A new law will come into effect on 1 August, aiding authorities in combating online criminals, Justice Minister Bence Tuzson announced at a press conference in Budapest on Wednesday.
This legislative package, initiated by the Ministry of Justice in collaboration with the Ministry of National Economy, the National Bank, and the Hungarian Banking Association, was submitted to parliament this spring. It provides legal tools and measures for authorities to take action against online perpetrators.
Tuzson stated that this is the first legislative package resulting from an intensive government effort to combat online fraud. The government’s goal with the new law is to expedite the detection of crimes and the related proceedings.
Key elements of the legislation include speeding up information exchange between banks to track fraudulent funds and intervene to freeze them.
Online marketplaces will also be required to participate in detecting crimes by deleting user accounts used for fraud.
According to Tuzson, the modifications in criminal proceedings aim to enhance their effectiveness. Significant changes include redistributing case loads so that courts can proceed based on general jurisdiction without needing special expertise. Another change allows investigating authorities to request certain banking and telecommunications data without a prosecutor’s permission, thereby speeding up the collection of data necessary for identifying individuals. Tuzson added that further legislation is planned for the autumn to strengthen cooperation between investigative authorities and banks. He also mentioned that there are currently 15 victim support centres, with plans to establish such centres in all county seats to provide immediate assistance to crime victims. Staff at these centres offer legal, psychological, and professional guidance, and feedback from the system can be utilized in legislative processes.
Deputy Governor of the Hungarian National Bank, Csaba Kandrács, said the central bank is also involved in the Ministry of Justice’s working group focused on legislation against online fraud. He called the new law a milestone, as it strengthens efforts to stop and recover stolen customer funds. Quick and effective joint work between banks and investigative authorities is crucial to stop the stolen funds and bring perpetrators to justice. However, making online fraud impossible is even more important. This requires educating current and future customers, and the CyberShield initiative has made significant contributions, but this work must continue. CyberShield was launched in November 2022, when the Hungarian National Bank, the Hungarian Banking Association, the National Media and Infocommunications Authority, the National Cyber Security Institute of the National Security Service, and the National Police entered into an agreement to collectively create ‘bulletproof’ protection against digital criminals. Later, the Ministry of Economic Development, the Ministry of Justice, the Hungarian State Treasury, and the Regulatory Activities Supervisory Authority also joined the collaboration.
Kandrács noted that the central bank expects banks to use real-time fraud detection systems to identify and intercept suspicious transactions before they are completed. The fight against fraud is ongoing and presents various challenges.
In the first quarter of this year, card fraud incidents increased significantly, while cases related to transfers rose only slightly.
Fraudsters are increasingly using targeted phishing, where attackers use publicly available information from social media to send personalized messages to potential victims. Therefore, it is essential to identify and strengthen points in the anti-fraud process. As part of these efforts, the Hungarian National Bank recently issued a directive outlining expectations for financial institutions regarding online loan fraud. Kandrács added that the new fraud detection system will use artificial intelligence to identify and filter out unusual payment patterns and alert banks within the five-second execution time of the transfer.
Levente Kovács, Secretary-General of the Hungarian Banking Association, stressed the importance of recognizing cyber fraudsters and their methods, and the significant role of preventive information. The banking sector is working on creating a centralized fraud detection system, expected to be completed by 2025.
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