Financial Crime World

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Guidelines for Credit Institutions: A Comprehensive Overview

Credit institutions in Austria are subject to a comprehensive set of organisational requirements that depend on the type of business activities envisioned by the entity. The management board must define and oversee internal principles of proper business management (“fit and proper”) and ensure the requisite level of care when managing the institution.

Registration and Oversight of Senior Management

Credit institutions are required to ensure the suitability of their managing directors, supervisory board members, and holders of key functions on an ongoing basis. This includes:

  • Providing ongoing training for governing bodies and employees
  • Undergoing a rigorous assessment process, including fit and proper hearings

Remuneration Requirements

The remuneration policies and practices of credit institutions licensed in Austria are governed by:

  • Sections 39/2 and 39b of the Banking Act (BWG)
  • The Annex to Section 39b
  • Guidelines issued by the European Banking Authority (EBA)

The Financial Market Authority (FMA) must take these regulations into account when overseeing remuneration practices.

Anti-Money Laundering/Know-Your-Customer Requirements

The Financial Markets Anti-Money Laundering Act (FM-GwG) sets out special due diligence requirements for credit institutions. These include:

  • Verifying the identity of customers before establishing a business relationship
  • Conducting ongoing monitoring and reporting of suspicious transactions

Depositor Protection

The Act on Deposit Guarantee Schemes and Investor Compensation (ESAEG) regulates the protection of deposits and credit balances, including interest on accounts and savings. The objective is to ensure:

  • Rapid and comprehensive compensation of depositors’ claims in the event of a guarantee
  • Transparency and accountability in the management of deposit guarantee schemes

Bank Secrecy

Section 38 paragraph 1 of the BWG stipulates the obligation of banks not to disclose certain information and secrets that have come to their attention based on their relationship with customers. This includes:

  • Circumstances where disclosure or exploitation is likely to violate a legitimate interest of the customer

Conclusion

Credit institutions in Austria are subject to a range of regulations and guidelines aimed at ensuring the stability and integrity of the financial system. By understanding these requirements, credit institutions can ensure compliance and maintain the trust of their customers.