these may also establish de facto ownership status.
In the case of indirect ownership, a distinction is made between the legal entity in which the shares are indirectly held, the intermediate owner and the indirect owner. The indirect owner’s shareholding must be calculated in accordance with Section 8:2(4) of the Civil Code in such a way that, where the intermediate legal entity holds more than 50 per cent, the indirect owner’s entire shareholding in the intermediate legal entity must be taken into account, whereas, where the intermediate legal entity holds a shareholding of less than 50 per cent in the company under scrutiny, the shareholdings of the intermediate legal entity and the owners’ stakes’ per centage higher up in the chain must be multiplied together. Where there are several intermediate legal entities and their respective shareholdings all exceed 50 per cent, the total existing shareholding of the person directly owning the indirectly owned company must be taken into account as the shareholding of the indirect (ultimate) owner. [See the guidance of the Central Bank of Hungary (CBH) on complex ownership structures: https://www.mnb.hu/letoltes/komplex-tulajdonosi-strukturak.docx (link inserted on 15 July 2026). The legislative references in the guidance no longer fully reflect the current legal situation; however, the calculation examples are very helpful.]
A question that has arisen in practice is whether the shares held by close relatives should be aggregated when applying Section 3(38)(a) and (b) of the AML Act. The answer to this question is no; according to the CBH’s position, the provisions referring to others contained here must be interpreted restrictively, and only Sections 8:2(2) and (4) of the Civil Code may be taken into account on that basis, whilst Section 8:2(5) shall not be considered. [See CBH’s position statement on this: https://allasfoglalaskereso.mnb.hu/Home/Download?documentid=1836 (link inserted on 17 July 2026).] (It should be noted that recent amendments to the regulations governing private equity funds actually require the aggregation of holdings held by close relatives. Both the change in the regulations and the current practice would justify the aggregation of holdings held by close relatives; however, the appropriate codification of this raises a number of practical issues and therefore requires great care.)
Subsection (f) of Section 3(38) of the AML Act is to be applied as a supplementary rule, pursuant to which the members of the management of the company under scrutiny (namely, all of them!) must be regarded as ultimate beneficial owners in the event that a ultimate beneficial owner cannot be identified in accordance with sub-sections (a) and (b).
4. The beneficial owner of a public limited company (nyrt.)
The regulations are somewhat more lenient with regard to the ultimate beneficial owner of a public limited company. If we are seeking the ultimate beneficial owner of the public limited company itself, it is not necessary to identify this person, because, according to the position of the CBH, in the case of companies listed on a regulated market, the ultimate beneficial owner and the entire ownership structure are known to the supervisory authority, are adequately monitored, and the disclosure rules render it unnecessary to determine the specific identity of the ultimate beneficial owners. By contrast, however, if the public limited company is situated higher up in the ownership chain (that is to say, if it is not the subject of the client due diligence), it must be examined whether a shareholder holding a stake of 25 per cent or more can be identified within the public limited company’s ownership structure; and if so, the ownership chain must be traced with regard to that shareholder, and the identity of the ultimate beneficial owner may be determined depending on the outcome of this process. [See the position statement of the CBH on this: https://allasfoglalaskereso.mnb.hu/Home/Download?documentid=1859 (link inserted on 15 July 2026).]
If amongst the shareholders of the public limited company featured in the ownership structure of the legal entity subject to due diligence there is no shareholder holding a stake of 25 per cent or more, then – provided that no other ultimate beneficial owner qualifying as such through influence, management or control can be identified amongst the other owners of the legal entity subject to due diligence – the members of the management of the legal entity subject to due diligence shall be regarded as ultimate beneficial owners pursuant to Section 3(38)(f) of the AML Act.
5. The beneficial owner of capital funds
In the context of determining the ultimate beneficial owner of a private investment fund, the new sub-paragraph (g) of Section 3(38) of the AML Act, which entered into force on 29 June 2026, refers to the equally new Section 48, which aims to define the identity of ultimate beneficial owners even more precisely than before. Under this provision, the ‘ultimate beneficial owner of a private investment fund is:
a) a natural person who, alone or jointly with a close relative as defined in Section 8:1(1)1 of the Civil Code, owns at least 25 per cent of the investment units issued by the investment fund,
b) in the case of a legal person or an organisation without legal personality which holds at least 25 per cent of the investment units issued by the investment fund, the beneficial owner of that investor as defined in point 38(a) or (b),
c) a natural person who, on the basis of investment units held by them alone or jointly with a close relative as defined in paragraph (1), point 1 of Section 8:1 of the Civil Code, is entitled to approve amendments to the conditions set out in the management regulations of the closed-end investment fund or to approve the transfer of fund management; furthermore, in the case of an investor who is a legal person or an organisation without legal personality and who holds such authority alone, the ultimate beneficial owner of that investor as defined in point 38(a) or (b),
d) the natural person who otherwise exercises effective management, control or influence economically equivalent thereto over the private investment fund, in particular:
(da) a natural person who, under the management rules of the closed-end investment fund – whether directly or indirectly – is entitled to exert a decisive influence on the investment policy, investment decisions, asset allocation or risk management system of the closed-end investment fund, irrespective of whether they hold investment units; for the purposes of this provision, decisive influence shall be deemed to exist, in particular, where a natural person has voting or veto rights in the fund manager’s investment decision-making process, or where the fund manager – in accordance with the investment fund’s management regulations – regularly and effectively acts on the instructions of that person;
(db) a natural person who, pursuant to the management regulations of the closed-end investment fund or any other document governing the operation of the investment fund – whether alone or jointly with other investors – holds voting rights sufficient to amend the management regulations, or to prevent the investor approval required under the management regulations for the transfer of fund management or the initiation of the fund’s winding-up;
(dc) a natural person who, in a manner not specified in subparagraphs (a) to (c), is otherwise capable of exercising a de facto decisive influence over the decision-making or activities of the private investment fund;
e) if no natural person can be identified on the basis of sub-paragraphs (a) to (d) of this paragraph, the senior officer of the fund manager managing the closed-end investment fund.”
As mentioned above, the new Section 9/C(1) of the AML Act, which came into force on 29 June 2026, also stipulates which documents and information the service provider carrying out the due diligence is required to examine. These are:
a) the management regulations and articles of association of the closed-end investment fund;
b) the fund’s capital (the total capital contributions) and the proportion of each investor’s capital share;
c) the investor base – in particular whether investors are professional or retail investors – the rights and obligations of investors as set out in the management regulations, and the material obligations arising from the legal representative status of the fund manager.
The legislator expects service providers to assess, on the basis of the above documents and information and on a risk-sensitive basis, whether there may be grounds for suspicion of money laundering, terrorist financing or proliferation financing. Section 9/C(2) of the AML Act stipulates that particular attention must be paid to whether (a) the fund’s investment units or other collective investment instruments are bearer instruments and whether their underlying ultimate beneficial owners can be identified; (b) whether the fund’s shareholders and investors include any natural person who may qualify as an ultimate beneficial owner under Section 3(38) but who was not listed by the reporting entity when making the declaration to the beneficial ownership register; (c) whether the fund employs a parallel structure, investment chain, holding structure or other structure spanning multiple legal systems which could be used to conceal the identity of the ultimate beneficial owner or the nature of the chain of ownership.”
It is clear from the above that, instead of the previous rules which allowed service providers a certain degree of discretion, the legislator has introduced more specific and stringent regulations to identify the ultimate beneficial owners of private equity funds and to prevent money laundering (and the financing of terrorism and proliferation) through their use.