Austria’s Know Your Customer: Ensuring Anti-Money Laundering Compliance
Introduction
The Financial Market Authority (FMA) plays a vital role in regulating anti-money laundering (AML) and combating terrorist financing in Austria. The country’s financial market anti-money laundering act, FM-GwG, has been in force since January 1, 2017, and is heavily influenced by European legislation.
Know Your Customer (KYC)
Under the FM-GwG, obliged companies are required to conduct due diligence on their customers, a process known as know your customer (KYC). This involves verifying the identity, suitability, and risks associated with maintaining a business relationship. The FMA is responsible for ensuring compliance with these regulations.
KYC Process
The KYC process typically begins before establishing a business relationship, and obliged companies must obtain specific personal details from their customers. For natural persons, this includes:
- First name(s)
- Last name
- Date of birth
- Nationality
- Residential address
In the case of legal entities or partnerships, companies must provide:
- Company name
- Legal form
- Registration number
- Registered office or principal place of business
- Names of members or legal representatives
Outsourcing Customer Due Diligence
It is possible to outsource customer due diligence to a third party who is also obliged by law to comply with AML regulations. However, the responsible party remains liable for fulfilling general due diligence obligations.
Additionally, it is possible to contract with a third party that is not obliged by law to meet AML regulations, such as WebID or IDnow.
Third-Party Contractors
When outsourcing customer due diligence, the contractual third party must meet AML regulations and ensure reliability. The actions of these third parties are attributed to the responsible party as its own actions.
Entities that can be relied on specifically by law to comply with AML regulations include:
- Credit institutions
- Financial institutions
- Auditors
- External accountants
- Tax advisors
- Notaries
- Independent legal professionals
- Trust or company service providers
- Estate agents
- Providers of gambling services
Compliance Requirements
In Austria, there is no need for the outsourcing company to acquire a license. However, it is essential for obliged companies to ensure that their third-party contractors meet AML regulations to avoid any potential legal consequences.
Staying Informed
As AML regulations continue to evolve in Austria, it is crucial for financial institutions and other obliged parties to stay informed about the latest requirements and best practices to maintain compliance. Failure to comply with these regulations can result in severe penalties and damage to reputation.
Conclusion
In conclusion, Austria’s Know Your Customer (KYC) process is a critical component of anti-money laundering (AML) compliance. Obliged companies must ensure that they conduct thorough due diligence on their customers, including verifying identity, suitability, and risks associated with maintaining a business relationship. By understanding the requirements and best practices for outsourcing customer due diligence, financial institutions can maintain compliance and avoid potential legal consequences.