Financial Crime World

Austria Falls Short of International Standards for Financial Crimes Reporting

Introduction

In a recent report by the Financial Action Task Force (FATF), Austria has been found to be lacking in its efforts to prevent and combat financial crimes such as money laundering and terrorist financing.

Deficiencies Identified by the FATF

The FATF’s Follow-Up Report (FUR) on Austria’s progress in addressing deficiencies identified in 2017 revealed that the country has made some improvements, but still falls short of meeting international standards. The report was released on December 15, 2017.

  • Risk Assessment and Risk-Based Approach: Austria needs to strengthen its regulatory framework and improve its enforcement efforts to effectively combat financial crimes.
  • National Cooperation and Coordination: The country’s lack of progress in this area raises concerns about the risks posed by money laundering and terrorist financing in the Austrian financial system.
  • Confiscation and Provisional Measures: Austria has been criticized for its lack of transparency and beneficial ownership information, as well as its regulation and supervision of financial institutions.

Areas Requiring Improvement

The FATF identified weaknesses in several key areas, including:

  • Customer Due Diligence (R.10): The country also needs to improve its customer due diligence requirements.
  • Record-Keeping Requirements (R.11): Austria’s record-keeping requirements need to be strengthened to ensure that financial institutions can effectively detect and prevent suspicious transactions.
  • Transparency and Beneficial Ownership Information (R.24 and R.25): The country has been criticized for its lack of transparency and beneficial ownership information, which makes it difficult to identify and track illicit financial flows.
  • Regulation and Supervision of Financial Institutions (R.26): Austria’s powers of supervisors need to be improved to ensure that they can effectively oversee the financial sector and detect potential risks.

Call for Action

The FATF has called on Austria to take immediate action to address these deficiencies and bring its regulations in line with international standards. Failure to do so may result in the country being added to the FATF’s list of countries subject to a call for action.

Response from the Financial Market Authority (FMA)

Austria’s financial crimes regulator, the FMA, has been tasked with implementing the necessary reforms and strengthening its oversight of the financial sector. The FMA has promised to work closely with other government agencies and international partners to address the identified weaknesses and improve Austria’s anti-money laundering and combating terrorist financing regime.

In a statement, the FMA said: “We acknowledge the FATF’s concerns and are committed to taking all necessary measures to strengthen our regulatory framework and improve our enforcement efforts. We will work closely with our international partners to ensure that Austria meets its obligations under the relevant international standards.”

Conclusion

The FATF report highlights the importance of effective regulation and oversight in preventing and combating financial crimes. It also underscores the need for countries to work together to share information and best practices in this area.

As a member of the European Union, Austria is required to implement the EU’s anti-money laundering and combating terrorist financing directives, which set out strict requirements for financial institutions and other sectors to prevent and detect suspicious transactions.

The FATF report will be reviewed by the Austrian government and the FMA in the coming months. The country is expected to provide an update on its progress in addressing the identified weaknesses at a future FATF meeting.