The government of Hungary has published draft amendments to the country's gambling legislation to require payment processors to block financial transactions with unlicensed operators.
They payments ban applies to all transfers and card transactions to and from gambling operators who do not hold a national licence, with transfers blocked on the basis of a blacklist and card transactions blocked on an MCC-code and country-code basis for internet payment service providers.
To implement the ban, Hungary's Gambling Supervisory Authority will require the country's licensed operators to submit details of their nominated account for player transactions, with accounts related to unlicensed operators blacklisted for payment blocking.
All Hungarian financial institutions will be required to abide by the blacklist, with fines of between HUF1.0m and HUF5.0m (approx. €3,000 to €16,000) per instance of non-compliance.
The draft amendments state that payment transactions relating to commercial category codes 7800, 7801, 7802, 7995 or 9406; country codes other than 348; and payment services provided on the internet, must be rejected immediately without notifying the person initiating or receiving the payment transaction.
The authorities say that unlicensed gambling in Hungary carries significant public security, consumer protection, public health and socio-political risks, making payment blocking a necessity.
"In the absence of effective international legal assistance, operators without a Hungarian gaming licence are in fact not under the supervision and control of Hungarian gambling supervisory, anti-money laundering, consumer protection and other authorities," the ministry of justice states.
"Prize claims and gambler protection expectations cannot be guaranteed by Hungarian law against gambling operators providing cross-border illegal services, and cannot currently be ensured as part of international cooperation.
"The aim of the draft is to actively discourage illegal gambling operations, duly ensure responsible gambling operations on the Hungarian legal gambling market, and expand the instruments of administrative law to combat illegal gambling operations by blocking payments and restricting financial contracts relating to gambling operators in order to protect Hungarian gamblers more intensely."
The payment blocking rules were notified to the European Commission on December 15th and are subject to a standstill period expiring March 16th, 2018.