The European Union (EU) on Thursday launched an infringement procedure against Hungary for the country's controversial law on transparency of foreign-funded non-governmental organizations (NGOs).

The European Commission sent a "letter of formal notice", the first step of EU infringement procedure, to Hungary underlining that their law does not comply with EU norms.

"The law interferes unduly with fundamental rights as enshrined in the Charter of Fundamental Rights of the European Union, in particular the right to freedom of association," the Commission said in a statement, adding that the law "could prevent NGOs from raising funds and would restrict their ability to carry out their work".

"The law also introduces unjustified and disproportionate restrictions to the free movement of capital, as outlined in the Treaty on the Functioning of the European Union," the Commission noted.

The law raises concerns as regards the respect of the right to protection of private life and of personal data, the Commission added.

Hungary was given one month to respond to the letter.

"We expect that the Hungarian government will engage in a dialogue to resolve this issue as soon as possible. We await a reaction from the Hungarian authorities within a month," said European Commission First Vice-President Frans Timmermans.

The law, approved by Hungary's parliament on June 13, will oblige NGOs receiving more than 7.2 million forints (about 26,290 U.S. dollars) per year in foreign funding to register as a "foreign-supported organization", or risk termination for non-compliance.

The Hungarian law marked a roughening of fronts in the government's combat with foreign-funded NGOs, in particular those receiving support from Hungarian-born billionaire George Soros.

The Hungarian government has claimed that the new law is meant to improve transparency and to fight money laundering and terrorism funding.

Under EU law, the European Commission, acting as guardian of EU Treaties, has the power to take legal action against a member state which is not respecting its obligations.

source: xinhua