Financial Crime World

Austrian Banks Face Increased Oversight and Regulation

Vienna, Austria - New Regulations Implemented by Financial Market Authority (FMA)

The Austrian financial regulator, Financial Market Authority (FMA), has introduced new regulations to increase oversight and transparency in the country’s banking sector. These changes aim to strengthen the stability and transparency of Austria’s banking sector while protecting depositors and maintaining confidentiality.

Key Requirements

  • Audit Committee: Credit institutions with total assets exceeding €1 billion or those with transferable securities listed on a regulated market must establish an audit committee.
    • The committee will be responsible for:
      • Supervising the audit and issuance of financial statements
      • Internal control systems
      • Audit functions
      • Risk management systems
  • Additional Committees: Banks with total assets exceeding €5 billion must set up three new committees:
    • Nomination Committee
    • Remuneration Committee
    • Risk Committee

Senior Management Requirements

  • Ongoing Training and Assessment of Suitability: Senior management must undergo ongoing training and assessment to ensure their professional suitability.
  • Stricter Evaluation Process: The FMA will apply a stricter evaluation process when evaluating the professional suitability of functionaries, including an oral examination on financial expertise and knowledge of relevant laws and regulations.

Remuneration Policies

  • Encouraging Sustainable Behavior: Credit institutions must adopt remuneration policies that encourage sustainable and long-term behavior among employees.

Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT)

  • Verification of Customer Identity: Austrian banks are required to verify the identity of customers before establishing a business relationship.
  • Implementation of AML/CFT Measures: Banks must implement anti-money laundering and counter-terrorism financing measures in accordance with the Financial Markets Anti-Money Laundering Act.

Depositor Protection

  • Deposit Coverage: Deposits of up to €100,000 per customer are covered in the event of a bank failure.
  • Depositor Protection: The new regulations aim to protect depositors by ensuring that their funds are secure and accessible.

Banking Secrecy

  • Confidentiality Obligation: Section 38 paragraph 1 of the Banking Act (BWG) stipulates the obligation of banks and their employees not to disclose certain information and secrets that have come to their attention based on their relationship with customers.

The new regulations aim to strengthen the stability and transparency of Austria’s banking sector while protecting depositors and maintaining confidentiality.