Financial Crime World

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Austrian Banking Regulations

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Austria has a robust regulatory framework for its banking industry, ensuring that financial institutions operate with transparency and integrity. This comprehensive guide covers key aspects of Austrian banking law, including remuneration policies, anti-money laundering (AML) and know your customer (KYC) requirements, depositor protection, and bank secrecy.

Remuneration

The Financial Market Authority (FMA) regulates remuneration policies and practices for credit institutions in Austria. This is based on the following key points:

  • Section 39 paragraph 2 of the Banking Act (BWG) requires administrative, accounting, and control procedures for identifying, assessing, managing, and monitoring banking business risks, including those related to remuneration policies.

Key Requirements

  • Establish clear and transparent remuneration policies
  • Ensure that remuneration practices align with risk management objectives
  • Implement effective governance and oversight structures

Anti-Money Laundering (AML) / Know Your Customer (KYC)

The Financial Markets Anti-Money Laundering Act (Finanzmarkt-Geldwäschegesetz - FM-GwG) transposes international and European rules for preventing money laundering and terrorist financing into national law. Key requirements include:

  • Credit and financial institutions must perform due diligence on customers, verify their identities, and report suspicious activities to prevent money laundering and terrorist finance
  • Establish effective AML/KYC procedures and policies

Key Requirements

  • Conduct customer due diligence and risk assessments
  • Verify customer identity and documentation
  • Implement reporting mechanisms for suspicious transactions

Depositor Protection

The Act on Deposit Guarantee Schemes and Investor Compensation (ESAEG) implements the Directive on Deposit Guarantee Schemes (Directive 2014/49/EU) and regulates deposit protection. Key requirements include:

  • Credit institutions must belong to a protection scheme, and deposits up to EUR100,000 per customer and bank are covered in case of insolvency

Key Requirements

  • Join a recognized deposit guarantee scheme
  • Comply with minimum capital requirements
  • Implement effective risk management practices

Bank Secrecy

Section 38 paragraph 1 of the BWG obliges banks, their shareholders, corporate bodies, staff, and other persons acting on behalf of the bank not to disclose certain information and secrets that have come to their attention based on their relationship with customers.

Key Requirements

  • Maintain confidentiality in relation to customer information
  • Avoid disclosure of sensitive or confidential information
  • Implement effective data protection practices