Latest Payments News: Hungarian Regulator Fines Key Banks Over AML Compliance Failure, and more

Catch up on six of the stories our payments compliance analysts have covered lately, and stay up-to-date on the latest news.

Hungarian Regulator Fines Key Banks Over AML Compliance Failure

Magyar Nemzeti Bank (MNB) has imposed financial penalties totalling more than HUF43m (€103,705) on OTP Bank and MBH Bank for failing to fully meet anti-money laundering and counter-terrorism financing (AML/CTF) compliance obligations.

In late 2023 and early 2024, Hungary’s central bank issued supervisory decisions requiring the banks to address specific deficiencies by August 2024.

However, its latest review found unresolved issues, leading to a HUF28m (€67,535) fine for OTP Bank and a HUF15m (€36,180) fine for MBH Bank.

OTP Bank, the largest commercial bank in Hungary, was cited for incomplete retrospective screenings, inadequate customer due diligence and shortcomings in internal controls and audits.

MBH Bank, meanwhile, failed to enhance its internal regulations, ensure sufficient staffing for transaction monitoring and establish proper rules for verifying the source of funds.

The central bank emphasised that although the deficiencies do not jeopardise the safe operation of the banks, both institutions must address these issues promptly to ensure full compliance with AML/CTF regulations.

India Mandates Name Look-Up Facility For Bank Transfers

The Reserve Bank of India (RBI) has mandated that all banks connected to two major funds transfers systems must introduce a beneficiary account name look-up facility by April 1, 2025.

Last week, the RBI issued a directive to all banks that participate in India’s Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems.

The directive calls on these banks to implement an account name look-up service that can be used via mobile and internet banking applications, and when visiting a branch in person.

The solution implemented should be based on the account number and the Indian Financial System Code (IFSC) of the beneficiary.

An IFSC is an 11-digit alphanumeric code unique to each bank branch in India, which is used for online money transfers through NEFT, RTGS and the Immediate Payment Service (IMPS).

Based on the account number and the IFSC, the facility should identify the beneficiary’s account name using the receiving bank’s core banking solution.

Both the sending and receiving banks must preserve detailed records of all name look-up queries made and responses received, and the service should be made available to customers free of charge.

Sudhanshu Prasad, chief general manager of the RBI, noted that the directive will bring the RTGS and NEFT in line with IMPS and Unified Payment Interface (UPI), which already have facilities that allow senders to verify the names of beneficiaries before initiating transfers.

As with similar services in other countries, such as the UK’s Confirmation of Payee (CoP), the sender may continue with the transfer even if the facility cannot find an exact match for the intended beneficiary.

Brussels-Backed EPI Scores With E-Commerce Trial

The European Payments Initiative (EPI) and Germany’s Volksbanken Raiffeisenbanken cooperative financial network have announced the successful completion of the first end-to-end Wero e-commerce payment transaction.

Wero is the mobile payments platform created by the EPI, a coalition of EU banks with political backing from the European Commission, the European Central Bank and members of the European Parliament.

The proof-of-concept (POC) transaction was conducted between late November and mid-December on the online shop of 1. FC Kaiserslautern, a German football club.

It was facilitated by VR Payment, a payment provider owned by the DZ Bank Group, and two participating pilot banks.

“Ever since the beginning of the Wero launch discussions, we were convinced we wanted to try it out,” said Thomas Hengen, CEO, 1. FC Kaiserslautern.

“Wero offers us and our clients a seamless experience, while being easy to implement, and it is competitive with regards to other options on the market. It is also European, which for a European football club is a key asset,” he added.

Further trials are now planned throughout early 2025 to refine the solution ahead of its market launch.

“This POC is another key step towards our retail market entry into commercial payments, as foreseen,” said Martina Weimert, CEO of EPI.

Weimert explained that the aim was to prove that the EPI’s solution is working well end-to-end and is “as simple, secure, and effective as we’ve been advocating for”.

“Now we are entering the next phase and preparing for the broad introduction in the coming months,” said Weimert.

Wero's broader rollout is set to begin in Germany in Summer 2025, with Belgium and France to follow in late 2025 and early 2026 respectively.

Digital Payments Grow, But Cash Remains Crucial For Eurozone

Digital payments continue to rise across the euro area, but cash remains a key payment method, especially for in-store transactions and small-value exchanges, according to the European Central Bank’s (ECB) latest study on consumer payment attitudes.

In 2024, cash accounted for 52 percent of in-store payment transactions by number, a decrease from 59 percent in 2022.

Cards, meanwhile, remain the dominant payment method in value terms, with a 45 percent share (down slightly from 46 percent), followed by cash at 39 percent (down from 42 percent) and mobile payment apps at 7 percent (up from 4 percent).

The shift towards digital payments is driven by an increase in online transactions, which now make up 21 percent of consumers’ day-to-day payments by number and 36 percent by value, up from 17 percent and 28 percent respectively in 2022, the ECB said.

Cards lead the way in online payments, representing 48 percent of transactions, while electronic wallets and mobile apps collectively account for 29 percent.

Despite the growing digital trend, consumer preferences for payment methods remain stable.

A majority (55 percent) favour non-cash payments in stores, 22 percent prefer cash and 23 percent are indifferent.

Consumers perceive cards as faster and more convenient, but appreciate cash for expense management and privacy.

Access to cash remains a priority, with 62 percent of consumers emphasising the importance of having cash as a payment option, up from 60 percent in 2022.

In addition, 87 percent report being satisfied with access to cash through ATMs or banks, although this marks a slight decline from 89 percent in 2022.

South Korea Proposes New Credit Card Fee Structure

South Korea’s Financial Services Commission (FSC) has announced proposed amendments to the country’s supervisory regulations for specialised credit financial businesses.

Released on December 24, 2024, the changes are intended to instil a more equitable fee structure for merchants, while creating better financial practices within the credit card industry.

The reforms include lowering the preferential fee rate cap for small and medium-sized merchants from the current range of 0.5 to 1.5 percent to 0.4 to 1.45 percent.

The schedule for designating large credit card merchants and publishing merchant fee rates will also be aligned with that of small and medium-sized merchants to ensure consistency.

In addition, credit card companies that make early payments (within two days of the billing date) to merchants will receive expanded recognition for financing costs.

Indonesia Unveils New Digital Asset Regulation

The Indonesian Financial Services Authority (OJK) has introduced new legislation aimed at regulating the country’s rapidly growing digital asset market, including cryptocurrencies.

Officially titled the "Implementation of Digital Financial Asset Trading Including Crypto Assets", the new secondary legislation will become an actionable compliance requirement for crypto players in the country from January 10, 2025.

It is intended to professionalise the industry by setting a new standard for licensing, operational security and compliance in the sector.

Under the new rules, all digital asset providers must obtain a business licence from the OJK before operating.

This requirement applies to exchanges, clearing and settlement institutions, storage service managers and traders.

Eligible digital assets must utilise distributed ledger technology, ensure transparency and avoid enabling illegal activities, and crypto exchanges are responsible for evaluating assets and listing only those that meet these criteria.

The regulation also mandates the creation of secure and reliable systems for trading, clearing and storage, with crypto providers required to implement stringent risk management practices and prioritise consumer protection.

As in jurisdictions such as the EU, crypto players will need to adhere to cybersecurity and anti-money laundering (AML) laws.

They must meet reporting obligations, including via real-time monitoring systems that integrate with the OJK and other relevant institutions, as well as regular evaluations and quarterly reports on listed digital assets.

A transition period allows oversight of digital financial assets to shift into the OJK’s oversight, with completion required within 24 months under Law No. 4 of 2023.

Providers must comply with the OJK’s licensing and operational standards within this timeframe, and business plans must be submitted within 15 working days of receiving OJK directives, with updates limited to once per year unless otherwise permitted.

Providers found non-compliant during audits must resolve issues within three months.

Penalties for violations are severe, with fines of up to IDR2m ($123) per day for administrative breaches and the potential for licence suspension or revocation for more serious non-compliance offences.

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