Escalation of the Investigative Authorities: As Many as Four Bodies May Now Probe Cases Involving Public Funds

Four Instead of One

Until now, the prosecution of offences involving public funds was essentially concentrated in a single body, the Prosecution Service: investigations were carried out by the police, the National Tax and Customs Administration (NAV) or the Prosecution Service itself, but only the Prosecution Service could bring charges and only it could represent the prosecution. This model is now changing radically. As a result of extremely intensive legislative activity, a completely new authority, the National Asset Recovery and Asset Protection Office (NVVH), joins the Prosecution Service; the European Public Prosecutor's Office will also appear from 2027; and the NAV is receiving new mandatory audit tasks. In addition, the long-familiar asset-growth investigations may return with respect to politicians. Consequently, the same case may come to the attention of as many as four different authorities.

The New Super-Authority: The NVVH

The Office, which began operating on 1 September, may investigate a broad range of persons: anyone who manages budgetary or EU funds, uses such grants, or manages or previously managed assets forming part of national assets. It may also audit the financial management of local and national minority self-governments and their associations.

The so-called public asset protection investigation is initiated by the NVVH ex officio, but it may also act on a referral from another body or on the basis of a complaint, and a suspicion of a criminal offence is not required. Whom it scrutinises is determined primarily by its own risk analysis. The NVVH publishes the criteria and results of its risk assessment on its website, so those managing public funds would be well advised to monitor it regularly.

During an investigation, the NVVH works with a toolkit similar to that of the tax authority: it requests data and documents, may conduct on-site inspections, may request statements, may copy electronic data carriers, may contact other authorities, and may also engage experts. Those who fail to cooperate can expect a substantial fine: tens of millions of forints in the case of private individuals, and sums running into the billions in the case of organisations.

At the end of the investigation, the Office prepares a summary report and decides on further steps on that basis. The strongest instrument is criminal proceedings: if a suspicion of a criminal offence arises, the NVVH may itself investigate and even bring charges. In this way, it essentially combines the functions of the police and the Prosecution Service, which can provide it with very broad powers.

The NVVH may investigate only priority offences listed in the Code of Criminal Procedure that are connected to the exercise of public authority or the management of public assets (for example, corruption, misuse of office, embezzlement, fraud or breach of fiduciary duty committed to the detriment of public assets, aggravated budget fraud, cartel offences, and related money laundering or participation in a criminal organisation). In such cases, the NVVH may take the proceedings under its own competence until charges are brought, even if they were initiated by the police or the Prosecution Service. In other words, it can essentially reach over the heads of these general public authority bodies. This, too, is extraordinary in Hungarian legislation.

The "Ordinary" Prosecution Service Remains

The Prosecution Service is not being pushed out of cases involving public funds, but its role is changing. In every case that the NVVH does not take over, the Prosecution Service continues to decide on bringing charges and to represent the prosecution, while the investigation is conducted in the usual manner by the police, the criminal divisions of the NAV, or the Prosecution Service itself.

In practice, most proceedings will probably continue to start here. The police and the Prosecution Service are obliged to act where a suspicion of a criminal offence arises, whereas the NVVH itself decides in which cases it will intervene. The division of labour between the two bodies is therefore ensured by a simple rule: if the police or the Prosecution Service orders an investigation into an offence falling within the NVVH's competence, it must notify the Office within 24 hours, after which the Office decides whether to take over the case.

The European Public Prosecutor's Office Is Coming Too

Alongside the two domestic public prosecuting bodies, an EU actor will soon join as well, as the European Commission confirmed Hungary's accession to the European Public Prosecutor's Office (EPPO) on 10 July 2026. However, actual operations are still some way off. The Hungarian European Prosecutor will be selected by the Council of the European Union from among three candidates nominated by Hungary, and the organisation may begin its work twenty days after the appointment. The EPPO is therefore expected to begin its substantive activity in Hungary in 2027.

The EPPO investigates and prosecutes offences affecting the financial interests of the Union. These include, in particular, fraud relating to EU grants, corruption, breach of fiduciary duty and money laundering, VAT fraud involving at least two Member States and causing damage of at least EUR 10 million, and related offences committed within a criminal organisation. Importantly, its competence is retroactive: it may also investigate cases committed after 1 June 2021.

Where both the European Public Prosecutor's Office and the Hungarian authorities could proceed in a case, the EU body has priority as a general rule: if the EPPO evokes the case, both the Prosecution Service and the NVVH must hand it over. If a dispute arises over whether the case falls within the EPPO's competence at all, under the EU regulation the decision is made by the national body designated by the Member State. Which body that will be in Hungary will be settled by the legislation required for accession, which has not yet been adopted.

New Audit Tasks at the NAV

The fourth actor, the NAV, approaches the matter from a different direction: in carrying out its new tasks, it examines assets not in criminal proceedings but in its capacity as a tax authority. The National Assembly has prescribed by law that the NAV must audit fiduciary asset management arrangements and private foundations. This is an unusual solution, since the tax authority usually decides for itself whom to audit.

Asset-growth investigations are also returning. In July, the government announced that the NAV would receive stronger powers and, based on risk analysis, could examine the asset growth of senior political leaders and members of their households going back as far as twenty years. According to the announcement, this may affect around one thousand people, and newly appointed politicians would become subject to investigation after two years. There is as yet no question of asset-growth investigations becoming general, but with the expected introduction of a wealth tax, this too may be anticipated.

Sometimes More Means Less?

The expansion of the institutional system on a scale not seen for a long time rightly raises the question: where will the pool of professionals needed for effective operation come from? If the bodies operating in parallel try to poach experienced prosecutors, investigators and tax experts from one another, increasing the number of authorities may even backfire. The tax authority faces a similar challenge, as its headcount and expertise must be adjusted to the new tasks being added.

The biggest question, however, is how bodies with overlapping competences at numerous points will coordinate their work. It must be avoided that some cases are left without an owner, and also that, with so many cooks, the broth is spoiled.