Financial Crime World

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Austria Makes Progress in Fighting Money Laundering and Terrorism Financing

December 15, 2016 - The Financial Action Task Force (FATF) has assessed Austria’s efforts in combating money laundering and terrorism financing, and while the country still faces some challenges, significant progress has been made.

Challenges Remain

Austria was placed under the FATF’s enhanced follow-up process due to concerns over its ability to effectively combat money laundering and terrorist financing. However, an assessment by the International Monetary Fund (IMF) concluded that the country has made progress in addressing most of the technical deficiencies identified in 2016.

Strengths and Weaknesses

The report noted that Austria has a strong legal and institutional framework for combating money laundering and terrorist financing, with improvements required in:

  • National AML/CFT policy coordination
  • Risk assessments
  • Targeted financial sanctions

On the other hand, Austria was found to have achieved substantial results in:

  • Investigating and prosecuting persons financing terrorism
  • Implementing targeted financial sanctions related to proliferation financing
  • International cooperation

However, fundamental improvements are needed in:

  • The collection and use of financial intelligence
  • Investigation and prosecution of money laundering

Progress Made

The FATF has recognized some improvements in technical compliance and upgraded several recommendations since 2016. Austria’s first enhanced follow-up report was adopted in December 2017, which analyzed progress in addressing certain technical compliance deficiencies. The country received a total of 12 upgrades where sufficient progress had been made.

Recent Developments

Austria has taken steps to strengthen its AML/CFT framework, including:

  • Amending the Financial Market Anti-Money Laundering Act (FM-AML Act) in 2018 and again in July 2019 to transpose the obligations from the Fourth and Fifth Anti-Money Laundering Directives
  • Enhancing its sanctioning regime for violations of AML/CFT rules, with fines now reaching up to EUR 5 million for individuals and legal entities

Key Developments

Some key developments highlighted in the report include:

  • The inclusion of Virtual Asset Service Providers (VASPs) in the list of obliged entities, subject to the same AML/CFT requirements as credit institutions and financial institutions
  • The FM-AML Act introduced definitions for virtual currencies and VASPs, going beyond the Fifth Anti-Money Laundering Directive

Conclusion

While Austria still faces challenges in combating money laundering and terrorist financing, significant progress has been made in recent years. The country’s efforts to strengthen its AML/CFT framework and enhance cooperation with international partners are welcome steps towards improving its effectiveness in this area.

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