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 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.
Austria does not have a separate money laundering act, but instead has legal provisions in a number of different statutes. Since the financial sector is naturally the most susceptible area, the Austrian Banking Act (BWG), Insurance Supervision Act (VAG) and Securities Supervision Act (WAG) include provisions on money laundering and terrorist financing. 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 (typically 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.
An EU directive cannot be applied directly, but must first be transposed into national law.
Transposition of the 3rd Money Laundering Directive was performed in Austria in 2007 in the Austrian Ministry of Finance by amendments to the Austrian Banking Act (BWG), Stock Exchange Act (BörseG), Insurance Supervision Act (VAG) and Securities Supervision Act (WAG).
The 3rd Money Laundering Directive is currently being revised. The 4th Money Laundering Directive is expected to be approved in 2013 and subsequently transposed into national law.
As a rule, EU regulations can be applied directly.
Regulation no. 1781/2006 on payer information requires that every transfer of funds be accompanied by complete client information (name, address and account number). The objective is to permit all transfers to be tracked. (Exemptions can be made for typical small donations)
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 36 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 work of the FATF through regional groups, and political pressure is applied to countries with inadequate rules.
In 2008, the mandate of the FATF 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 mandate of the FATF 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 into account expansion of the FATF mandate to include combating of proliferation financing, merge the Special
Recommendations with the 40 Recommendations and include important findings from 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 Setpember 2016 and is available on the FATF website.