Money Laundering and Terrorist Financing
Both money laundering and terrorist financing are subject to penalty in Austria (§§ 165 and 278d of the Austrian Criminal Code (StGB)). Money laundering is the concealment of the illegal origins of income from certain criminal activities, referred to as prior criminal offences. Every financial centre bears the risk of being misused for money laundering. The scope of terrorist financing is more difficult to define than money laundering. It is understood to be providing assets (including legal assets) for the perpetration of a terrorist act. Similar to the fight against terrorist financing, international standards also exist for combating proliferation financing, since the proliferation of weapons of mass destruction also presents a serious danger to international peace.
Legal Bases in Austria
Financial Markets AML Act: With the implementation of the 4th Money Laundering Directive provisions on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing for credit institutions and financial institutions are concentrated in one financial supervisory law for the first time. The new law shall ensure uniform application of AML/CFT obligations and facilitate supervision by the Financial Market Authority. Provisions can also be found, for example, in the Austrian Trade Act (GewO), Gambling Act (GSpG), and the Codes of Professional Conduct for Attorneys at Law (RAO) and Notaries (NO). These provisions place great importance on the principle of "know your customer", which is intended to deny money launderers the benefit of anonymity.
In Austria, every client must identify themselves:
- To establish a permanent business relationship with a financial institution (usually by opening a savings account)
- To perform a transaction with a value of EUR 15,000 or more outside of a permanent business relationship
- To deposit or pay out savings, if the amount deposited or paid out is EUR 15,000 or more
- If there are suspicions of money laundering or terrorist financing and doubts exist about identification data that was previously obtained
Identification is performed using official photo ID. If the client is a minor or a legal entity, in addition to proof of the representative's identity, proof of the power of representation and identity of the person or entity being represented must also be provided. In a trust relationship, the identity of the trustor must also be disclosed.
Suspicion of money laundering or terrorist financing must be reported to the money laundering unit of the Austrian Federal Ministry of the Interior.
Legal Bases in the EU
An EUdirective cannot be applied directly, but must first be transposed into national law.
Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (4th Anti-Money Laundering Directive) was published in the Official Journal of the European Union on 5 July 2015 and had to be implemented in national law by 26 June 2017. For the financial sector the implementation has already been completed by the Financial Markets AML Act that entered into force on 1 January 2017 and by the Beneficial Owners Registry Act, which fully entered into force on 15 January 2018. For obliged entities of the non-financial sector the Directive was transposed by amendments to the Lawyers’ Act, the Disciplinary Statute for Lawyers and Lawyer-Candidates, the Notarial Code, the Gambling Act, the Trade Act, the Public Accountants and Tax Consultants Act and the Accountancy Act. Commission delegated regulations (EU) 2016/1675, (EU) 2018/105 and (EU) 2018/212 supplement the 4th Money Laundering Directive by identifying high-risk third countries with strategic deficiencies.
Directive (EU) 2018/843 (5th Anti-Money Laundering Directive) amending Directive (EU) 2015/849 (4th Anti-Money Laundering Directive) was published in the Official Journal of the European Union on 19 June 2018 and has to be implemented in national law within the general transposition period by 10 January 2020.
Regulation (EU) 2015/847 on information accompanying transfers of funds was also published in the Official Journal of the European Union and entered into force on 26th of June 2017. Regulation (EU) 2015/847 repeals Regulation no. 1781/2006 and requires that every transfer of funds is accompanied by specific information on payer and payee. The objective is to permit all transfers to be tracked.
Regulation (EC) No. 1889/2005 on controls of cash entering or leaving the Community was an implementation of FATF Special Recommendation IX. Under this regulation, travellers entering or leaving the Community with EUR 10,000 or more in cash must report the amount of cash being carried to the customs authorities.
This reporting requirement is aimed at preventing illegal movements of cash for unlawful purposes such as money laundering and terrorist financing.
The Financial Action Task Force (FATF) was established as an independent anti-money laundering organisation at the 1989 G7 Summit in Paris. Today it has 37 members, including the major financial centres of Europe, North America, South America and Asia.
The goal of the FATF is to establish globally uniform standards for combating money laundering and terrorist financing. Non-member countries are involved in the FATF's work through regional groups, and political pressure is applied to countries with inadequate rules.
In 2008, the FATF's mandate was expanded to include combating the proliferation of weapons of mass destruction.
In 1990, the FATF issued its first report containing a set of 40 Recommendations for combating money laundering. These have been revised regularly and have become established as a recognised international standard. A few weeks after the attacks of 11 September 2001, the FATF's mandate was extended to include combating terrorist financing. Nine Special Recommendations have been issued since that time.
The FATF Recommendations were revised again in 2012 to take the expansion of the FATF's mandate into account to include combating of proliferation financing, merge the Special
Recommendations with the 40 Recommendations and to include important findings from country assessments.
FATF Country Assessments
FATF country assessments are prepared with the assistance of the World Bank and the International Monetary Fund and evaluate compliance with the standards – including in non-member countries.
Austria was examined by the FATF in 2015/2016.
The assessment report was published in September 2016 and is available on the FATF website.
Austria is in Enhanced Follow-up Process. The first Enhanced Follow-up Report was published in December 2017 and is available on the FATF Website.
Publication of statistics according to Article 44 para. 3 of the 4th Anti-Money Laundering Directive
As laid down in Art. 44 para. 3 of the 4th Anti-Money Laundering Directive, Member States shall ensure that a consolidated review of their statistics with regard to their systems to combat money laundering or terrorist financing is published.