The proposed law requires certain NGOs receiving over EUR 23,000 per year from outside Hungary to: register as an ‘organisation receiving support from abroad’; display this label on its website and publications; report the personal details of each donor.
Failure to register will lead to a fine of up to EUR 2,900 and, ultimately, dissolution of the organisation. The proposed law states that it is designed, in part, to combat money laundering and terrorist financing. The proposed law violates the following rules of EU law:
- Directive 2015/849 on anti-money laundering and terrorist financing.
The directive requires national authorities to carry out a risk assessment of the NGOs targeted to prove that they are at risk of being used for money laundering and terrorist financing. No NGO specific risk assessment has been carried out. The government has not produced any publicly available evidence to suggest that these organisations are at risk so as to justify the proposed measures.
Undermining public trust
The proposed law must also comply with the EU Charter of Fundamental Rights. The law would interfere with the right to protection of personal data because it requires the details of donors to be published. The law would also interfere with freedom of expression and of association. First, it imposes extremely severe sanctions for non-compliance.
Second, it undermines public trust in NGOs, which will prevent them performing their core tasks. NGOs allow the public to participate in the democratic process by informing them of developments in law and policy, representing their views to government and holding governments accountable to their legal obligations. For NGOs to play these roles, they require public trust. Otherwise, the public is unlikely to believe the information they provide or coordinate their activities of civic participation through these NGOs, or provide donations on which NGOs survive.
A government is allowed to limit rights in the public interest. But it must not restrict them more than is strictly necessary. The proposed law imposes a disproportionate interference with these rights because existing national rules already provide the authorities with sufficient information and powers to fight money laundering and terrorist financing.
- Article 63 of the Treaty on the Functioning of the European Union and Directive 88/361 concerning free movement of capital.
EU law prohibits governments from restricting the free flow of capital between EU countries. This includes donations made to charitable organisations. According to EU law, any measure likely to deter people from transferring capital between countries, amounts to a restriction.
The proposed law would require the personal details of people making donations from another EU country to be reported. This is likely to deter people and organisations from making donations. Although a government is allowed to restrict free movement of capital in the interest of public security, the authorities must prove that there is a genuine and serious threat.
The government has provided no evidence that these organisations pose any such threat.