Fraudulent Activities on the Rise: Austrian Law Provides Limited Defenses
Austria’s financial landscape is plagued by fraud and money laundering, prompting authorities to crack down on those responsible. While some individuals may think they have found ways to avoid prosecution, a closer look at Austrian law reveals limited defenses available.
Money Laundering Defense
According to Section 165a of the Criminal Code, an individual is not liable for money laundering if:
- They voluntarily disclose their involvement or facilitate asset seizure before authorities become aware of their culpability.
- Assets are seized without their contribution and they genuinely attempt to enable seizure.
Fraud Within Families
Section 166 provides a defense for fraud committed within family relationships. If an individual defrauds a:
- Spouse
- Registered partner
- Lineal descendant
- Sibling
- Relative with whom they share a household
The maximum penalty is up to three months imprisonment and/or a fine not exceeding 180 penalty units. However, this defense does not apply to:
- Guardians
- Trustees
- Custodians who act to the detriment of those for whom they are responsible.
No Special Defense for Financing Terrorism
Unlike money laundering and fraud, there is no specific defense available for financing terrorism.
Diversion Options
Depending on the severity of the offense, defendants may be eligible for diversion programs. These programs allow individuals to avoid criminal prosecution in exchange for completing specific requirements or undergoing treatment.
Company Liability
Companies can face liability for the actions of their employees and decision-makers. To mitigate this risk, companies are advised to implement internal compliance systems that ensure adherence to:
- Anti-money laundering regulations
- Terrorism financing regulations
- Fraud regulations
Customer and Business Partner Due Diligence
Austria requires companies to conduct thorough due diligence on new business partners, including:
- Identifying the beneficial owner
- Documenting their identity
- Ongoing monitoring to detect potential money laundering or terrorist financing activities.
Private Enforcement
Victims of fraudulent activities can file private actions for damages in civil court. In some cases, they may join criminal proceedings as a private party, seeking compensation for their losses. The criminal court may award damages if the necessary evidence can be gathered without delaying the proceeding.
Damages Calculation
To calculate damages, courts establish:
- Causality
- Compare the victim’s financial situation before and after the event
- The burden of proof rests with the victim
Other Remedies
Successful claimants may also receive:
- Declaratory judgments holding the opponent liable in principle
- Cease and desist orders
- Orders to publish the judgment if unfair competition laws have been violated
As Austria continues to combat fraud and money laundering, individuals and companies must be aware of their legal obligations and potential consequences for non-compliance.