Financial Crime World

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Austria Tightens Know Your Customer Rules to Combat Money Laundering and Terrorist Financing

In an effort to prevent the misuse of its financial system for illegal activities, Austria has implemented strict “know your customer” rules to combat money laundering and terrorist financing. The country’s financial institutions are now required to identify clients in various situations, including:

  • When establishing a permanent business relationship
  • Performing transactions above a certain value
  • Depositing or paying out large sums of money

Austria’s financial supervisory law, known as the Financial Markets AML Act, consolidates provisions on the prevention of money laundering and terrorist financing for credit institutions and financial institutions. The act ensures uniform application of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) obligations and facilitates supervision by the Financial Market Authority.

In addition to the Financial Markets AML Act, other laws and regulations in Austria also place emphasis on the “know your customer” principle, which aims to deny money launderers the benefit of anonymity. These include:

  • The Austrian Trade Act
  • Gambling Act
  • Codes of Professional Conduct for Attorneys at Law
  • Notaries Act

Identification Requirements

To identify clients, financial institutions must use official photo ID. If the client is a minor or legal entity, proof of the representative’s identity, power of representation, and identity of the person or entity being represented must also be provided. In trust relationships, the identity of the trustor must be disclosed.

Suspicion Reporting

If suspicions arise about money laundering or terrorist financing, financial institutions must report such cases to the money laundering unit of the Austrian Federal Ministry of the Interior.

EU Directives and Regulations

Austria is a member of the European Union and has implemented EU directives and regulations aimed at combating money laundering and terrorist financing. These include:

  • The 4th Anti-Money Laundering Directive, which requires Member States to ensure that a consolidated review of their statistics with regard to their systems to combat money laundering or terrorist financing is published.

FATF Country Assessments

Austria was examined by the Financial Action Task Force (FATF) in 2015/2016 and was found to be in Enhanced Follow-up Process. The country has since carried out a National Risk Assessment 2021, which identifies risks to its financial sectors and aims to enable authorities and obliged entities to take effective preventive action.

The FATF’s recommendations have been revised regularly and have become an established international standard 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.