Financial Crime World

Here’s the article formatted in markdown:

Austria Tightens KYC Guidelines for Financial Institutions

The Austrian financial market is strengthening its anti-money laundering (AML) regulations by focusing on “know your customer” (KYC) requirements. The Financial Market Authority (FMA) has introduced new guidelines for financial institutions to verify the identity and suitability of customers.

National Regulatory Framework

Overview of FM-GwG

The regulatory framework in Austria is governed by the Financial Market Anti-Money Laundering Act (FM-GwG), which came into force on January 1, 2017. This act combines provisions from the European Union’s Fourth and Fifth Money Laundering Directives to provide a clear legal basis for supervisory activities.

Key Provisions

  • Combines EU directives to establish a comprehensive regulatory framework
  • Provides a clear legal basis for supervisory activities
  • Ensures consistency with international AML standards

KYC Requirements

Identifying Customers

Financial institutions in Austria are required to identify customers before establishing a business relationship. This includes obtaining personal details such as:

  • Name
  • Date of birth
  • Nationality
  • Residential address

For legal entities or partnerships, institutions must obtain company information, including:

  • Registration number
  • Address of the registered office

Customer Due Diligence

Obligations and Responsibilities

Financial institutions are responsible for fulfilling general due diligence obligations. Customer due diligence can be outsourced to third parties who are themselves subject to AML regulations.

However, the responsible party remains liable for fulfilling general due diligence obligations. Institutions may also rely on contractual third parties that meet AML requirements, but must ensure their reliability and attribution of actions.

Outsourcing Customer Due Diligence

Contractual Third Parties

Financial institutions can outsource customer due diligence to third parties who are not obliged by law to meet AML regulations, such as WebID or IDnow. However, the contractual third party must still meet AML requirements, and the institution must ensure their reliability.

License Requirements

No Need for Licensing

There is no need for outsourcing companies to acquire a license in Austria. Entities that can be relied upon specifically by law as third parties to comply with AML regulations include:

  • Credit institutions
  • Financial institutions
  • Auditors
  • Notaries
  • Independent legal professionals