Hungary holds public consultation for draft law on electronic identification and signatures in the financial sector


On 10 November 2023, the Prime Minister's Cabinet Office submitted for public consultation the draft “Law on the Digital State and Certain Rules for the Provision of Digital Services” (“Digital Citizenship Law”).

This Digital Citizenship law is linked to the National Digital Citizenship Programme, which aims at making it easier and faster for “digital citizens” (more precisely: every person resident in Hungary) to manage their affairs through a single mobile application. The mobile application will allow users to prove their identity, settle their payments to the state with the touch of a button, and carry out most of their administrative tasks via their mobiles, by using a single application that provide integrated access to courts and public administrations. Furthermore, digital citizens will also be able to fully interact with their public utility companies and financial service providers using this app.

New requirements for the financial services sector

Specific private businesses (e.g. credit institutions, financial enterprises, payment institutions, electronic money institutions, insurance and reinsurance companies, investment firms and commodity exchange service providers) are obliged to accept the government-provided central identification and signature services in addition to their own services that perform the same function. This obligation works along similar lines as the obligation of “relying parties” under the proposed eIDAS 2.0 to accept the European Digital Identity Wallets for identification (e.g. preamble (28), Article 6db.).

Besides electronic identification in general, “eIdentification” is now possible under the government-provided electronic identification service. In this service, the user’s facial image can also be used for identification and for automated comparison in the existing governmental facial image database.

“eSignature” is also a feature, which covers both the current “identification based document authentication” system (in Hungarian: azonosításra visszavezetett dokumentumhitelesítés, or AVDH) with some future enhancements, such as multiple factor authentication and qualified electronic signatures. (Remote-key storage-based methods will also be introduced). The improved AVDH features contained in the draft law will retain the current capability to create private deeds of full probative value, but can also be used to create public deeds.

Next steps

The Digital Citizenship Law is open for comments until 17 November 2023 by sending an email to [email protected]. The text of the Digital Citizenship Law is available here in Hungarian only.

Following the public consultation, the final draft is expected to be submitted to parliament. With a planned entry into force on 1 January 2024, the Digital Citizenship Law would repeal the current Electronic Administration Act.

If the draft law is passed, the current identification-based document authentication service (AVDH) will be replaced by the above-mentioned eIdentification and eSignature services as of 1 September 2024. Private businesses specified above would have until 1 January 2025 to comply with the provisions of the act.

For more information on this draft law and how it could impact your company, contact your CMS client partner or these CMS experts.

The article was co-authored by János Bálint.