## _cr09298 ## Source details **Canonical URL:** [_cr09298](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09298.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09298.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09298.pdf.json) --- ### Preface and Executive Summary — scope and mission - Assessment based on the FATF 40 Recommendations 2003 and the 9 Special Recommendations 2001; AML/CFT assessment Methodology 2004, updated February 2008. - On-site mission: September 15–30, 2008. Assessment team: Alain Védrenne-Lacombe (LEG, team leader); Nadine Schwarz; Giuseppe Lombardo; Emmanuel Mathias (LEG); Helen Hatton (LEG expert). - Deliverables: summary of AML/CFT measures in Austria at mission time; levels of compliance with the FATF 40+9 Recommendations (see Table 1); recommendations to strengthen the system (see Table 2). - Executive Summary key findings (selection): - Austria’s crime level among lowest in EU Member States; exposure to ML/FT risks considered limited but transit/destination risks exist due to geography, banking secrecy tradition, tax regime. - Comprehensive AML/CFT system designed and being implemented; transposition of Third EU ML Directive expanded coverage (effective January 1, 2008) but some provisions require closer alignment with FATF and time for full implementation. - Concerns: small number of ML convictions, low legal penalties, low amounts of proceeds confiscated; FT provisions not fully covering FATF range; A-FIU operates as law enforcement unit without FIU analysis/dissemination functions. - Supervisory bodies (FMA, OeNB) generally sound but need stronger licensing, sanction regimes and resources. ### Legal system and institutional measures — criminalization, confiscation, FT - Money laundering (Article 165 StGB): - ML established 1993; three conduct types in Article 165 (paras. 1, 2 and 5); offence extends to any type of property regardless of value (Article 165 para. 4). - Predicate offences: all “crimes” (punishable by life or > three years, Article 17 para. 1 StGB) and list of designated misdemeanors; counterfeiting and piracy of products excluded from Article 165 list. - Self-laundering: Article 165 limits ML to assets “that derive from the crime of another person”; self-laundering is not criminalized; assessors concluded non-criminalization not established as a fundamental principle per FATF. - Mens rea: “intentionally” and “knowingly” standards; dolus eventualis included; intent may be inferred via free evaluation of evidence. - Liability of legal persons: - VbVG (in force January 1, 2006) provides general criminal liability for legal persons for all penal offences; fines use daily-rate system; calculated minimum and maximum fines for ML by a legal person: Minimum fine EUR 3,500; Maximum fine EUR 1,000,000; maximum daily rate EUR 10,000; minimum daily rate EUR 50. - Sanctions for natural persons (Article 165): - Basic ML (paras. 1 & 2): maximum two years imprisonment or fine up to 360 daily rates. - Aggravated: six months to five years if assets exceed EUR 50,000 or as member of continuous ML group. - ML on behalf/interest of criminal organisation/terrorist group: imprisonment up to three years; if assets > EUR 50,000 penalty six months to five years. - Confiscation and provisional measures: - Confiscation of profits (Article 20 StGB), forfeiture (Article 20b StGB), confiscation of instrumentalities (Article 26 StGB); Article 20b may apply without conviction but requires proof of “criminal organization” or “terrorist group”; Article 65a StGB: confiscation/forfeiture apply to all property items in Austria. - Seizure (StPO Articles 109–110) and sequestration (StPO Article 115); A-FIU can order blocking/postponing under Article 41 BWG; blocking order expires after 6 months (Article 41 para. 3a BWG). - Forfeiture of property at disposal of criminal organisations rarely applied; conferring effectiveness issues due to restrictive access to information and proving criminal organisation elements. - Financing of terrorism (Article 278d StGB): - FT criminalized 2002; natural persons: prison term six months to five years; legal persons: maximum fine EUR 1,000,000 (Article 4 VbVG). - Gaps: Article 278d does not fully cover financing of terrorist organizations and individuals regardless of use of funds, nor fully cover organization/direction where group’s sole purpose is FT; SR.II rated PC. - Ratings summary (selected): - R.1 — LC (ML criminalization effectiveness concerns; self-laundering not criminalized; counterfeiting/piracy not predicate). - R.2 — LC (sanctions too lenient for natural and legal persons). - R.3 — PC (strict conditions for access to banking records, legal privilege hinder tracing/confiscation). - SR.II — PC; SR.III — PC (freezing of assets other than funds and OeNB Regs limited); SR.IV — LC (reporting technical issues). ### Preventive measures — financial institutions (CDD, PEPs, wire transfers, supervision) - Legal transposition and timing: - Third EU ML Directive transposed; major AML/CFT revisions effective January 1, 2008; some operational circulars pending; risk-based approach introduced modeled on EU Directive. - Scope and definitions: - BWG defines “credit institutions” and “financial institutions” (Article 1 paras. 1–2); BWG lists banking activities (detailed Article 1 enumerations preserved in source). - AML/CFT measures apply to persons conducting FATF-defined “financial institution” activities; money remitters/exchange bureaus included as credit institutions under BWG. - Customer Due Diligence (Article 40 BWG and equivalents VAG/WAG): - CDD required before permanent business relationship; for occasional transactions ≥ EUR 15,000; for deposits/withdrawals from savings ≥ EUR 15,000; on suspicion of ML/FT; when doubts on ID data. - Beneficial owner definition preserved verbatim (includes 25 percent plus one share threshold). - Records/transaction documentation: retain identification documents and transaction records at least five years after termination (Article 40 para. 3 BWG; Article 98g VAG). - Simplified and exemptions (Article 40a BWG and Article 98c VAG): - Exemptions allowed for specified credit/financial institutions, listed companies, domestic authorities, certain public bodies, electronic money limits, fiduciary account derogations for attorneys/notaries under conditions; authorities stated law creates exemptions rather than risk-based simplification, raising FATF concerns. - Fiduciary accounts exception: trustee declaration, annual client lists within two months after year-end, trustor not domiciled in “noncooperative country,” and no suspicion; exemptions apply pre-January 1, 2008 fiduciary practices. - Enhanced due diligence (Article 40b BWG / 98d VAG): - Required for non-face-to-face business, cross-border correspondent banking with non-EEA banks, PEPs (foreign PEPs subject to enhanced measures), and other higher-risk situations; senior management approval for PEPs and obligation to establish source of wealth/funds and enhanced monitoring. - Domestic PEPs not automatically subject to enhanced measures (time-limited one year after end of functions). - Wire transfers (Regulation (EC) No. 1781/2006 implemented): - SR.VII implemented; originator information rules apply (name, account number, address); R.10 and SR.VII rated C. - Supervisory framework: - FMA is integrated regulator; since January 2008 OeNB conducts offsite/offsite bank exams; OeNB enforces financial sanctions under DevG in payments. - Onsite AML/CFT examinations limited: AML/CFT focused OeNB missions ~11 in 2008; total credit institutions 871 with assets EUR billion 899 (Key table: Credit Institutions Number 871; Assets (EUR billion) 899). - Supervisory shortcomings: limited resources, reliance on external auditors, sanction regime not proportionate/dissuasive; recommendations to strengthen fit & proper testing, sanction scope, and supervisory resources. - Key statistics & sector figures (exact preserves): - Banking sector contribution to value added: 5.4 percent in 2005. - Aggregated balance sheet foreign nonbank deposits ratio: 17 percent in 2007; 14 percent in 2005. - Credit Institutions detailed (Dec 31, 2007): - Joint Stock and Private Banks: Number 51; Assets (EUR b) 251 - Savings Banks (Sparkassen): Number 56; Assets (EUR b) 150 - Rural Credit Cooperatives (Raiffeisenbanken): Number 558; Assets (EUR b) 222 - Industrial Credit Cooperatives (Volksbanken): Number 70; Assets (EUR b) 69 - Mortgage Banks (Landeshypothekenbanken): Number 11; Assets (EUR b) 88 - Building Societies (Bausparkassen): Number 4; Assets (EUR b) 21 - Special banks (Sonderbanken): Number 96; Assets (EUR b) 87 - Investment Fund Management Companies: Number 29; Assets (EUR b) 166 (AUM) - Exchange Offices: Number 12; Assets Na - EEA Branch offices: Number 25; Assets (EUR b) 11 - Total: Number 871; Assets (EUR b) 899 - Debit cards 6.9 million (2005); Credit cards 1.1 million (2005). - Compliance ratings (selected): - R.5 — PC (exemptions and gaps re: fiduciary accounts, savings documents, third-country EEA presumptions). - R.6 — LC (PEP measures limited to at-establishment; effectiveness unestablished). - R.7 — LC (correspondent banking measures not applied to EEA in practice). - R.8 — LC (no explicit requirements to prevent misuse of technological developments). ### Financial Intelligence Unit (A-FIU) — reception, analysis, dissemination and STRs - A-FIU placement and functions: - A-FIU is unit 3.4.2 within the Federal Criminal Police Department (BKA); receives STRs and conducts criminal investigations; FT STRs forwarded to BVT; A-FIU does not perform independent FIU analysis/dissemination functions. - A-FIU acts as national centre de facto for STR reception but lacks explicit FIU analytical/dissemination mandate; R.26 rated PC. - STR volumes (exact figures preserved): - Statistical Table 19 — STRs Received by A-FIU: - 2004: ML-Related STRs 373; FT-Related STRs 12; Reports on Anonymous Savings Accounts 1,206 - 2005: ML-Related STRs 467; FT-Related STRs 19; Reports on Anonymous Savings Accounts 1,009 - 2006: ML-Related STRs 692; FT-Related STRs 15; Reports on Anonymous Savings Accounts 1,174 - 2007: ML-Related STRs 1,085; FT-Related STRs 23; Reports on Anonymous Savings Accounts 514 - Statistical Table 20 — ML-Related STRs breakdown by reporter (2007 totals preserved): - Financial institutions 1,045; Banks 1,039; Insurance 6; DNFBPs 13; Casinos 1; Lawyers 1; Notaries 3; Accountants 1; Real Estate Agents 1; Dealers 4; TCSPs 2; Austrian administrations 27; Ministry of Finance 21; FMA 5; Customs 1. - 2007 total information received: 2,247 information including 1,599 reports from professions; of those 1,085 recorded as “STRs”, 197 related to 419 letters/phishing emails not meeting STR definition. - Investigation practice and protection issues: - STR treated as criminal complaints; investigations opened upon STR reception; criminal procedure may disclose reporting person name to defendants when proceedings start, potentially reducing reporting; joint action plan November 2008 to better protect anonymity; MoJ ordinance November 11, 2008 gives guidelines on protection. - A-FIU staff (Money Laundering Unit): head, one secretary and three teams (total of 10 detectives; footnote: 11 detectives as of March 1, 2009). - A-FIU sent/received 383 cases via Egmont secure web in 2007 (Statistical Table 34). - Operational limitations and recommendations: - A-FIU dual role (reception + investigation) constrains ability to perform strategic analysis/typologies and provide routine dissemination/feedback; recommended to create an FIU with analysis/dissemination mandate and empower it to request information pre-investigation. - R.26 rating: PC due to lack of national-centre analytical/dissemination functions. ### Suspicious Transaction Reporting — law and DNFBPs - Reporting legal basis (sectoral laws): - BWG Article 41; VAG Article 98f; WAG Articles 6 & 12 para. 4; BörseG Article 25 para. 5; GewO Article 365u(1). - Reporting scope and thresholds: - Obligation triggered by suspicion that transaction “serves the purpose of ML” (Article 165 StGB) or FT (Article 278d StGB) — assessors note reporting definition narrower than “proceeds of crime” standard and self-laundering excluded. - Reporting applies irrespective of thresholds and includes attempted transactions where explicitly stated. - STR levels and DNFBP reporting (exact numbers preserved): - DNFBP STRs (Statistical Table 30 totals): - Casinos: 2004 2; 2005 1; 2006 0; 2007 1 - Lawyers: 2004 1; 2005 4; 2006 4; 2007 1 - Notaries: 2004 2; 2005 3; 2006 2; 2007 3 - Accountants: 2004 0; 2005 0; 2006 1; 2007 1 - Real Estate Agents: 2004 0; 2005 1; 2006 0; 2007 1 - Dealers: 2004 3; 2005 1; 2006 3; 2007 4 - TCSPs: 2004 0; 2005 2; 2006 2; 2007 2 - Total DNFBP STRs: 2004 8; 2005 12; 2006 12; 2007 13 - Assessors’ ratings: - R.13 — PC (reporting requirement limited to transactions serving purpose of ML; counterfeiting/piracy not required as predicate; GewO professions not required to report self-laundering). - R.14 — LC (reporter protection broadly in place but insurance intermediaries protections differ; possibility of referring customer to police may constitute indirect tipping-off). - R.16 — PC for DNFBPs overall (scope too narrow; effectiveness low; legal privilege and reporting gaps). ### Designated Non-Financial Businesses and Professions (DNFBPs) — coverage, supervision, gaps - Coverage: - All FATF DNFBPs covered by AML/CFT laws/regulations: Casinos (GSpG), Real estate agents, Dealers in precious stones/metals, TCSPs (GewO), Lawyers (RAO), Notaries (NO), Accountants (WT-ARL, BiBu-ARL). - Casinos: - GSpG monopoly; 12 casinos (CASAG) and 1 internet casino (ÖLG); betting volume and gaming revenues: Casinos 12 | Gaming Revenue (2007, EUR m.) 194 | Betting Volume (2007, EUR m.) 4.215; Internet Casinos 1 | Gaming Revenue (2007, EUR m.) 35. - Electronic lotteries allowed as internet casinos; internet casino CDD/guidance gaps identified; MoF supervisory powers exist but internet casino AML/CFT legal coverage weak. - DNFBP shortcomings & recommendations (selection): - Expand and tailor preventive measures; define CDD for all casinos incl. internet casinos; remove legal ambiguities for notaries/lawyers/accountants; extend enhanced monitoring to DNFBPs; strengthen supervision, resources and sanctions for DNFBPs; address professional secrecy limiting reporting. - Supervision and sanctions: - Supervisory split: MoF for casinos; local district authorities (Bezirksverwaltungsbehörden) for many GewO professions; Bar Association, Chamber of Civil Law Notaries, Chamber of Chartered Public Accountants and Tax Consultants, Parity Commission oversee respective professions. - Trade authority visits: approx. 100 visits since 2002 (91 in Vienna); few sanctions imposed; resource and expertise gaps noted. - Compliance ratings for DNFBPs (selected): - R.12 — PC (CDD requirements shortcomings and implementation issues across DNFBPs). - R.24 — PC and R.25 — LC (supervisory gaps and lack of tailored guidance and monitoring resources). ### Legal persons, arrangements, trusts, Treuhand, and NPOs — transparency & registration - Legal persons: - Central Commercial Register (Firmenbuchgericht) records legal persons; registration accessible online; associations listed in Central Register of Associations (ZVR). - Private foundations (Privatstiftung): founding deed registered; beneficiaries may be in non-public appendix to founding deed — access to beneficial ownership hindered. - Any subsequent changes to a shareholder’s identity must be registered in the Commercial Register for limited liability companies and joint-stock companies with a single shareholder; no requirement to register changes for joint-stock companies with multiple shareholders or bearer shares. - Bearer shares: possible to issue up to 100% bearer shares in joint-stock companies; de-facto dematerialisation in capital markets; bearer shares impede ascertainment of beneficial ownership. - Treuhand: - Civil contract widely used; partial registration limited to funds held by lawyers/notaries above thresholds; no register for Treuhand generally; very common in economy; transparency gaps for non-lawyer Treuhänders and assets other than funds. - Trusts: - Foreign trusts may be administered from Austria; no measures ensuring transparency of foreign trusts in Austria; no register. - NPOs: - 111,282 associations in ZVR as of Dec 31, 2007; estimated 95 percent of NPOs are associations. - Gaps: private foundations not required to make ownership/control information publicly available; insufficient NPO-specific transaction record requirements and outreach; SR.VIII rated PC. - Assessors’ R.33 & R.34 ratings: - R.33 — PC (insufficient capacity to ascertain beneficial ownership due to bearer shares, private foundation appendices, registration gaps). - R.34 — PC (no transparency for Treuhand/assets other than funds; no oversight for foreign trusts; limited TSP oversight). ### Cross-border cash controls (SR.IX) and Customs - EC Regulation 1889/2005 applied; declaration threshold EUR 10,000. - Statistical Table 23 Cash Control Austria (selected period sums preserved): - Period 15.06.2007-30.09.2007 | Declarations 494 | Total Sum (EUR) 918,301,298 - Period 01.10.2007-31.12.2007 | Declarations 461 | Total Sum (EUR) 1,155,292,204.58 - Period 01.01.2008-31.03.2008 | Declarations 627 | Total Sum (EUR) 810,960,980 - Oral Declarations: 3 | 5 | 7 across first three periods respectively. - Non Declared: 0 | 2 | 7; Sum (Non Declared) (EUR): 659,219 | 453,686 | 26,500. - Gaps: - Exemptions for municipalities Jungholz and Mittelberg from declaration/disclosure obligations — SR.IX rated PC; Jungholz anecdote: >15,000 bank accounts for 300 inhabitants cited as risk. - No central computerized database at evaluation time; plans to create database pending Data Protection Commission registration. - Customs seizure authority (ZollR-DG Article 17c); seizures reported rarely; interim injunctions applied by A-FIU increased: Injunctions number 2007 28; Amounts involved — Accounts Deposits (EUR million): 113.9 (Statistical Table 15 preserved). ### National and international cooperation, MLA, extradition, asset sharing - Domestic cooperation: - Financial Market Committee (FMC) chaired by MoF; quarterly; operational coordination via monthly MoF/FMA Jour Fixe, quarterly AML/CFT Task Force (MoF, FMA, BVT, A-FIU, OeNB, MoJ). - R.31 rated C (domestic coordination observed). - Mutual Legal Assistance & extradition: - Central authority: Department for International Criminal Cases, MoJ; ARHG governs MLA/extradition. - Shortcomings: strict banking secrecy/judicial admission (StPO Article 116) and broad legal privilege slow access to bank records and documents — R.36 rated PC; R.38 rated PC. - Extradition: Austrian nationals cannot be extradited (Article 12 ARHG) — practice to prosecute domestically; average surrender times (2006 EU EAW data): surrendered 183 persons; 20 EAWs refused; surrender durations: 23 days (consented), 47 days (non-consent); extradition averages 63 days when person held in custody. - International FIU cooperation: - A-FIU member of Egmont Group since 2004; ESW traffic: total 2007 383 (received+sent); Table 34 and Table 35 detail country breakdowns. - A-FIU not legally empowered to exchange FT-related information (BVT handles FT) — SR.V rated NC for FT exchange capability. - Asset freezing, confiscation and SR.III: - EU Regulations 881/2002 and 2580/2001 directly applicable; difficulties freezing assets other than funds (real estate, companies, vehicles); OeNB Official Announcements used for EU-internals but limited scope; SR.III rated PC. - No funds frozen pursuant to UNSCRs 1267/1373 at time of assessment; one case (USD 4,083.87) related to 1267 listed account described. - Recommendations on international cooperation: - Soften Article 116 StPO judicial admission conditions; conclude arrangements for coordinating seizure/confiscation with other countries; consider asset sharing beyond EU/US; increase resources for A-FIU to respond to foreign FIUs; empower A-FIU for FT exchanges. ### Statistics, effectiveness and enforcement indicators (selected) - ML convictions (official/public statistics vs A-FIU counts): - Official ML convictions low: Statistics Austria: only three convictions for ML pronounced in 2005. - A-FIU “effective number of convictions” (based on ML charges underlying a conviction): 12 (2003); 10 (2004); 5 (2005); 10 (2006); 18 (2007). - ML cases and confiscation statistics (selected preserved figures): - Statistical Table 9 — ML Cases: 2003 ML cases total 29; ML investigations 17; ML prosecutions 12; ML Convictions 7 (as published). 2006 ML cases total 75; ML investigations 61; ML prosecutions 14; ML Convictions 3 (published). - Statistical Table 14 — ML Offenses (Article 165 StGB) — amounts seized/confiscated: - 2003 amounts seized/confiscated: EUR 554.212,61 + USD 110,000 - 2004 amounts seized/confiscated: EUR 15,334,347 - 2005 amounts seized/confiscated: 0 - 2006 amounts seized/confiscated: EUR 3,955,000 - Statistical Table 15 — Interim injunctions by court order applied for by the A-FIU: - 2004 Injunctions 23; Amounts involved — Accounts Deposits (EUR million) 27.9 - 2005 Injunctions 15; Amounts 99.2 - 2006 Injunctions 21; Amounts 28 - 2007 Injunctions 28; Amounts 113.9; Cash 2006: 0.2 (EUR million); Cash 2007: 2.3 (EUR million) - FT criminal cases: - 2003–2006: 18 FT-related criminal cases registered; none led to indictment; 16 dismissed; 2007 four new FT cases (two criminal investigations by public prosecutors; two preliminary investigations); no convictions for FT through 2007. ### Key cross-cutting recommendations (selected, exact phrasing preserved where numeric) - Criminal law and sanctions: - Criminalize self-laundering. - Make counterfeiting and piracy of products predicate offences to ML. - Increase penalties for natural persons under Article 165 and minimum sanctions for legal persons. - Extend criminalization of FT to cover financing of terrorist organisations and individual terrorists regardless of use of funds. - FIU and STRs: - Review legal framework to clearly establish a Financial Intelligence Unit serving as national centre for receiving, analyzing and disseminating disclosures of STRs and other relevant information concerning suspected ML or FT activities. - Empower this FIU to analyze STRs prior to any police/criminal investigation, with access to financial, administrative and law enforcement information and authority to obtain additional information from reporting parties. - Banking secrecy and access: - Soften requirements in Article 116 StPO for law enforcement access to banking information; ease conditions for accessing information held by financial institutions and by lawyers and notaries. - Freezing/confiscation and UNSCR implementation: - Set up procedures ensuring freezing without delay of assets other than funds (immovable goods, companies, businesses, vehicles). - Modify OeNB regulations adopted pursuant to the DevG to make possible freezing of funds/assets held by EU-internals in instances set forth by UNSCR 1373 and SR.III. - Provide more guidance to private sector, especially non-banking financial industry and DNFBPs, on freezing obligations. - DNFBP and supervisory measures: - Expand CDD/monitoring/supervision for casinos (including internet casinos), real estate agents, dealers, TCSPs, lawyers, notaries, accountants; issue tailored guidelines; strengthen sanctions and supervisory resources. - Subject transportation of cash into/out of Jungholz and Mittelberg to declaration/disclosure obligations; develop computerized database for declarations and use it to build intelligence to target cash couriers. - Require that holders of savings documents for savings deposit accounts with balance < EUR 15,000 and not registered in customer’s name be considered beneficial owners and subject to ID/verification obligations; remove blanket exemption for fiduciary accounts < EUR 15,000. - International cooperation & MLA/extradition: - Ensure MLA is granted timely and that secrecy/professional privilege do not impede effective cooperation; conclude arrangements for coordinating seizure/confiscation with other countries; consider asset sharing beyond EU/US. - Supervision resourcing and guidance: - Provide resources, training and support to supervisory divisions (FMA, OeNB, local district authorities) to step up AML/CFT oversight; issue supervisory guidance and circulars to industry; expand onsite AML/CFT examinations. - NPO sector: - Require private foundations to make identity of persons who own, control or direct activities publicly available; strengthen NPO record-keeping for domestic and international transactions; strengthen outreach. *Italic: Source: IMF staff report — _cr09298 (Preface, Executive Summary and selected chapters/extracts) — IMF PDF* ### Preface ................................................................................................................ ### _cr09298 - Preface ### Document scope and structure - Preface (page 9) - Executive Summary (page 10) - Main report organized in 7 numbered chapters (1 to 7) with detailed sub-sections and compliance assessments. - Two tables sections: "Tables" and "Statistical Tables" with numbered tables and titles. - Two annexes: - Annex 1. Authorities’ Response to the Assessment (page 300) - Annex 2. Details of All Bodies Met During the On-Site Visit (page 301) ### Chapter-level themes and major subtopics - Chapter 1 — General - 1.1 General Information on Austria (page 16) - 1.2 General Situation of Money Laundering and Financing of Terrorism (page 19) - 1.3 Overview of the Financial Sector and DNFBP (page 21) - 1.4 Overview of commercial laws and mechanisms governing legal persons and arrangements (page 30) - 1.5 Overview of the Strategy to Prevent Money Laundering and Financing of Terrorism (page 31) - Chapter 2 — Legal System and Related Institutional Measures - 2.1 Criminalization of Money Laundering (R.1 & 2) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 1 & 2 (pages starting 37) - 2.2 Criminalization of Terrorist Financing (SR.II) — Description and Analysis; Recommendations and Comments; Compliance with Special Recommendation II (pages starting 49) - 2.3 Confiscation, freezing and seizing of proceeds of crime (R.3) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 3 (pages starting 56) - 2.4 Freezing of funds used for terrorist financing (SR.III) — Description and Analysis; Recommendations and Comments; Compliance with Special Recommendation III (pages starting 65) - 2.5 The Financial Intelligence Unit and its Functions (R.26) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 26 (pages starting 76) - 2.6 Law enforcement, prosecution and other competent authorities—the framework for the investigation and prosecution of offenses, and for confiscation and freezing (R.27 & 28) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 27 & 28 (pages starting 87) - 2.7 Cross Border Declaration or Disclosure (SR.IX) — Description and Analysis; Recommendations and Comments; Compliance with Special Recommendation IX (pages starting 94) - Chapter 3 — Preventive Measure—Financial Institutions - 3.1 Risk of Money Laundering or Terrorist Financing (page 102) - 3.2 Customer Due Diligence, Including Enhanced or Reduced Measures (R.5 To 8) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 5 to 8 (pages 102–129) - 3.3 Third Parties And Introduced Business (R.9) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 9 (pages 130–132) - 3.4 Financial Institution Secrecy or Confidentiality (R.4) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 4 (pages 132–137) - 3.5 Record-Keeping and Wire Transfer Rules (R.10 & SR.VII) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 10 and Special Recommendation VII (pages 137–142) - 3.6 Monitoring of Transactions and Relationships (R.11 & 21) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 11 & 21 (pages 142–145) - 3.7 Suspicious Transaction Reports and Other Reporting (R.13-14, 19, 25 & SR.IV) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 13, 14, 19 and 25 (criteria 25.2), and Special Recommendation IV (pages 146–155) - 3.8 Internal Controls, Compliance, Audit and Foreign Branches (R.15 & 22) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 15 & 22 (pages 156–161) - 3.9 Shell Banks (R.18) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 18 (page 162) - 3.10 The Supervisory and Oversight System—Competent Authorities and SROs. Role, Functions, Duties, and Powers (Including Sanctions) (R.23, 29, 17 & 25) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 17, 23, 25 & 29 (pages 162–182) - 3.11 Money or Value Transfer Services (SR.VI) — Description and Analysis; Recommendations and Comments; Compliance with Special Recommendation VI (pages 183–184) - Chapter 4 — Preventive Measures—Designated Non-Financial Businesses And Professions (DNFBP) - 4.1 Customer Due Diligence and Record-keeping (R.12) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 12 (pages 186–208) - 4.2 Suspicious Transaction Reporting (R.16) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 16 (pages 210–219) - 4.3 Regulation, Supervision, and Monitoring (R.24-25) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 24 & 25 (criteria 25.1, DNFBP) (pages 219–229) - 4.4 Other Non-Financial Businesses and Professions—Modern-Secure Transaction Techniques (R.20) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 20 (pages 230–231) - Chapter 5 — Legal Persons And Arrangements and Non-Profit Organizations - 5.1 Legal Persons—Access to Beneficial Ownership and Control Information (R.33) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 33 (pages 231–240) - 5.2 Legal Arrangements—Access to Beneficial Ownership and Control Information (R.34) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 34 (pages 240–243) - 5.3 Non-Profit Organizations (SR.VIII) — Description and Analysis; Recommendations and Comments; Compliance with Special Recommendation VIII (pages 243–249) - Chapter 6 — National And International Cooperation - 6.1 National Cooperation and Coordination (R.31 & R. 32) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 31 & 32 (pages 250–252) - 6.2 The Conventions and UN Special Resolutions (R.35 & SR.I) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 35 and Special Recommendation I (pages 252–255) - 6.3 Mutual Legal Assistance (R.36-38, SR.V) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 36 to 38 and Special Recommendation V (pages 255–262) - 6.4 Extradition (R.37, 39, SR.V) — Description and Analysis; Recommendations and Comments; Compliance with Recommendations 37 & 39, and Special Recommendation V (pages 263–267) - 6.5 Other Forms of International Cooperation (R.40 & SR.V) — Description and Analysis; Recommendations and Comments; Compliance with Recommendation 40 and Special Recommendation V (pages 267–275) - Chapter 7 — Other Issues - 7.1 Resources and Statistics (page 276) ### Tables and statistical resources (selected entries and numbering preserved) - Tables section includes: - Table 1. Ratings of Compliance with FATF Recommendations (page 277) - Table 2. Recommended Action Plan to Improve the AML/CFT System (page 289) - Statistical Tables include numbered items 1 through 35 with titles such as: - Statistical Table 1. Categories of Financial Institutions (page 23) - Statistical Table 3. Credit institutions (December 31, 2007) (page 24) - Statistical Table 12. ML-Convictions 2004 – 2007 (page referenced) - Statistical Table 19. STRs Received by the A-FIU (page 85) - Statistical Table 23. Statistics Cash Control Austria (page 95) - Statistical Table 34. Information received/sent through the ESW (page 274) - Statistical Table 35. Breakdown of information requested by foreign FIUs (page 274) ### Annexes and supplementary materials - Annex 1. Authorities’ Response to the Assessment (page 300) - Annex 2. Details of All Bodies Met During the On-Site Visit (page 301) *Source: _cr09298 - Preface (IMF PDF)_ ### Annex 3. List of All Laws, Regulations, and Other Material Received ............................................. 302 ### Annex 3. List of All Laws, Regulations, and Other Material Received ............................................. 302 ### Preface - Assessment basis: - 40 Recommendations 2003 and the 9 Special Recommendations on Terrorist Financing 2001 of the Financial Action Task Force (FATF). - AML/CFT assessment Methodology 2004, as updated in February 2008. - Materials supplied by the authorities, on-site mission from September 15–30, 2008, and subsequent verifiable information. - Assessment team: - Composed of IMF staff and one expert under IMF supervision: Alain Védrenne-Lacombe (LEG, team leader); Nadine Schwarz; Giuseppe Lombardo; Emmanuel Mathias (LEG); and Helen Hatton (LEG expert). - Scope: - Review of institutional framework, AML/CFT laws, regulations, guidelines, regulatory systems, and implementation/effectiveness related to financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs). - Deliverables: - Summary of AML/CFT measures in Austria at the time of the mission, levels of compliance with the FATF 40+9 Recommendations (see Table 1), and recommendations to strengthen the system (see Table 2). ### Executive Summary — Key Findings (numbered as in source) - 1. Crime and risk context: - Austria’s crime level is among the lowest in EU Member States. - Authorities consider exposure to money laundering and financing of terrorism risks is limited. - Austria’s geographical location and historical ties with Central Eastern and Southern Europe may make it a transit point for drugs and other trafficking and a destination for criminal money, attracted by political stability, tradition of banking secrecy, and attractive tax regime. - 2. System design and implementation: - Authorities have designed and are implementing a comprehensive AML/CFT system, supported by well-developed federal administrative and supervisory bodies, and active professional organizations. - 3. Criminalization and confiscation: - Criminalization of money laundering generally in line with FATF standards; legal framework provides a wide range of confiscation and provisional measures. - Concerns: small number of convictions for money laundering, low legal penalties, and low amounts of proceeds of crime confiscated raise questions about overall effectiveness. - Criminal provisions for financing of terrorism largely consistent with the 1999 Convention but do not cover full range of activities in FATF standard. - 4. Transposition of Third EU AML Directive: - Resulted in large overhaul, expansion and strengthening of Austrian AML/CFT regime covering broadest range of financial activities and DNFBPs, except certain casinos. - Some provisions should be brought more closely into line with FATF; more time needed before full implementation. - 5. Supervisory system: - Generally sound and efficient. - Need to strengthen licensing requirements, sanction regime, and allocate additional resources to supervisory bodies. - 6. Austrian Financial Investigation Unit (A-FIU): - Effective police unit but does not fulfill STR analysis and dissemination functions of an FIU. - Possible disclosure of information on the person making an STR to the defendant pursuant to criminal procedure may contribute to low reporting. - 7. Banking secrecy and access: - Gateways exist for authorities to obtain data protected by banking secrecy, but public prosecutors’ requests are subject to restrictive conditions that financial institutions and legal professions may exploit to decline supply of information. - 8. Registration and beneficial ownership: - System of registration of legal persons generally well-developed. - Access to beneficial ownership data hindered for some non-profit organizations, legal arrangements (Treuhand) and some legal persons, notably foundations and companies issuing bearer shares. - 9. Cooperation and mutual legal assistance: - Various fora established for national cooperation and coordination. - Deficiencies in domestic legal framework slow provision of mutual legal assistance. ### Legal System and Related Institutional Measures (numbered as in source) - 10. Money laundering offense scope: - Follows Vienna and Palermo Conventions. - Offense extends to any type of property, regardless of value, representing proceeds of crime, irrespective of predicate offense location. - Predicate offenses include all serious offenses under Austrian criminal law plus a wide range of misdemeanors, except counterfeiting and piracy of products. - Non-criminalization of self-laundering not established to be supported by fundamental principles per FATF standard. - 11. Liability: - Liability of natural persons broader than required by the Conventions. - General criminal liability enlarged to include legal persons and entities for all penal offenses. - 12. Financing of terrorism (FT) criminalization: - Consistent with 1999 UN Terrorist Financing Convention; addresses all activities irrespective of place of offense. - Needs extension to fully include financing of terrorist organizations and individual terrorists, regardless of use of funds. - 13. Specialized prosecutorial and police units: - Prosecutorial units specialized in financial crime prosecution established. - Investigations generally by specific police units: A-FIU for money laundering; Federal Agency for State Protection and Counter-Terrorism (BVT) for terrorist financing. - 14. Implementation effectiveness: - Overall legal framework fairly comprehensive, but effective implementation questions remain. - Few convictions for money laundering compared to predicate offenses (notably drug-related). - Contributing factors: non-criminalization of self-laundering; practical difficulties linking to predicate offenses, especially when abroad; prosecutors’ practice of indicting money laundering under “participation” in the predicate offense. - No convictions for FT between 2004 and 2007. - AML/CFT sanction regime for natural and legal persons needs further strengthening. - 15. Confiscation and provisional measures: - Legislation provides wide range of confiscation and provisional measures applying to laundered property, proceeds of ML/FT or other predicate offenses, and corresponding value; mechanism applies to all property items in Austria. - Restrictive conditions to law enforcement’s access to information and documents held by financial institutions and some DNFBPs limit effectiveness. - Non-conviction based forfeiture regime extensive but not yet applied. - 16. Freezing terrorist funds/assets: - Mainly implemented via European Council Regulations (directly applicable) and Council Common Positions enacted through Official Announcements of OeNB. - Difficulties in execution of directly applicable EU regulations for freezing non-financial assets. - Need additional guidance for private sector on freezing obligation. - 17. Reporting and A-FIU functions: - Financial institutions and DNFBPs report suspicious activities to A-FIU (unit of Federal Criminal Police Department). - A-FIU treats STRs as criminal complaints and conducts criminal investigations with full powers and access to information. - A-FIU does not perform FIU-required analysis and dissemination functions; FT cases handled by BVT. - A-FIU maintains regular contact with reporting entities, providing guidance and feedback. - 18. Banking secrecy vs disclosure: - Banking legislation contains strict secrecy provisions, but legal provisions and jurisprudence provide gateways for authority access. - Requests by A-FIU based on STRs are usually complied with. - Court orders requested by public prosecution are rejected by financial institutions if requests do not, in their view, provide substantive, material and adequate evidence that legal conditions for disclosure are met, delaying access to information. ### Preventive Measures — Financial Institutions (numbered as in source) - 19. Legislative and regulatory progress: - Since last evaluation, legislative and regulatory revisions and transposition of Third EU ML Directive led to major overhaul, expansion and strengthening of AML/CFT regime. - 20. Scope of coverage: - All persons and entities conducting as a business in Austria one or more of the financial activities listed in FATF definition of “financial institution” are subject to AML/CFT measures, set out in sector-specific laws. - Post-transposition additions include customer identification, beneficial ownership definition, identification and monitoring of PEPs, and cross-border correspondent banks. - Good implementation found in large international firms and smaller financial institutions, especially for long-established measures. - Effective implementation of some provisions that came into force on January 1, 2008 could not be fully established; some operational circulars pending. - 21. Alignment with FATF Recommendations: - Financial sector measures generally in line with FATF Recommendations. - CDD requirements expanded to cover all customers and beneficial owners, natural and legal persons. - Further expansion needed by removing three exemptions and requiring additional CDD for beneficiaries of some smaller savings deposit accounts. - Financial institutions have strict selection procedures at business relationship inception, especially when relying on intermediaries or third-parties for CDD. - 22. Risk-based approach: - Revised legislation introduces risk-based approach to CDD modeled on EU Directive. - Requires financial institutions to conduct business risk analysis, apply risk-based CDD, and take appropriate measures for higher risk situations. - Financial institutions initiated programs to develop IT tools for risk-sensitive monitoring. - Authorities should consider conducting ML/FT risk assessment to determine if additional legal provisions needed for Austria-specific risks (bearer shares, personal asset holding vehicles, private banking). - 23. Enhanced due diligence areas: - Legislation calls for enhanced due diligence for non-face-to-face business, cross-border correspondent banking, and business with PEPs. - Nature and scope of monitoring measures not defined and left to financial institutions’ risk-based discretion. - Financial institutions should be specifically required to examine background and purpose of transactions viewed as unusual and record findings in writing. - General requirement to maintain CDD records is fully in line with the standard. - 24. STR origin and reporting issues: - Most STRs originate from “credit institutions” (a category covering several financial institutions in Austria), especially money transfer services. - Under criminal procedure, information may be disclosed to the defendant after criminal proceedings initiated, potentially reducing STR reporting. - In November 2008, authorities initiated an action plan to better protect anonymity of reporting entities and persons filing STRs. *Source: Annex 3 and accompanying Preface and Executive Summary text from the provided IMF assessment content.* ### 25. Most categories of financial institutions are subject to broad obligations regarding the ### _cr09298 - 25. Most categories of financial institutions are subject to broad obligations regarding the ### AML/CFT governance and supervision of financial institutions - Finding: Most categories of financial institutions are subject to broad obligations regarding the compliance management and internal audit functions, but requirements need better focus to ensure adequate and comprehensive coverage of exposure to ML/FT risks. - Recommendation: The compliance officer’s seniority, independence and right to access CDD information, transaction records and other relevant information should be set out in the law. - Institutional responsibilities: - The Financial Market Authority (FMA) has overall responsibility for regulation, supervision and enforcement in the financial sector. - Since January 2008, the OeNB has been entrusted with conducting offsite monitoring and onsite examinations of banks. - Licensing and supervision: - Broad definition of banking activities subjects a wide range of institutions to supervision, and includes notably money value transfer services that can only be conducted by credit institutions. - Licensing requirements and supervisory process would prohibit the establishment and operation of shell banks. - Concerns exist about adequacy of the licensing process, especially regarding assessment of significant or controlling interests when capital is in the form of bearer shares. - Recommendation: Fit and proper tests should be applied to senior managers and all supervisory board members. - Supervisory capacity and sanctioning: - The FMA and the OeNB are increasing examinations and meetings with senior management, demonstrating steps toward closer AML/CFT supervision. - Both authorities rely on external auditors to examine regularly all financial institutions and confirm AML/CFT controls are in place and operational. - Finding: The capacity of both the FMA and the OeNB needs further strengthening and additional resources are required to enable supervisory divisions to step up onsite examinations and to cover all areas of ML/FT risk. - Finding: The sanctioning regime does not appear to be sufficiently proportionate and dissuasive. - Recommendation: Application of sanctions should be extended to all members of supervisory boards and senior management. ### Domestic financial institutions with limited specialized business - Finding: Local district authorities supervise domestic financial institutions that carry limited specialized financial business. - Finding: Legal provisions regulating licensing, business, supervision and sanctioning of these institutions are not sufficiently adapted to their activity and ML/FT risks. ### Designated Non-Financial Businesses and Professions (DNFBPs) - Coverage: - Further to the Third EU AML Directive, all DNFBPs are covered in laws and regulations. - The range of covered activities goes beyond the FATF standard to include all types of dealers, auctioneers and accounting professions. - Shortcomings and recommendations: - Preventive measures applicable to these businesses and professions need to be expanded and better tailored to their specificities. - Customer due diligence (CDD) requirements should be defined for all casinos operating in Austria, including internet casinos. - Legal ambiguities in coverage of transactions performed by notaries, lawyers and accountants should be removed. - Requirements for enhanced monitoring of higher risk categories or transactions called for by the FATF Recommendations should be extended to the sector. - Implementation generally needs to be strengthened, especially for TCSPs, and new or revised guidelines need to be issued. - Heightened professional secrecy provisions for lawyers, notaries and accountants may be contributing to the low level of reporting of suspicious transactions. - Supervision and sanctions: - Supervisory system is generally in place for the sector but mostly lacks resources and expertise. - Finding: The sanctioning regime appears to be proportionate and dissuasive for lawyers and notaries, but needs to be developed for other professions. ### Cash reliance and currency concerns - Finding: Measures to reduce the reliance on cash appear insufficient, considering the important quantity of large denomination banknotes issued by the OeNB. ### Legal persons, arrangements, trusts, and NPOs - Legal persons and foundations: - Austria mainly relies on a central registration of all types of legal persons, including foundations. - Access to relevant ownership information is hampered by limited requirements to register changes in ownership, the possibility for companies to issue bearer shares, and the option for private foundations to record beneficiaries’ names in non-public appendixes to founding deeds. - Treuhand and trusts: - The Treuhand is a very common feature of the Austrian economy. - A partial registration system is in place limited to financial assets and is mandatory only for some trust service providers (lawyers and notaries). - Finding: There are no measures to ensure the transparency of foreign trusts operated in Austria. - Nonprofit organizations (NPOs): - Recommendation: Obligations for NPOs to ascertain and maintain information about their ownership structure and transactions should be expanded. ### National and international cooperation - Domestic cooperation: - Mechanisms for domestic cooperation and coordination are institutionalized and embedded into the Federal Constitution. - Various policy and operational fora have been established under the lead of the Ministry of Finance where national competent authorities exchange information on AML/CFT issues and coordinate activities. - Mutual legal assistance and extradition: - Austria has enacted legislation encompassing key requirements of international conventions regarding mutual legal assistance, signed several bilateral treaties with neighboring states, and shortened domestic procedures to improve processing of information requests. - The country may provide a range of measures of mutual legal assistance in AML/CFT investigations, prosecutions and related proceedings initiated by other countries. - Finding: The extradition framework is not entirely in line with the FATF standard and its effectiveness was not established. - Shortcomings in cooperation: - Provision of mutual legal assistance suffers from strict requirements for lifting bank secrecy and the extensive scope of legal privilege, which slow down provision of mutual legal assistance. - Supervisory authorities have a fairly comprehensive regime for international cooperation on anti-money laundering. - Weaknesses identified regarding international cooperation on combating terrorism financing: - The A-FIU is not legally empowered to exchange information. - International cooperation by law enforcement authorities lacks effectiveness. ### General country and AML/CFT context (selected statistics and observations) - Country profile and economy: - Land area: almost 84,000 square kilometers. - Population: just over 8 million inhabitants. - GDP per inhabitant: EUR 31,139 (2006); EU member country average: EUR 24,628. - Governance and legal environment: - Austria ranks 12th out of 180 countries in the 2008 Transparency International Corruption Perception Index. - Austria ratified the United Nations Convention against Corruption on January 11, 2006. - Predicate offenses and crime levels: - Main predicate crimes: theft, drug trafficking and fraud. - Other proceed-generating offenses identified: human being trafficking, burglaries and smuggling. - Austria is considered by EUROPOL as one of the four main destination countries for human being trafficking in the EU. - In 2006, around 29 cases of drug trafficking per 100,000 inhabitants were recorded, compared with an average of 59 at the EU level. - Money laundering drivers and trends: - Major money laundering problems: money remittance systems, offshore business and hawala. - Money remittance systems are considered the main tool used by drug-traffickers, internet-fraudsters, pickpockets, traffickers in human beings and burglars to launder money. - Offshore business trend: companies founded by “remote methods”, use of virtual office space, telephone/fax switching, accounts, address services/post boxes to create spheres of influence across countries. - Hawalas are mainly used by foreign criminal organizations and networks. - Authorities consider Austria’s exposure to the risk of money laundering is low. - Reporting and convictions: - In 2007, the A-FIU received 1,085 STRs, rising from 373 cases in 2004. - More than 95 percent of the declarations came from banks, including one single money remittance institution counting for a sizeable share. - Information on phishing emails and 419 letters/emails are counted among the STRs. - Finding: The number of ML convictions is very low. - Statistic: According to Statistics Austria, only three convictions for money laundering have been pronounced in 2005. *Source: _cr09298 - 25. Most categories of financial institutions are subject to broad obligations regarding the* ### 2006. The penalties provided for these convictions were extremely low, and the most severe penalty ### _cr09298 - 2006. The penalties provided for these convictions were extremely low, and the most severe penalty ### Money laundering convictions and penalties - The most severe penalty imposed was a one to three years imprisonment sentence pronounced in 2006. - Authorities explained that convictions are counted only in relation to convictions for the offense which has the highest punishment. - Separate statistics compiled by the A-FIU based on the actual number of ML charges underlying a conviction: - 12 ML convictions in 2003 - 10 in 2004 - 5 in 2005 - 10 in 2006 - 18 in 2007 - Authorities indicated reasons for low ML conviction figures: - Lack of criminalization of self-laundering in Austria. - Prosecutors prefer to indict ML activities under “participation,” because a higher penalty provided in the case of participation in the predicate offense can be applied. - In practice, it is easier to prove participation in the predicate offense than the ML activity as a stand-alone crime. ### Press-reported typologies and risk perceptions - Assessor team reviewed Austrian and international press during a two year period before the assessment; press mentioned cases involving politically exposed persons (PEPs) from Eastern Europe, Central Asia, the Baltic States and the Balkans. - Most common typology: predicate offense committed abroad and funds allegedly laundered in Austria. - Press reported mutual legal assistance, extradition requests and investigations involving foreign PEPs. - Financial investigations relating to corruption or embezzlement schemes by major foreign companies were reported. - Press mentioned several suspicions of ML-related schemes involving subsidiaries of Austrian banks in CESE; this led the Austrian parliament to inquire into Austrian banks’ eastern businesses and their possible relation with ML in 2007. ### National ML risk environment and exposures - Authorities have not conducted comprehensive risk analyses; general view in financial and non-financial institutions is that the level of ML risk is low in Austria. - This perception may be a source of vulnerability in a country that attracts significant foreign financial flows based, among others, on a tradition of secrecy. - Aggregated balance sheets of banks show a growing trend in the ratio of foreign nonbank deposits to total nonbank deposits: - 17 percent in 2007 - after raising more than 20 percent from the 2005 level (textual phrasing preserved) ### Financing of Terrorism (FT) findings and cases - Authorities deem the risk of FT in Austria low compared with other European jurisdictions. - Few terrorism investigations in recent years: - In 2007, eight persons were arrested for terrorist-related offenses: five related to Islamist organizations, and three related to right-wing organizations. - On March 12, 2008, a court condemned a couple in Austria on charges of membership in a terrorist association (Al-Qaeda), threatening the Austrian Government and attempted coercion for producing an Al-Qaeda promoting video; the Supreme Court annulled the verdict on procedural issues and remitted it to the court for re-examination. - Austria hosts minorities, including of Kurdish origin; members of an EU and US designated terrorist group were found to have stayed in Austria in 2007. - Authorities assume a very small part of the Kurdish community collects funds for terrorist purposes, but have no available evidence to confirm this assumption. - No information on how FT techniques and trends have changed following the introduction of counter-terrorist financing measures. ### FT suspicious activity reporting and cases - In the last four years authorities consider suspicious cases and complaints rose in quantity and quality; fewer matches with terrorist lists but more STRs due to increased due-diligence by reporting entities. - Two illustrative cases mentioned by authorities: - Case 1: legally acquired money transferred via official bank transfers to organizations in the Near East (initiated by STRs from the financial sector). - Case 2: amounts acquired by traditional criminal activities transferred quickly and anonymously via “Money Transmitter Systems” (initiated by STRs from the financial sector). - Authorities expect new payment methods (Internet-based transfer systems, mobile phone transfers) to gain importance for terrorist organizations, but to date no such methods have been ascertained in Austria and no such cases of suspicion have come to authorities’ knowledge. ### FT criminal case statistics - Between 2003 and 2006, 18 criminal cases related to FT were registered; none led to an indictment. - In 16 cases, proceedings were dismissed by the public prosecutors. - Two FT cases initiated in 2006 are still pending. - In 2007, four new FT cases were registered: - Two criminal investigations by public prosecutors. - Two preliminary investigations by investigative judges. - Three of them have been terminated, one case is still pending. - Therefore there are actually three FT cases pending; none has resulted in an indictment. - Until 2007, there have been no convictions of FT. ### Overview of the financial sector - Contribution to total value added: 5.4 percent in 2005. - Core of the financial system: credit and domestic financial institutions dominated by a few large groups; five largest credit institutions hold almost 50 percent of total banking assets, and two of them are foreign-owned. - Post office’s financial services have been privatized. - 12 exchange offices in the country, mostly located in Vienna. - Banking activities regulated by the Banking Act (Bankwesengesetz, BWG). ### Insurance sector - 31 out of the 82 insurance companies active in Austria are engaged in the life business. - No independent reinsurance companies. - Insurance sector total assets equal 32 percent of GDP, vs. 63 percent in the EU. - Major insurance companies are associated with Austrian banking groups. - Insurance activities fall under the Insurance Supervision Act (Versicherungsaufsichtgesetz, VAG). ### Insurance intermediaries and DNFBP counts - Insurance intermediaries: independent agents and brokers; 18,374 registered intermediaries regulated by the Trade Act 1994 (Gewerbeordnung, GewO). ### Securities and investment funds sector - Securities business includes: - 145 investment firms (Wertpapierunternehmen). - 163 investment service providers/undertakings (Wertpapierdienstleistungsunternehmen). - 29 investment fund management companies which are credit institutions (three major management companies account for 57 percent of the whole business). - 2,364 domestic investment funds which manage EUR 166 billions of assets. - Total assets under management: 64 percent of the GDP (2006); many funds promoted and managed by banks. - Number of foreign investment funds marketed in Austria: 4,962 in 2007. ### Capital markets and infrastructure - Debt securities volumes comparable to similar EU countries; stock market total capitalization small compared to EU peers. - Securities clearing processed by CCP-A. - Oesterreichische Kontrollbank (OeKB) operates securities trading settlements and is the Central Securities Depository for Austrian issuances; OeKB is subject to AML/CFT provisions of the BWG. - Stock Exchange Law (Börsegesetz, BörseG) regulates stock and commodity exchange activities. ### Key statistical table extracts (as of end-December 2007) - Credit Institutions: Number 871; Assets (EUR billion) 899 - Domestic Financial Institutions: (952-13,459) Na - Non-Life Insurance Undertakings: Number 51; Assets (EUR billion) 23 (as of December 31, 2006) - Life Insurance Undertakings: Number 31; Assets (EUR billion) 60 - Pensions Funds: Number 20; Assets (EUR billion) 13 - Investment Firms: Number 145; Assets - - Investment Service Providers: Number 163; Assets - - Domestic Investment Funds: Number 2,364; Assets (EUR billion) 164 - Foreign Investment Funds: Number 4,962; Assets na - (Source: FMA) ### Cross-border expansion and exposures - Austrian banks and insurance companies have greatly developed cross border business, becoming key players in CESE and some CIS countries. - Insurance companies collected 24 percent of their premium written in CESE countries in 2006. - Statistical Table 2 — Market shares of Austrian banks in CESE and CIS countries (as of December 2007): - Bosnia and Herzegovina, Croatia, Slovak Republic, Albania, Serbia, Czech Republic: ≥ 35% - Hungary, Bulgaria, Romania, Slovenia: 15-35% - Ukraine, Poland, Belarus, Russia: ≤ 15% ### Private banking and foreign deposits - Many Austrian banks market to both nonresident and resident foreign customers; about 30 credit institutions offer private banking and wealth management services in Austria. - Aggregated balance sheets of banks show a growing trend in the ratio of foreign nonbank deposits to total nonbank deposits: - 17 percent in 2007 - 14 percent in 2005 ### Banking structure and institutions (December 31, 2007) - Credit institutions detailed counts and assets: - Joint Stock and Private Banks: Number 51; Assets (EUR b) 251 - Savings Banks (Sparkassen): Number 56; Assets (EUR b) 150 - Rural Credit Cooperatives (Raiffeisenbanken): Number 558; Assets (EUR b) 222 - Industrial Credit Cooperatives (Volksbanken): Number 70; Assets (EUR b) 69 - Mortgage Banks (Landeshypothekenbanken): Number 11; Assets (EUR b) 88 - Building Societies (Bausparkassen): Number 4; Assets (EUR b) 21 - Special banks (Sonderbanken): Number 96; Assets (EUR b) 87 - Investment Fund Management Companies: Number 29; Assets (EUR b) 166 (Assets under management) - Exchange Offices: Number 12; Assets Na - EEA Branch offices: Number 25; Assets (EUR b) 11 - Total: Number 871; Assets (EUR b) 899 - Credit Institutions from EEA Member states: Number 392 - In the FMA nomenclature, private banks are commercial banks. ### Payment methods and channels - All traditional and new payment methods are used. - Debit cards: 6.9 million cards in 2005. - Credit cards: 1.1 million cards in 2005. - Use of prepaid cards increasing but limited; cash widely used through a large number of ATMs. - Banks offer internet banking services limited to transactions on, and consultations of, existing accounts. - Source for payments and securities settlements systems: Payments and Securities Settlements Systems in the EU, ECB August 2007. ### Legal and supervisory framework - BWG defines a large array of banking activities restricted to credit and domestic financial institutions. - Domestic financial institutions (Article 1, paragraph 2 BWG) authorized to conduct at least one of: leasing, advice on capital structure, industrial strategy, mergers and acquisitions, credit reporting services, and safe deposit services. - Financial Market Authority (FMA) is the integrated regulator and supervisor for the financial sector, except domestic financial institutions and insurance intermediaries supervised by local district authorities. - As of January 2008 revamp: Oesterreichische Nationalbank (OeNB) has sole responsibility for conducting offsite monitoring and onsite examinations of banks; overall responsibility for banks’ regulation and enforcement stays with the FMA. - Focus of OeNB supervision is on systemic banks; external auditors assess compliance with regulations of all credit institutions annually. ### DNFBP overview notes - Insurance intermediaries regulated by the Trade Act 1994 (Gewerbeordnung, GewO); local district authorities supervise insurance intermediaries. - No data available differentiating management consultants (Unternehmensberater) who operate as DNFBPs from those carrying out only activities defined in Article 1 paragraph 2 of the BWG. - Statistical Table 4 — Domestic Financial Institutions activities: - Leasing: Number of Institutions 950 - Safe deposit services: Number of Institutions 2 - Advice (management consultants): Number of Institutions 12,507 *Source: _cr09298 - 2006. The penalties provided for these convictions were extremely low, and the most severe penalty* ### 81. Organization of games of chance is regulated in the Gambling Law (Glücksspielgesetz, ### _cr09298 - 81. Organization of games of chance is regulated in the Gambling Law (Glücksspielgesetz, ### Gambling legislation and licensing - Organization of games of chance is regulated in the Gambling Law (Glücksspielgesetz, GSpG). - The GSpG refers to gaming houses (Spielbanken defined in Article 21, paragraph 1 GSpG) and electronic lotteries (Elektronische Lotterien, defined in Article 12a GSpG) which may be run as internet casinos, offering casino games with non-face-to-face transactions between the customer and the licensee. - The gaming legislation establishes a monopoly of the Federal Government executed by a system of licenses granted by the Federal Ministry of Finance (MoF). - Currently all legally permitted licenses have been assigned to only two licensees: - Casinos Austria AG (CASAG) for 12 Austrian casino licenses. - Österreichische Lotterien GmbH (ÖLG) for electronic lotteries. - There are currently legal proceedings regarding card casinos, which have developed quickly in recent years and are not regulated, but that the authorities consider as game of chance providers. - The MoF is the supervisory authority for casinos and internet casinos with extensive supervisory powers. ### Casinos and internet casinos — activity and statistics - Statistical Table 6. Activity of Casinos in Austria - Type | Number | Gaming Revenue (2007, EUR m.) | Betting Volume (2007, EUR m.) | Licensing and Supervisory Authority (incl AML/CFT) - Casinos | 12 | 194 | 4.215 | MoF | MoF - Internet Casinos | 1 | 35 | - | MoF | MoF - The total betting volume more than doubled between 2005 and 2007 and foreigners account for 70 percent of the bets. ### Regulated professions subject to AML/CFT (DNFBPs) - Real Estate Agents, Dealers in Precious Stones and Metals, TCSPs are regulated by the GewO and must be registered. - Competent authority for authorization, registration, prudential or market conduct supervision, and for AML/CFT supervision: local district authorities (Bezirksverwaltungsbehörden), in cooperation with the police. - Local district authorities are under the command of the States’ Governors who are directly under the control of the Federal Ministry of Economy, Family and Youth (MoE); police authorities are under the control of the Federal Ministry of the Interior (MoI). ### Real estate agents — numbers and branches - Statistical Table 7. Real Estate Activity in Austria - 2006 | 2007 | 2008 - Number of Real estate Agents (including real Estate Management, Building Contractors) | 8.514 | 8.734 | 8.954 - Number of Branches | 1.683 | 2.151 | 671 ### Dealers in precious stones and metals - All dealers—not only those dealing with precious stones and metals—fall under the AML/CFT legislation when carrying cash transactions above EUR 15,000. - No information was available on the precise number of dealers in precious stones and metals. ### Trust or company service providers (TCSPs) and management consultants - Authorities consider the profession of management consultant (Unternehmensberater) as carrying out the functions of TCSPs regarding the FATF definition; they must comply with the AML/CFT provisions of the GewO. - Core function of management consultants is advisory to companies, not to provide the services listed in the FATF glossary concerning TCSPs. - In 2008, 12,507 management consultants were registered with the Austrian Federal Economic Chamber (Wirtschaftkammer Österreich, WKO). - Other professions providing FATF-listed TCSP services include office services categories; 679 firms are registered with the WKO in these two categories. - Pursuant to new GewO provisions, each provider of an activity listed by the FATF as TCSP will have to be registered as a management consultant. Implementation was not effective at the time of the on-site visit. ### Accountants - Two professions perform activities listed in FATF Recommendations 12 and 16: - Chartered public accountants-tax consultants (Wirtschaftstreuhänder). - Certified management accountants-accountancy professions (Bilanzbuchhalter). - Both professions are authorized to prepare for or carry out transactions for creating, operating or managing legal persons or arrangements, and buying and selling business entities; can assist in managing client money, securities, or other assets. - In March 2008: - 8,027 natural persons and 2,345 companies were registered with the Chamber of Chartered Accountants and Tax Consultants. - 2,079 natural persons and 62 companies were registered for the Accountancy Profession (2,052 certified management accountants, 61 certified management accountant companies, 3 bookkeepers, 24 payroll accountants and 1 payroll accountant-company). ### Lawyers - Lawyers’ activities include representation before courts and authorities, and advisory services; organized under the Lawyer’s Act (Rechtsanwaltsordnung, RAO). - Activities listed in FATF Recommendations 12 and 16 that lawyers may undertake: - the purchase or the sale of real estate or enterprises; - the administration of money, securities or other assets, the opening or administration of bank accounts, saving accounts or accounts regarding securities; - the foundation, operation or administration of trust companies, companies or similar structures like endowments or foundations, including procurement of means necessary for these functions. - Number of lawyers: - 2003: 4,494 Austrian lawyers and 47 lawyers registered in the list of established European lawyers. - 2007: 5,129 Austrian lawyers and 81 European lawyers. - Competent authority for supervision (including AML/CFT): Board of the Bar Association (Ausschuss der Rechtsanwaltskammer). ### Notaries - Austrian notaries are Latin (civil law) notaries, organized through the Notaries’ Act (NO); they are self-employed law experts with quasi-judicial functions and appointed by the government. - Activities listed in FATF Recommendations 12 and 16 that notaries may undertake: - the purchase or the sale of real estate or enterprises; - the administration of money, securities or other assets, the opening or administration of bank accounts, saving accounts or securities accounts; - the foundation, operation or administration of trust companies, companies or similar structures like endowments or foundations, including procurement of means necessary for these functions. - Notaries play an important role as trustees and must record trusts in the Trust Register of Austrian Notaries before making any disposition of trust property. - Currently, there are 478 notaries and 381 notarial candidates in Austria. - Competent regional Chamber of Civil Law Notaries exercises professional supervision of notaries. ### Legal persons and registration - Austrian law recognizes the following legal persons: - Limited liability company (Gesellschaft mit beschränkter Haftung); - Joint-stock company (Aktiengesellschaft); - European Society (Europäische Gesellschaft); - Cooperative society (Erwerbs- und Wirtschaftsgenossenschaft); - European cooperative (Europäische Genossenschaft); - Association (Verein); and - Private foundation (Privatstiftung). - Legal persons come into legal existence by registration in the Commercial Register (Firmenbuchgericht), accessible online via special websites authorized by the MoJ against a small fee. - Local offices of the Commercial Register in each of the 99 districts. - Newly formed corporations must record articles of incorporation and submit the application; upon compliance the court orders registration and publication in the official gazette (Amtsblatt zur Wiener Zeitung) and through the Internet (Ediktsdatei). - Associations must register with the relevant local district authority or Federal Police Directorate and are listed in the Central Register of Associations (Zentrales Vereinsregister, ZVR), a public register kept by the MoI. - Foreign corporations may establish branch offices which must be entered in the Commercial Register; disclosure requirements analogous to Austrian-incorporated companies apply. ### AML/CFT strategy, priorities, and coordination - Austria has not formalized a specific AML/CFT strategy. - Emphasis on multilateral coordinated action and cooperation; priority given to timely implementation of Directive 2005/60/EC (Third EU ML Directive). - The MoF leads Austria’s delegation to the FATF and plays a major role in transposition of European norms into domestic law. - Coordination fora: - Policy level: quarterly Financial Market Committee (FMC) chaired by the Director General responsible for Financial Market issues in the MoF (Chair) and CEOs of the OeNB and the FMA; FMC covers financial market stability matters including AML/CFT. - Monthly MoF/FMA Jour Fixe meetings discuss FMC matters. - Operational level: FATF coordinating meetings involve MoF, MoJ, FIU, BVT, MoFA, FMA, OeNB, MoE. - AML/CFT Task Force: MoF, FMA, BVT, A-FIU, OeNB and MoJ meet quarterly. - MoF and FMA AML/CFT Jour Fixe meets monthly. - WKO engagement: - Department Bank and Insurance of the WKO published first professional regulation for AML in 1989. - WKO contributes to raising awareness among DNFBPs; a two-year activity plan is being drawn with the authorities to provide information on ML/FT trends and AML/CFT legislation to the private sector. ### Institutional framework — ministries and agencies - Federal Ministry of Finance (MoF) - Prominent coordination role for AML/CFT policy. - Tax and Customs Department proposes revisions to Customs Law and Fiscal Penal Code. - Competent authority for proposing amendments to the GSpG for licensing and supervision of casinos and internet casinos, including appointing state commissioners to licensees. - Federal Ministry of Justice (MoJ) - Overall responsibility for criminal law (StGB, StPO), regulates lawyers and notaries, handles international cooperation (extradition, MLA), and has statutory role in legal acts relating to legal persons and arrangements. - Federal Ministry of the Interior (MoI) - Core functions: public security, criminal investigations, law enforcement. - Houses Austrian Financial Investigation Unit (A-FIU) and Federal Agency for State Protection and Counter-Terrorism (BVT). - Associations Act and its supervision fall within MoI ambit. - Federal Ministry for European and International Affairs (MoFA) - Handles public international law matters, Austria’s compliance with international obligations, negotiation of treaties, coordination in justice and home affairs. - Federal Ministry of Economy, Family and Youth (MoE) - Responsible for legislative proposals related to auditors, external accountants and tax advisors, TCSPs, real estate agents and dealers, insurance intermediaries. - Competency to issue secondary regulations and guidelines; with local district authorities, is the supreme authority for supervision of the referenced professions. ### Criminal justice and operational agencies - Austrian Financial Investigation Unit (A-FIU) - A police unit within the Criminal Intelligence Service (Bundeskriminalamt, BKA). - Receives and investigates STRs, or mandates investigations to national police services; BVT solely competent to investigate FT-related cases. - Federal Agency for State Protection and Counter-Terrorism (BVT) - Competent for state protection, counter-terrorism and counter-terrorism financing; seconded by States’ Agencies for Protection and Counter-Terrorism (Landesämter für Verfassungsschutz, LVT) in the nine Länder. - BVT investigations can be initiated on the basis of STRs forwarded by the A-FIU, other national or foreign security authorities, or internal sources. - Courts and prosecution authorities - StPO provides for four different types of courts depending on maximum sentence length. - Judges appointed by MoJ; senior judges’ appointment reserved to the Bundespräsident. - Public prosecution conducts investigations, lays charges, and represents indictments; public prosecution offices are separate from courts and bound by instructions from senior public prosecution offices and MoJ; General Procurator's Office is directly responsible to the Federal Minister of Justice. ### Financial sector bodies - Financial Market Authority (FMA) - Integrated supervisor of all financial institutions and activities (banking, insurance, securities and pension fund activities) — with exceptions noted. - Autonomous institution under public law placed under direct parliamentary control. - Functions include issuing regulations, granting licenses, supervising and enforcing prudential and AML/CFT requirements. - Within FMA, an AML Competence Center monitors AML/CFT developments and provides technical support; FMA conducts specific AML/CFT examinations in its remit. - Central Bank (Oesterreichische Nationalbank, OeNB) - (Further description continues beyond provided content.) *Source: IMF staff report excerpt (chapter section provided).* ### 119. In 2007, the banking supervision functions have been restructured, the OeNB being granted ### _cr09298 - 119. In 2007, the banking supervision functions have been restructured, the OeNB being granted ### Restructuring of banking supervision and operational roles - In 2007, banking supervision functions were restructured: - The OeNB was granted sole responsibility for carrying out offsite analysis and conducting onsite examinations of credit institutions. - The FMA remains entrusted with regulatory, licensing and enforcement powers. - Procedures and operational arrangements have been institutionalized to maintain close cooperation and regular consultation between the OeNB and the FMA. - The OeNB is, within the scope of the Foreign Exchange Act (Devisengesetz, DevG), responsible for enforcing financial sanctions in international payment transactions. ### Designated non-financial businesses and professions (DNFBPs) — supervisory arrangements - Casino supervision: - The MoF is the responsible supervisory authority for casinos. - Surveillance is conducted by a team of independent inspectors of the MoF. - An appointed state commissioner attends all meetings of the supervisory board and the general meeting of the shareholders. - A special department of the Local Tax Authority for Fees and Transaction Taxes mandates independent inspections of casinos to control proper determination of the tax base; local tax authorities report to the MoF. - Traders, TCSPs: - Under the responsibility of the MoE and the state governors, local district authorities license and prudentially supervise all activities conducted under the GewO, including trust or company service providers, real estate agents and dealers including auctioneers, and insurance intermediaries. - Responsibilities include checking compliance with AML/CFT measures and issuing administrative sanctions; the MoE can give instructions to lower level authorities. - Since the last amendment of the GewO in 2008, police services must cooperate with and support the trade authorities in the execution of AML/CFT provisions. - Lawyers, Notaries and Accountants: - The Board of the Bar Association where a lawyer is registered is responsible for monitoring compliance with professional regulations, including AML/CFT requirements; Board members are elected for a three-year term; disciplinary offenses are handled by the Disciplinary Council. - The competent regional Chamber of Civil Law Notaries supervises notaries, including verifying compliance with provisions to prevent or fight ML or FT. - The Chamber of Chartered Public Accountants and Tax Consultants and the Parity Commission for the Accountancy Professions are the competent supervisory authorities for AML/CFT preventive measures for accountants and are subordinated to the MoE. - Registers and NPOs: - The Central Register of Associations (ZVR) is administered by the MoI. - The Commercial Register, administered by the Commercial Courts, contains records about ownership and control details for all companies and other legal persons; changes in ownership and control information must be kept up to date and all information is available to the public. - NPOs are mainly organized as associations listed in a public register administered by the MoI; the MoI is responsible for regulating associations and can instruct lower level authorities. - Associations with charitable or welfare purposes or purposes connected to a state-approved church are tax-exempt, independently of legal form; tax authorities verify purpose based on statutes and accounts. - In 2002, the eight most important umbrella organizations (representing more than 350 charities and all catholic orders in Austria) signed a contract with the Chamber of Chartered Public Accountants and Tax Consultants on a seal of quality for donation organizations. - Other supervisory bodies and roles: - Local district authorities (first instance) and regional governors (second instance) are competent for supervision of domestic financial institutions under the General Administrative Procedure Act (Allgemeines Verwaltungsverfahrensgesetz, AVG). - The Austrian Federal Economic Chamber (WKO) and its nine state chambers, and other professional chambers, represent membership interests, provide information and advisory services, must be consulted by governments on legislative projects, and may be entrusted with supervisory or regulatory powers. - External auditors, in the course of auditing work, investigate financial institutions’ compliance with prudential and AML/CFT legal requirements and report on these issues to the FMA. ### Approach concerning risk and risk-based measures - Austria transposed the Third EU ML Directive, including the risk-sensitive measures it requires, into the Austrian legal framework with effect on January 1, 2008. - The risk-based approach in place since January 2008 stems from the EU Directive rather than from a comprehensive domestic assessment of overall ML/TF risk in Austria. - Authorities indicated some prior partial risk analysis that led to legal provisions requiring: - customers to indicate if they are acting on behalf of a third party; - subjecting non-face-to-face business to enhanced due diligence; - including the money remittance business into financial activities subject to licensing. - Under the new regime: - Persons and entities subject to AML/CFT provisions must define and operate preventive measures adjusted to risks and are required to conduct a risk-analysis of their business using suitable criteria. - The regime lists situations allowing lower or higher CDD and requires appropriate risk-based measures to ascertain customer information and conduct ongoing monitoring. - Supervisory practice: - Austria’s decentralized and multi-tiered financial sector results in a large number of financial institutions. - Supervisors have long adopted a risk-sensitive approach to onsite examinations; mission planning and inspection scope are based on assessments of ML and FT risks and weaknesses detected by external auditors or OeNB and FMA supervisors. ### Progress since the last evaluation and legislative developments - The last assessment of Austria’s compliance with previous FATF Recommendations was conducted by the IMF during the 2003 FSAP using the former methodology; assessors concluded the framework was comprehensive and Austria had achieved a good level of compliance but identified areas for strengthening: - greater clarity in legal provisions defining suspicion of money laundering and the obligation to screen unusual transactions; - further guidance to financial institutions on AML/CFT duties, particularly customer identification; - enhanced monitoring of compliance by supervisors in all financial institutions subject to AML/CFT obligations, including through on-site inspections; - sustained supervisory attention during the phasing out of anonymous savings deposit accounts. - Subsequent legislative and regulatory revisions and implementation of the Third EU ML Directive addressed many concerns: - identification and verification requirements, notably for beneficial owners in legal entities and beneficiaries of insurance policies, have been strengthened and implementing guidelines issued; - a risk-based approach must be applied to business relationship monitoring, based notably on the customer’s business and risk profile, and the grounds for suspicion have been broadened; - supervision of compliance with AML/CFT provisions has been amplified and reorganized, notably reallocating all onsite and offsite banking supervision tasks to the OeNB; - savings deposit accounts review is incorporated into onsite supervisory examinations; credit institutions must inform the A-FIU of all requests to withdraw funds from savings deposits with a balance of at least EUR 15,000, when the identity of the customer has not being ascertained. - Further amendments: - categories of higher risk customers have been enlarged to include PEPs and correspondent relationships; - the scope of activities related to the financing of terrorism has been broadened; - money transmitters and exchange bureaus were subjected to the BWG provisions; - preventive measures were expanded to additional categories of DNFBPs. - Criminal and international cooperation developments: - The Austrian Federal Statute on the Responsibility of Entities for Criminal Offenses provides general criminal liability for legal persons and entities for all penal offenses. - Austria ratified the Palermo Convention on 23 September 2004. - In the area of international cooperation, the Vienna Convention has been ratified and implemented. ### Legal system and related institutional measures — Criminalization of Money Laundering (R.1 & 2) - Legal framework: - In Austria, Article 165 of the StGB sets forth the offense of Money Laundering (ML). The offense was established in 1993 and amended several times. - Austria has signed and ratified the 1988 United Nations Convention on Illicit Drugs and Psychotropic Substances (Vienna Convention) and the 2000 UN Convention against Transnational Organized Crime (Palermo Convention). - Criminalization — types of conduct under Article 165 (c. 1.1): - Article 165 sets forth three different types of conducts constituting the ML offense: - Paragraph 1: intentional concealment of assets originating from a crime or a specified misdemeanor committed by another person (excluding self-laundering) or disguising their origin, particularly by providing false information in legal relations regarding origin, ownership, disposal rights, transfer or location (covering Article 3, paragraph 1, b, ii of the Vienna Convention and Article 6, paragraph 1, a, ii of the Palermo Convention). - Paragraph 2: knowingly acquiring such assets, holding them in custody, investing, administering, converting, realizing or transferring them to a third party (covering acquisition, possession and use — Article 3, paragraphs 1, b, i and 1, c, i of the Vienna Convention and Article 6, paragraphs 1, a, i and 1, b, i of the Palermo Convention). - Paragraph 5: knowingly, acting on behalf or in the interest of a criminal organization (as defined in Article 278a of the StGB) or a terrorist group (as defined at Section 278b), acquiring assets of that organization or group, holding them in custody, investing, administering, converting, realizing or transferring them to a third party. During the assessment, authorities did not share a uniform view as to whether this provision would also cover acts of members of the criminal organization (which would partially derogate from the Austrian principle that ML may only be committed by a person other than the perpetrator of the predicate offense). - Laundered property (c. 1.2): - The ML offense extends to any type of property, regardless of its value, that directly or indirectly represents the proceeds of crime. - Article 165 paragraph 4 of the StGB: “a property item shall be deemed to derive from an offense when the perpetrator of the crime has obtained it through that offense or received it for the commission of that offense, or when it represents the value of the originally obtained or received property item.” - Proving that property is proceeds of crime (c. 1.2.1): - Conviction for the predicate offense is not a necessary pre-condition to bringing charges for ML, though prosecutors and judges indicated that a conviction for the predicate offense is the best evidence. - The level of evidence required to prove the predicate offense (particularly for the first two types of ML) is “beyond reasonable doubt,” requiring proof of specifics of the predicate offense (designated offense, timeframe, perpetrator, types of assets), which is a high standard and considered one of the most difficult obstacles, especially when the predicate offense was committed abroad. - For laundering “in the interest of a criminal organization or of a terrorist group” (Article 165, paragraph 5), it is not necessary to link ML to a specific predicate offense; it is sufficient to prove that the property laundered belongs to a criminal organization or a terrorist group. Authorities noted conditions to prove that an associated group constitutes a criminal organization are also challenging. - Scope of predicate offenses (c. 1.3): - Predicate offenses for ML are all “crimes” (intentional acts punishable by life imprisonment or a term of more than three years under Article 17, paragraph 1 of the StGB) and a list of “designated misdemeanors” that include public corruption and bribery offenses, forgery of documents, criminal association and financing of terrorism. The list of misdemeanors was added in 2002. - The list of predicate offenses covers all categories designated by the FATF, with the notable exception of counterfeiting and piracy of products, which is a misdemeanor in Austria and is not included in Article 165’s list of misdemeanors. - Statistical Table 8 (excerpted in source) maps designated FATF categories to Austria’s predicate offenses; explicit mentions include Article 278/278a/278b/278d StGB for organized crime and terrorism, various StGB and other Acts for trafficking, corruption, fraud, counterfeiting currency, environmental crime, murder, kidnapping, robbery/theft, forgery, piracy, insider trading and market manipulation (Article 48b BörseG), and others. - Threshold approach for predicate offenses (c. 1.4): - Predicate offenses include all serious offenses under Austrian criminal law (“crimes” punishable with more than three years of imprisonment) and a wide range of designated misdemeanors (which does not include counterfeiting and piracy of products). - Extraterritorially committed predicate offenses (c. 1.5): - Authorities state they can establish jurisdiction for ML offenses irrespective of where the predicate offense was committed, provided it would constitute a criminal offense under Austrian law. - Article 165, Paragraph 1 language does not limit ML to domestic predicate offenses. - Article 64, Paragraph 1 (8) of the StGB explicitly provides grounds for jurisdiction, naming ML when laundering activities are committed abroad and the predicate offense is committed in Austria. - Article 65 of the StGB (Paragraph 3) states that “it is sufficient that the offense is liable to prosecution according to Austrian law if there is no penal power at the place where the criminal act was committed.” *Source: IMF staff report text as provided in the content unit.* ### 144. Self-laundering is not criminalized in Austria as Article 165 limits the scope of the ML ### 144. Self-laundering is not criminalized in Austria as Article 165 limits the scope of the ML ### Self-laundering: scope and legal rationale - Article 165 limits the scope of the ML offenses to assets “that derive from the crime of another person.” - ML undertaken by a person “acting on behalf or in the interest of a criminal organizations or the terrorist group” (Article 165, paragraph 5) could amount to self-laundering if the ML activity is undertaken by a member of the criminal organization or of the terrorist group. - Authorities invoke the criminal law principle that an offender cannot be additionally and separately punished for a “post-offense behavior” that relates to the proceeds of his/her own crime (principle of “post factum delicti”). - Under this principle: - One punishable act (the predicate offense) includes another concurring act (the concealing or disguising of property items that derive from the predicate offense’s perpetrator). - The penalty set forth for the punishable act is deemed to cover the entire unlawfulness of the offenders' act. - Supreme Court rulings: laundering activities undertaken by the perpetrator of the predicate offense do not constitute autonomous criminal activities because they are part of the “same historical happening” (interpreted broadly regarding timeframe) and do not entail autonomous and additional damage to vested rights. - Counterarguments noted: - Rulings do not explicitly indicate that non-criminalization of self-laundering is a fundamental principle of Austrian law. - Officials did not have a uniform view as to whether there is a fundamental principle on the subject; an amendment to the StGB could overturn the principle. - When laundering involves transfer, concealment, or disguise through the financial system, an additional damage to further rights and an additional social danger to the integrity of the financial system can be envisaged autonomously. - Conclusion: it was not established that the non-criminalization of self-laundering is supported by principles that amount to fundamental principles according to the FATF standards. ### Ancillary offenses (c. 1.7) - Attempt and participation in an attempt: - Article 15 of the StGB criminalizes attempt (as well as “any participation in an attempt”) for all offenses, therefore including ML. - Aiding, abetting, facilitating, counseling: - Article 12 of the StGB (“Treatment of all participants as offenders”) covers aiding and abetting, facilitating and counseling; its broad language includes “anybody who abets another person to commit the offense or who contributes to its perpetration in any other way.” - Incitement: - Article 3 (1) (c) iii of the Vienna Convention (publicly inciting or inducing others to commit offenses including ML) is covered by Article 12 of the StGB if the incitement/induction is for the specific offense of ML. - More generally, incitement is covered by Article 281 (“Incitement to disobedience of laws”) and Article 282 (“Incitement to criminal offenses and approval of criminal offenses”) when incitement is generic. - Conspiracy: - Conspiracy as known in common law (agreement of only 2 persons) is not criminalized in Austrian criminal law. - Austrian law criminalizes “criminal association” (Article 278 of the StGB) as “a union planned for a longer time of more than two persons aiming at the commitment of one or more crimes,” with a specific cross-reference to Article 165 of the StGB. - This aligns with Vienna and Palermo Conventions which allow establishment of either conspiracy or association “subject to the constitutional/basic concepts of the jurisdiction’s legal system.” ### Additional element—extraterritorial predicate acts (c. 1.8) - Article 65, paragraph 3 of the StGB: “it is sufficient that the offense is liable to prosecution according to Austrian law if there is no penal power at the place where the criminal act was committed.” ### Liability of natural persons (c. 2.1 and c. 2.2) - Mens rea in Austrian criminal law (Article 5 of the StGB): - Three types: “intentionally”, “willfully” or “knowingly.” - “Intentionally” (dolus) is the broadest standard and includes “dolus eventualis” (blind willfulness or recklessness, bedingter Vorsatz). - When a criminal provision does not specify mens rea (as in Article 165, paragraph 1), it is assumed the mens rea is “intentionally.” - For ML under Article 165: - Paragraph 1 (concealing/disguise): act must be committed with intent; mens rea includes dolus eventualis. - Paragraph 2 (acquiring, converting, transferring, etc.): acts must be committed “knowingly.” Knowledge that the assets are proceeds of crime is sufficient. - The mens rea standards are broader than those in the Vienna and Palermo Conventions because specific “purpose” language is not required. - Mental element inference: - Criminal law does not explicitly provide that intent may be inferred from objective factual circumstances, but Austria relies on the principle of free evaluation of evidence by the judiciary (Article 14 StPO), enabling judges to make such inferences. - Authorities indicate objective factual circumstances will very often be the most important clue for the judge's assessment. ### Liability of legal persons (c. 2.3 and c. 2.4) - VbVG (Federal Statute on the Responsibility of Entities for Criminal Offenses), in force January 1, 2006: - Provides for general criminal liability of legal persons and other entities (including commercial partnerships, private foundations, registered partnerships) for all criminal offenses, therefore including ML. - Liability is in addition to and independent from liability of natural persons prosecuted for the same act. - Article 3 of the VbVG: - Liability for offenses committed by a person with a leading position (“decision-maker”) if the decision-maker acted illegally and culpably. - Liability for offenses committed by a person under authority (“staff-member”) where lack of supervision or control by a decision-maker made the offense possible or considerably easier. - Entity responsible if offense was committed for the benefit of the entity or resulted from neglect of due diligence required of the entity. - Article 3, paragraph 2 and 3 specifics: - For decision-maker: entity responsible if decision-maker acted illegally and culpably. - For staff-member: entity responsible if - the facts/circumstances corresponding to statutory definition of an offense have been realized in an illegal manner; and - the commission of the offense was made possible or considerably easier because decision-makers failed to apply due and reasonable care (diligence), e.g., omitted effective technical, organizational or staff related measures. - Parallel proceedings: - Criminal liability of legal persons does not exclude civil liability resulting from the unlawful act. - Administrative proceedings to address conduct of legal persons/entities who engaged in ML are not foreseen by the law. ### Sanctions for ML (c. 2.5) - Natural persons: - Basic ML offenses (paragraphs 1 and 2 of Article 165) are misdemeanors carrying a maximum penalty of two years of prison or a fine calculated on daily rates (maximum equals to 360 daily rates). - Aggravated penalty (six months to five years of prison) applies when: - assets involved exceed the value of EUR 50,000; or - crime is committed as “a member of a criminal group associated for the purpose of continuous ML” (Article 165, paragraph 3). - ML conducted “on behalf or in the interest of a criminal organization ... or terrorist group”: penalty is imprisonment for a term not exceeding three years (Article 165, paragraph 5); if value of assets exceeds EUR 50,000, penalty ranges from six months to five years. - Legal persons (Article 4 VbVG): - Fine system uses daily rates; amount depends on: - gravity of the offense (expressed by maximum term of imprisonment for natural persons). Article 4 VbVG provides sliding scale from 40 to 180 daily rates based on maximum imprisonment. For ML: - maximum fine of 70 daily rates for basic ML; - rises up to a maximum of 100 daily rates if ML involves items worth more than EUR 50,000, or committed as member of criminal group associated for continuous ML, or on behalf/interest of criminal organization or terrorist group. - revenue of the legal person/entity. Daily rate for a legal person = one 360th of the yearly proceeds, reduced or augmented up to 30 percent considering overall economic situation (Article 4, paragraph 4 of the VbVG). Court assesses exact daily rate based on profit situation and financial performance. - Maximum daily rate: EUR 10,000. - Minimum daily rate (relevant for entities without profit over reasonable period): EUR 50. - Authorities: VbVG deliberately does not define assessment basis for revenues or permissible deductions; court may average proceeds over several years. - Calculated minimum and maximum fines for ML by a legal person: - Minimum fine: EUR 3,500. - Maximum fine: EUR 1,000,000. - Article 10 VbVG: legal consequences apply to legal successor in universal succession; fines on predecessor may be enforced vis-à-vis any legal successor. - Assessment of sanction levels: - Sanctions set forth for ML in the case of natural persons and the minimum sanction for legal persons are considered too lenient, not effective, nor proportionate or dissuasive, particularly since ML in most instances is a misdemeanor. - Criminal policy: ML often seen as an ancillary offense; prosecutors prefer to treat ML activity as “participation” under Article 12, which carries same penalty as predicate offense and may be easier to prove. ### Effectiveness and statistics (c. 3 / Effectiveness) - Concern: effective implementation of ML provisions. - Low number of convictions for ML under Article 165 (official statistics available for 2004-2006; conditional, unconditional and partially unconditional sentences statistics available for 2007). - Statistical Table 9. Money Laundering Cases (as reported) - 2003: ML cases – total 29; ML investigations (by public prosecutors) 17; ML prosecutions (dealt with by courts) 12; ML Convictions (as published by Statistics Austria) 7 - 2004: 47; 34; 13; 5 - 2005: 24; 20; 4; 3 - 2006: 75; 61; 14; 3 - Authorities' explanation of statistics: - In Austrian criminal statistics, convictions are counted only in relation to the offense with the highest punishment; convictions are counted once only irrespective of the number of offenses underlying the conviction. - Official ML statistics include only cases where ML was the sole offense or the offense with the highest threat of punishment among other offenses proven. - A-FIU “effective number of convictions” (based on the actual number of ML charges underlying a conviction): - 2003: 12 ML convictions - 2004: 10 - 2005: 5 - 2006: 10 - 2007: 18 - Observation: even adjusted figures remain low and raise effectiveness concerns given high numbers of convictions and investigations for serious predicate offenses (see Statistical Table 10 and Table 11 for broader offense statistics). - Selected figures from Statistical Table 10 (Number of Convictions for FATF Serious Offenses) - Illicit trafficking in narcotic drugs and psychotropic substances: 2004 5703; 2005 6127; 2006 5794; 2007 5435 - Theft: 2004 9480; 2005 9316; 2006 8523; 2007 8518 - Fraud: 2004 3189; 2005 3261; 2006 3139; 2007 2981 - Completed murder: 2004 24; 2005 28; 2006 33; 2007 34 - (Full table reproduced in source.) - Selected figures from Statistical Table 11 (2006 persons under investigation for designated offenses) - Illicit trafficking in narcotic drugs and psychotropic substances (SMG): 23,444 persons under investigation - Theft §§ 127 - 131 StGB: 46,415 persons under investigation - Fraud §§ 146 - 148 StGB: 18,583 persons under investigation - Illicit arms trafficking: 1,088 persons under investigation - Robbery §§ 142, 143 StGB: 2,346 persons under investigation - (Full table reproduced in source.) *Source: _cr09298 - 144. Self-laundering is not criminalized in Austria as Article 165 limits the scope of the ML* ### 169. The authorities further indicated that the low figures can be explained by the lack of ### _cr09298 - 169. The authorities further indicated that the low figures can be explained by the lack of ### Money Laundering convictions, prosecutorial practice, and sanctions - Authorities' explanation for low ML conviction figures: - Lack of criminalization of self-laundering in Austria. - Prosecutors prefer to indict ML activities under “participation” to apply the higher penalty provided in the case of participation in the predicate offense. - In practice, it is easier to prove participation in the predicate offense than the ML activity as a stand-alone crime. - Assessors' view: - Criminalizing basic ML as a misdemeanor (therefore perceived as a low-danger offense) and the difficulties encountered by prosecutors in proving the predicate offense significantly influence the low number of convictions. - Penalties observed (official statistics for 2004–2007; compiled for the case where ML was convicted with the higher terms): - The most severe penalty imposed was imprisonment for 1 to 3 years, in a case judged in 2006. - Statistical excerpts (ML Convictions 2004–2007 — Conditional, Unconditional and Partly Unconditional Fines; Sentences for Imprisonment): - Imprisonment up to 1 Month: 2004 0, 2005 0, 2006 0, 2007 1; Unconditional: 2004 0, 2005 0, 2006 0, 2007 0 - Imprisonment 1 to 3 Months: Conditional: 2004 2, 2005 1, 2006 1, 2007 1; Unconditional: 2004 0, 2005 0, 2006 0, 2007 0 - Imprisonment 3 to 6 Months: Conditional: 2004 1, 2005 0, 2006 0, 2007 3; Unconditional: 2004 0, 2005 0, 2006 1, 2007 0 - Imprisonment 6 to 12 Months: Conditional: 2004 0, 2005 0, 2006 0, 2007 5; Unconditional: 2004 0, 2005 0, 2006 1, 2007 0 - Imprisonment 1 to 3 Years: Conditional: 2004 0, 2005 0, 2006 0, 2007 0; Unconditional: 2004 0, 2005 0, 2006 1, 2007 0 - Imprisonment 3 to 5 Years: Conditional: 2004 0, 2005 0, 2006 0, 2007 0; Unconditional: 2004 0, 2005 0, 2006 0, 2007 0 - Imprisonment over 5 Years: Conditional: 2004 0, 2005 0, 2006 0, 2007 0; Unconditional: 2004 0, 2005 0, 2006 0, 2007 0 - Fine 60 to 120 Daily Rates: Conditional: 2004 0, 2005 0, 2006 0, 2007 1; Unconditional: 2004 0, 2005 0, 2006 0, 2007 0 - Juvenile Court Act (JGG) entry: - Section 12 Juvenile Court Act (JGG): 2004 1, 2005 0, 2006 0, 2007 0 - Partly Unconditional Imprisonment counts: 2004 1, 2005 1, 2006 0, 2007 3 ### Recommendations (section 2.1.2) - Recommendation 1: - Criminalize self-laundering; - Undertake actions (awareness raising or training) that would alter the kind of proof currently deemed necessary to show that property is proceeds or that conduct resulted in proceeds so that it will not be necessary for a successful prosecution that the prosecutor provide evidence that a specific offence occurred or a specific perpetrator engaged in the conduct; and - Make counterfeiting and piracy of products predicate offenses to ML. - Recommendation 2: - Increase the penalties set forth for natural persons by Article 165 and the minimum sanctions applicable in the case of legal persons. ### Compliance with Recommendations 1 & 2 — Ratings and underlying factors - R.1 — LC - No confirmation that the non-criminalization of self-laundering is supported by principles that amount to fundamental principles according to the FATF standard. - Low number of convictions and indictments for ML compared to the number of ML criminal investigations and convictions for serious offenses that generate proceeds in Austria, and standard of proof required by the courts to establish that assets originate from crime indicating an issue of effectiveness in the implementation of the ML criminal provision. - Counterfeiting and piracy of products not predicate offenses for ML. - R.2 — LC - Sanctions for ML against natural persons and minimum sanction established in the case of legal persons too lenient and not effective, proportionate or dissuasive. - Low number of convictions and indictments for ML compared to the number of ML criminal investigations and convictions for serious offenses that generate proceeds. ### Criminalization of Terrorist Financing (SR.II) — legal framework and coverage - Legal framework: - Financing of terrorism (FT) criminalized by Article 278d of the StGB in 2002 on the basis of the International Convention for the Suppression of the Financing of Terrorism (ICSFT). - Text and scope of Article 278d: - Article 278d criminalizes providing or collecting assets with the intent that they are used for the commission of enumerated offenses (1–8 listed in the provision), and states: “(2) The offender shall not be punished under paragraph 1 if the offense is subject to a severer penalty under another provision.” - The provision mirrors offenses in the nine international treaties appearing in the annex to the ICSFT and the language of Article 2, Paragraph 1 (b) of the ICSFT and thus fully cover the FT offense defined under its Article 2, Paragraph 1. - Related provisions: - Article 278c criminalizes the commission of terrorist criminal offenses; when acts amount to terrorism, maximum punishment set for specific provisions is increased by half but cannot exceed 20 years of imprisonment. - Article 278c, paragraph 3 introduces an exclusion of criminality for offenses directed to “the establishment or re-establishment of a democratic and constitutional situation or the exercise or observance of human rights,” which has cascading effects on SR.II elements despite Article 278d not cross-referring to Article 278c. ### Specific elements, gaps, and interpretations for FT - Indirect provision/collection: - Article 278d does not explicitly indicate whether indirect provision/collection constitutes FT, but authorities clarified criminal responsibility would nevertheless apply; example cited of a pre-trial case involving indirect collection through an organization providing funds to another organization situated in a conflict zone. - Mens rea and act requirement: - Prosecutors and judges confirmed the offense does not require that funds be linked to a specific terrorist act, nor that a terrorist act is committed or attempted; provision or collection with intent they are intended to be used for a terrorist act is sufficient. - The term “assets of property” includes any funds as defined by the ICSFT, including funds from a legitimate or illegitimate source. - Attempt and participation: - Attempt (including “participation in an attempt”) is criminalized for all offenses, including FT, under Article 15 of the StGB. - Participation as an accomplice, organization and direction of others, contribution to a group are covered by Article 12 and Article 278b (“Terrorist Association”) though not in all instances. - Organization, direction, and contribution: - Article 278b defines “terrorist group” as a union planned for a longer time of more than two persons aiming at the commitment of one or more terrorist criminal offenses—listed by Article 278c—by one or more members of the group. - The exclusion in Article 278c, paragraph 3 limits the scope: unions aimed at acts listed in 278c for certain political or human rights purposes may not qualify as “terrorist group.” - Criminal responsibility for organization and direction of others, and contribution to group activities when organization/direction is solely for FT (and not for terrorist acts) appears limited: a group established solely for FT may not be subject to Article 278b because Article 278b’s reference to Article 278c excludes pure-FT groups; Article 278 (criminal association) may also not apply when FT is a misdemeanor (punished with not more than three years’ imprisonment) because such misdemeanors are not included in the list of material elements for criminal association. - Coverage gaps relative to SR.II: - Article 278d adequately covers the material elements in Article 2, paragraphs 1, a and b and paragraph 5, a of the ICSFT. - Article 278d does not fully cover: - Direction and organization of others and contribution to a group acting with a common purpose when organization/direction is solely for FT (as required under Article 2, paragraphs 5, b and c). - Financing of terrorist organizations and financing of the individual terrorist regardless of whether financing is for criminal activities, legal activities or general support unless it can be shown the financier knew (including dolus eventualis) the funds were intended to be used for the commission of a terrorist act. - Authorities’ position on financing terrorist associations and individuals: - Authorities consider Article 278b, paragraph 2 in combination with Article 278, paragraph 3 provides ground to criminalize financing a terrorist organization per se, arguing “member participation in a criminal association” covers providing assets with knowledge of promoting the association or its criminal acts. - However, the exclusion of criminality in Article 278c, paragraph 3 may impede prosecution of financing where acts are committed for the excluded purposes. - Financing of an individual terrorist regardless of the purpose can only trigger criminal responsibility if it can be proved the financier was at least aware funds were meant to be used or intended to be used for the commission of a terrorist act (including awareness in the form of dolus eventualis). ### Predicate offense relationship and jurisdiction - Predicate offense for ML: - FT is a predicate offense to ML; Article 165 of the StGB (“Money Laundering”) explicitly cross-references Article 278d (“Financing of Terrorism”). - Jurisdiction: - FT offenses apply regardless of whether the alleged perpetrator is in the same country or a different country than the one in which the terrorist(s)/terrorist organization(s) is located or the terrorist act(s) occurred/will occur. - Example referenced: a case in pre-trial phase involves collection and provision of funds through an organization in a third country experiencing a conflict. *Source: _cr09298 - 169. The authorities further indicated that the low figures can be explained by the lack of* ### 190. The FT offense applies if the provision or collection of assets takes place in Austria, ### _cr09298 - 190. The FT offense applies if the provision or collection of assets takes place in Austria, ### FT offense: jurisdiction and scope - The FT offense applies if the provision or collection of assets takes place in Austria, irrespective of the place where the terrorist act is, or is planned to be committed. - If the FT offense itself was committed abroad, Austria may have jurisdiction only if: - (i) the perpetrator was Austrian at the time of the offense or he/she has gained the Austrian citizenship afterwards and is still in its possession at the time of the institution of criminal proceedings; or - (ii) the perpetrator was a foreigner at the time of the offense, but is in Austria at the time of prosecution and cannot be extradited. ### Mental element and liability of legal persons - The Mental Element of the FT Offense (applying c. 2.2 in R.2) - The criterion is met. - Liability of Legal Persons (applying c. 2.3 & c. 2.4 in R.2) - The criterion is met. ### Sanctions for FT (applying c. 2.5 in R.2) - Natural persons - The FT offense carries a prison term ranging from six months to five years. - The sentence imposed must not exceed the penalty provided for the financed offense. - The offender will be punished with a more severe penalty if the FT is subject to a more severe penalty under another provision. - Authorities explained this penalty equation derives from the accessory nature of the FT offense (treated as aiding and abetting), which would, under general criminal law principles, carry exactly the same penalty as the main offense. - Concern: this may create an issue with respect to the specificity of the financed offense (international standard indicates there should not be a specific linkage between the financing and a specific terrorist act). - Legal persons - Article 4 of the VbVG provides for a maximum fine of 100 daily rates for the offense of FT. - Therefore, the maximum fine for FT for legal persons and entities is EUR 1,000,000. - Assessment - The sanctions for natural persons appear to be too low, both in their minimum and their maximum, and therefore are not effective, nor proportionate or dissuasive. ### Implementation and effectiveness: case statistics and enforcement - Investigations and prosecutions - Authorities reported that between 2003 and 2006, 18 criminal cases related to FT were registered; none led to an indictment. - In 16 cases, the proceedings were dismissed by the public prosecutors. - In 2007, four FT cases were registered: - two criminal investigations by public prosecutors and two preliminary investigations by investigative judge. - Three of the 2007 cases have been terminated, one case is still pending. - No conviction for FT between 2004 and 2007. - Year-by-year breakdown - 2003: four criminal cases related to FT were registered — criminal investigations by public prosecutors in three cases and a preliminary investigation by an investigative judge in the fourth. - 2004: five FT cases were registered — criminal investigations by public prosecutors in four cases and a preliminary investigation by an investigative judge in the fourth case. - 2005: three criminal investigations were led by public prosecutors. - 2006: six criminal investigations were conducted by public prosecutors and two preliminary investigations were led by investigative judges. - Notable prosecution event - On March 12, 2008, a court sentenced a couple in Austria on charges of membership in a terrorist association (Al-Qaeda), threatening the Austrian Government, as well as attempted coercion for producing video promoting Al-Qaeda. - The Supreme Court annulled the verdict on procedural grounds and remitted it to the court for re-examination. - Authorities’ risk assessment - The authorities deem the risk of FT in Austria low, compared with other European jurisdictions; the existence of 18 criminal investigations since 2003 is cited as showing attentiveness to the FT risk. ### Recommendations and comments (2.2.2) - The authorities should: - extend the criminalization of FT in all instances envisaged in SR.II with reference to the financing of terrorist organizations and the individual terrorist, regardless of whether that financing is for criminal activities, legal activities or general support; - extend the criminalization to the whole range of activities envisaged by Article 2, paragraph 5 (b) and (c) of the 1999 UN Convention; and - increase the penalties set forth for FT. ### Compliance with Special Recommendation II (2.2.3) - SR.II rating: PC - Summary of factors underlying rating: - The offense of FT is not fully applicable in all the circumstances envisaged by SR.II, because in the case of the financing of a terrorist organization or an individual terrorist, the provision and collection of funds per se may not constitute an offense if it cannot be established that the provision or collection was with the knowledge that the assets were intended to be used for the commission of terrorist acts and in some other circumstances. - Penalties are too low and there is possible need for a link to a specific offense for penalty purposes. - Criminalization of organization and direction of others is not fully in line with the 1999 UN Convention. ### Confiscation, freezing and seizing of proceeds of crime (R.3) — legal framework and measures - Available measures - Two possibilities to confiscate property that has been laundered or which constitutes proceeds of any ML, FT or other predicate offense: - confiscation of profits ("Abschöpfung der Bereicherung", Article 20 of the StGB); - forfeiture ("Verfall", Article 20b of the StGB). - A third possibility for instrumentalities: Article 26 of the StGB (confiscation, “Einziehung”) — confiscation of “objects which have been used or have been intended to be used to commit an offense or have been produced by this offense” if necessary to counteract commission of offenses. - Scope and territorial reach - Confiscation of profits applies to economic benefits derived from any criminal offense. - Forfeiture applies to property at the disposal of a criminal organization (Section 278a) or a terrorist group (Section 278b), or property provided or collected as a means for financing of terrorism (Section 278d). - Property can be forfeited even if it derives from an offense where Austrian jurisdiction does not apply, if the offense is punishable under the law of the State where it was committed. - Article 65a of the StGB: confiscation and forfeiture “apply to all property items in Austria.” - Procedural aspects - Decision of confiscation or forfeiture can be made either as part of the main criminal trial or separately (Sections 443, 445 and 445a of the StPO). - Confiscation of profits (Article 20 of the StGB) - Applies to a person who has committed an offense (including misdemeanors) and has obtained economic benefit from it, or has received economic benefit for committing an offense. - Punishability of the offender is irrelevant for confiscation of profits; the provision requires an illegal act in objective terms. - The regime is value-based: court issues an order to pay an amount equivalent to illegal profits gained. - If extent of profits cannot be established, court may fix the sum according to its conviction. - Article 20, paragraph 2–3: rebuttable legal presumptions allow confiscation of property not directly linked to a specified offense in cases of continuous/repeated crimes or membership in a criminal organization (Article 278a) or terrorist group (Article 278b) where an “obvious presumption” exists that benefits derive from offenses. - Article 20, paragraph 4–5: covers third persons and legal persons/partnerships that have gained profits; successors can be subject to confiscation insofar as profits existed at transmission. - Forfeiture (Article 20b of the StGB) - Two cases: - property at the disposal of a criminal organization (Article 278a) or terrorist group (Article 278b), or provided/collected as means for financing terrorism (Article 278d); - property deriving from an offense where Austrian criminal jurisdiction is not established (Sections 62–65), but the offense is punishable under law of the State where it was committed. - Forfeiture does not require prior conviction but requires establishment and proof of existence of a “criminal organization” or “terrorist group.” - Forfeiture has been very rarely applied due to difficulty proving elements of a “criminal organization.” - Article 278a definition elements: association of a considerable number of persons, intended to last a longer period of time, similar to an enterprise; case law: “considerable number of persons” = ten persons or more; intended to exist at least about three months. - Forfeiture can apply to property “abandoned” in Austria and derived from extraterritorial offense punishable where committed; covers property indirectly held by criminal organization (e.g., straw-man) if proven to be “at the disposal” of the criminal organization/terrorist association. - Confiscation of instrumentalities (Article 26 of StGB) - “Objects which have been used or have been intended to be used by the perpetrator to commit an offense or have been produced by this offense shall be confiscated, if the confiscation seems to be required by the special condition of the objects to counteract the commitment of offenses.” - Allows confiscation of objects (not money) and is possible in absence of conviction or if the person cannot be subject to prosecution (Article 26, paragraph 3). - Exclusions and limitations - Confiscation of profits: excluded when defendant has satisfied civil claims, when confiscation enforcement is disproportionate to cost, or if order would cause inappropriate hardship (Article 20a). - Forfeiture: exclusions include legitimate claims by parties not participating in the offense, existence of foreign confiscation decision executable in Austria, or if forfeiture would be disproportionate (Article 20c). - Confiscation of instrumentalities: refrain if person removes special conditions making object useful for offending; legitimate claimant protections apply unless the claimant cannot guarantee objects will not be used to commit offenses. ### Provisional measures to protect property subject to confiscation (c. 3.2) - Legal basis - Articles 109-115 of the StPO provide provisional measures: “Seizure” (Sicherstellung, Article 110 of the StPO) and “Sequestration” (Beschlagnahme, Article 115 of the StPO). - The A-FIU has authority to block ongoing or postpone imminent transactions reasonably suspected of serving ML or FT purposes under various laws. - Seizure (Articles 109-110 of the StPO) - Seizure: temporary constitution of authority to dispose of objects, prohibition to surrender objects or assets to third parties, and prohibition to sell or pledge such objects and values when required for evidentiary purposes, securing civil claims, confiscation of profits (Article 20), forfeiture (Article 20b), confiscation (Article 26), or other property rights orders. - Seizure is ordered by the office of the public prosecution and executed by the criminal police (Article 110, paragraph 2). - In certain instances the criminal police is entitled to seize objects at its own discretion but must report to the office of public prosecution immediately and at the latest within 14 days from the seizure (Article 113, paragraph 2). - Instances where criminal police may seize at own discretion include (Section 109, n° 1, lit. a): objects under nobody’s authority to dispose; objects taken from a victim; objects found at the crime scene; objects of low value or easily substituted; objects whose possession is generally prohibited; objects in possession of a person arrested under Section 170 paragraph 1 no. 1 when arrested or found during a search under Section 120, paragraph 1; and cases under Article 4 of Council Regulation (EC) no. 1383/2003 of 22 July 2003 concerning customs action against goods suspected of infringing certain intellectual property rights. - Sequestration (Articles 109 and 115 of the StPO) - Sequestration: court decision to constitute or continue a seizure order, including prohibition to alienate, encumber or pledge real estates or rights listed in a public register (Article 109, paragraph 2b). - Admitted if objects seized are presumably required as evidence, are subject to civil claims, or will be needed to ensure a judicial decision on confiscation of proceeds of crime, forfeiture, confiscation, or other property orders whose execution would otherwise be endangered or made considerably more difficult. - Upon request of the office of public prosecution, the court must decide “immediately” about sequestration. - Application to value-based confiscation - Because Austria’s confiscation system is value-based, seizure and sequestration can apply to legal as well as illegal property. - When ordered to secure a judicial decision on confiscation of proceeds of crime or forfeiture, an amount of money that will cover the presumable confiscation or presumable forfeiture has to be determined (Article 115, paragraph 5). *Italic: Source — _cr09298 - 190. The FT offense applies if the provision or collection of assets takes place in Austria,* ### 218. It has to be noted that, according to Article 110, paragraphs 4 and 115, paragraph 3 the ### _cr09298 - 218. It has to be noted that, according to Article 110, paragraphs 4 and 115, paragraph 3 the ### Seizure and sequestration — legal limits and evidence - Seizure and sequestration of objects for reasons of evidence is not admitted and must be terminated if the affected person requests it “if and as soon as the aim of the evidence can be met with picture, sound or other recordings or with copies of written documents or data processed automation-aided and if there is no reason to assume that the seized objects themselves or the original versions of the information seized will have to be inspected during the court proceeding.” (Article 110, paragraphs 4 and 115, paragraph 3) ### A-FIU’s power to stop or postpone transactions (Preliminary Injunction “Anordnung”) - Legal basis: Article 41, paragraph 3 of the BWG; Article 98f, paragraph 3 of the VAG; Articles 6 & 12, paragraph 4 of the WAG (similar provisions for remaining financial sector and DNFBPs). - Obligations: - Financial institutions and DNFBPs must inform authorities without delay about transactions suspected of ML/FT. - Further execution of the transaction must be stopped unless delay would complicate or obstruct investigations (Article 41, paragraph 1 BWG; Article 98f, paragraph 1 VAG; Articles 6 and 12, paragraph 4 WAG). - The transaction can only be executed at the end of the following business day, unless otherwise instructed by the A-FIU. - A-FIU powers: - May order the financial institution/DNFBP not to execute the transaction. - Must notify the client and the prosecutor forthwith when such a measure is taken; notification must inform the client of the right to file a complaint with the Independent Administrative Court. - Must lift the order when reasons for blocking cease to exist or prosecutor rules preconditions for sequestration (Article 109, no. 2 and 115, paragraph 1, no. 3 StPO) no longer exist. - Blocking/postponing order expires 6 months after issuance or when court imposes sequestration pursuant to Article 109, no. 2, and 115, paragraph 1, no. 3, StPO (Article 41, paragraph 3a BWG; Article 98f, paragraph 4 VAG; Articles 6 and 12, paragraph 4 WAG). ### Ex parte application for provisional measures - Seizure and sequestration are applied ex-parte: - Order by the office of the public prosecution or by the criminal police in circumstances set out in Article 110, paragraph 3 (seizure). - Sequestration must be requested to the court by the office of the public prosecution “immediately.” - No prior notice required. ### Identification and tracing of property subject to confiscation - Principle of legality: law enforcement agencies must start an investigation if suspicion of a criminal offense exists (Article 34, paragraph 1; Article 36; Articles 99–100 StPO). - Criminal police may take provisional measures (seizure) to secure property; prosecutors may apply to court for sequestration. - Credit and domestic financial institutions (Article 1, paragraph 2 BWG) and DNFBPs must, upon request, provide the A-FIU “with all information which the authority (that is the A-FIU) deems necessary in order to prevent or pursue cases of ML or FT” (e.g., Article 41, paragraph 2 BWG). - A-FIU can request such information without a court order. - This direct access does not apply to other law enforcement agencies investigating ML/FT or where a reporting entity refuses the A-FIU’s request; in such cases the A-FIU must seek an order to compel production or search. - One known refusal case was deferred by the reporting entity to the Independent Administrative Tribunal (Unabhängiger Verwaltungssenat, UVS); UVS decided the BKA request was legal and information was transmitted to the BKA. ### Access to bank account information and judicial admission requirements - Article 116 StPO governs “information on bank accounts and bank operations” for access by police and A-FIU. - Disclosure is admitted “if it seems necessary to ascertain a criminal offense or a misdemeanor under the jurisdiction of the regional courts (that includes ML)” and sets principle of “judicial admission” — the office of the public prosecution must demand a court order and admission of disclosure (or search). - Conditions for admission are restrictive: the prosecutor must show, based on specific circumstances, that the business relation with the credit/financial institution is actually “connected to committing a criminal act” and that: - “either the holder of the account himself/herself is suspected of having committed the act or it is presumed that a person suspected of having committed the act will operate or has operated a transaction via the account”, or - “the business relation will be used for the transaction of a financial benefit that was gained through criminal acts or gained for them (Article 20 StGB) or is subject to the disposition of a criminal organization or terrorist group or is provided or collected as a means of financing terrorism (Article 20b StGB).” - Paragraph 4 of Article 116 requires that the order/admission contain: 1. the denomination of the court case and the criminal act it is based on as well as its legal denomination, 2. the credit or financial institution, 3. the designation of the documents to be handed over and the information to be disclosed, 4. the facts that constitute the grounds for the necessity and proportionality (section 5) of the order, 5. in the case of an order according to paragraph 2 the time frame concerning which the operations are to be disclosed, and 6. in the case of an order, according to paragraph 2, the facts that constitute the grounds for the connection between the business relation and the subject of the proceeding. - Court must consider proportionality: whether disclosure is proportionate to the infringement on rights of disinterested third parties and whether the same result could be achieved by less intrusive measures. - DNFBPs with professional privilege (lawyers and notaries): Article 9(4) RAO and 37(4) NO apply; broad notion of “legal advice” may substantially limit law enforcement access to information. ### Protection of bona fide third parties - Articles 20c and 26 StPO provide for abstention from forfeiture/confiscation if property is legitimately claimed by a person who has not participated in the offense, criminal organization, or terrorist association (Article 20c). - “Objects” legitimately claimed by an uninvolved person will only be confiscated if “the person concerned does not guarantee that the objects will not be used to commit the offense” (Article 26, paragraph 2). - Customers or “another party concerned” have the right to file a complaint with the Independent Administrative Tribunal or under Article 67 of the AVG in case of an A-FIU freeze. ### Power to void actions and avoidance of transfers - Article 879 ABGB: contracts violating statutory laws or contra bonos mores are null and void (applies where contract constitutes a criminal offense or intended to hinder State’s recovery of legitimate financial claims). - Acts of a debtor preventing creditors from satisfying legitimate claims may be contested under insolvency law and creditor’s avoidance of transfers law. ### Additional confiscation elements (Rec 3) - Civil (in rem) forfeiture is not authorized. - Forfeiture of property belonging to organizations primarily criminal in nature is provided (Article 20b StGB) — confiscation of “membership benefits.” - Confiscation of such membership benefits in principle does not require prior conviction for membership; procedure based on partial reversal of burden of proof — person must show alleged benefits did not derive from membership in a criminal organization or terrorist group. ### Effectiveness — observations and statistical data - Legal framework is robust in scope but questions about effectiveness exist. - Issues derive from restrictive conditions for: - Forfeiture of property at disposal of criminal organizations (difficulties proving elements of criminal organization). - Law enforcement access to information from financial institutions/DNFBPs (except A-FIU when investigating ML) and to compel documents. - Practical usage: - Forfeiture of property at disposal of criminal organization/terrorist group has not yet been applied (no figures provided). - Confiscation without conviction is rare in practice. - Statistics are difficult to interpret because amounts reported for 2004–2006 include property subject to provisional measures (not only final measures); amounts may be lower if restricted to final confiscation. - Noted considerable gap between amounts seized/confiscated and interim injunctions applied by the A-FIU. - Statistical Table 14. ML Offenses (Article 165 StGB) - 2003 - Number of cases: 3 - Number of court orders (seizure/confiscation): 3 (Article 144a StPO) - Amounts of property seized/confiscated: EUR 554.212,61 + USD 110.000 - 2004 - Number of cases: 4 - Number of court orders (seizure/confiscation): 5 (Article 144a StPO) - Amounts of property seized/confiscated: EUR 15.334.347 - 2005 - Number of cases: 0 - Number of court orders (seizure/confiscation): 0 - Amounts of property seized/confiscated: 0 - 2006 - Number of cases: 1 - Number of court orders (seizure/confiscation): 1 (Article 144a StPO) - Amounts of property seized/confiscated: EUR 3.955.000 - Statistical Table 15. Interim injunctions by court order applied for by the A-FIU - 2004 - Injunctions (number): 23 - Amounts involved — Accounts Deposits (EUR million): 27.9 - 2005 - Injunctions (number): 15 - Amounts involved — Accounts Deposits (EUR million): 99.2 - 2006 - Injunctions (number): 21 - Amounts involved — Accounts Deposits (EUR million): 28 - 2007 - Injunctions (number): 28 - Amounts involved — Accounts Deposits (EUR million): 113.9 - Cash amounts noted: - 2006: Cash: 0.2 (EUR million) - 2007: Cash: 2.3 (EUR million) ### Recommendations and comments (2.2.3) - The authorities should: - Ease the requirements for law enforcement authorities to obtain access to information held by financial institutions and lawyers and notaries (for example, for financial institutions, permit wider access to such information for determining the nature of a criminal activity; permit the police to obtain such information with ex post judicial authority’s intervention, in the cases of serious crime; for lawyers and notaries revisiting the notion of “legal advice”); - Consider changes needed to ease the burden in establishing that an organization is a “criminal organization” or otherwise change provisions so that Article 20b, when applied to property at the disposal of such organizations, is more readily enforceable; - Improve the effectiveness of the provisions by using them more frequently to restrain and confiscate criminal assets for ML, FT and predicate crimes, especially by making more use of forfeiture; - Maintain more precise statistics on amounts restrained and confiscated in each instance. ### Compliance with Recommendation 3 — rating - R.3: PC - Summary of factors underlying rating: - Strict conditions for obtaining/compelling information subject to banking secrecy and scope of legal privilege hinder the possibility for law enforcement authorities to locate and trace property. - Given the level of profit-generating crimes, effective use of the provisional measures and confiscation provisions not demonstrated. ### Freezing of funds used for terrorist financing (SR.III) — legal framework and practice - Freezing measures implemented mainly by directly applicable European Council Regulations: no. 881/2002 of May 27, 2002 and 2580/2001 of December 27, 2001, for UNSCRs 1267 and 1373, respectively (applicable to EU-externals). - Two Council Common Positions (No. 2001/930/CFSP and No. 2001/931/CFSP) apply to EU-internals but required enactment via binding EU Regulations or national legislation; in Austria, “Official Announcements” of the OeNB (pursuant to DevG, Federal Law Gazette I No. 123/2003) serve this purpose to a limited degree. - Freezing obligation exercised either through directly applicable EU legislation or through OeNB “Official Announcements” depending on persons concerned. - Prosecutors have duty to institute criminal proceedings and apply for provisional injunctions to freeze property (seizure or sequestration) if founded suspicion arises that funds belong to terrorists/terrorist organizations. - European Court of Justice judgment on September 3, 2008 (Kadi and Al Barakaat International Foundation, C-402/05 P and C-415/05 P) annulled the 2002 EU Council regulation insofar as it concerned the appellants but left the EU regulation in place for up to three months to permit the European Commission to remedy violations. - MoFA designated to collect and provide information to the UN Sanctions Committee on assets frozen in compliance with UN Resolutions. - No Austrian proposals for EU- or UN-listing procedures have been submitted so far. - Practice and statistics: - There are currently no funds frozen in Austria pursuant to UNSCRs 1267 and 1373. - No transactions have ever been prohibited pursuant to the OeNB regulations based on Article 4 DevG. - No violations of freezing obligations recorded so far; therefore no sanctions have been issued. - The 1267 list contains one listing concerning a limited liability company formerly incorporated in Austria (Youssef M. Nada & Co. Gesellschaft M.B.H.), dissolved on October 22, 2001 (prior to the listing dated November 2001) and deleted from the Commercial Register on November 14, 2003; BVT reports the company’s accounts were cleared before the listing so no funds could be found after the listing. *Source: _cr09298 - 218. It has to be noted that, according to Article 110, paragraphs 4 and 115, paragraph 3 the* ### 249. There was only one case concerning the freezing of funds pursuant to UNSCR 1267. The ### _cr09298 - 249. There was only one case concerning the freezing of funds pursuant to UNSCR 1267. The ### Case inventory and factual findings - One case concerning the freezing of funds pursuant to UNSCR 1267 involved an account on which USD 4,083.87 were deposited; the account had been inactive since February 19, 1987. - On March 4, 2002 the bank supplied information that the account holder died on January 3, 1987, indicating the account was apparently frozen by mistake. - A freezing action regarding a flat was undertaken pursuant to (EC Regulation 881/2001, therefore based on a 1267 listing) against a Himmat Ali Ghaleb. ### Legal and regulatory framework for UNSCR 1267 and 1373 implementation - Austria implements the financing-of-terrorism aspects of UNSCR 1267 and related Al-Qaeda/Taliban sanctions through EC Regulation 881/2002. - Austria implements UNSCR 1373 through EC Regulation 2580/2001. - These EC regulations are directly applicable in Austria as EU member state law (no domestic transposition required). - Under EC Regulation 881/2001: - All funds, other financial assets and economic resources belonging to, or owned or held by, listed natural or legal persons, groups or entities shall be frozen. - Annex I is regularly and promptly updated by the Commission whenever the UN Sanctions Committee changes the UN list. - The UN Security Council indicated freezing orders should be made within three working days after the UN determination; the EU follows an accelerated procedure beginning once the European Commission is informed, publishing Regulations that enter into force on the day of publication. - Regulation EC no. 2580/2001 establishes a freezing mechanism applicable to designated non-EU-based entities or non-EU residents/citizens (“EU externals”). Article 2 obliges freezing of funds, other financial assets and economic resources belonging to designated EU-externals and prohibits making such assets available to them. - The Council’s list for Regulation 2580/2001 is established and amended by unanimity; the current list referenced is Council Decision 2007/868/EC. - Financial institutions and other relevant institutions/authorities must implement Regulations 881/2001 and 2580/2001 immediately by freezing assets without prior notice and must notify OeNB upon freezing; OeNB reports to the Commission. ### Practical limitations and implementation gaps (assets other than funds) - Direct applicability of EU regulations in Austria poses difficulties for freezing assets other than funds held by financial institutions (e.g., real estate, businesses, companies, vehicles). - Freezing other assets is practically applicable only to transactions that require registration (notably immovable property), where the Ministry of Justice (MoJ) has instructed courts maintaining registers of immovable goods not to register transactions for goods that belong to listed individuals or companies. - These practical mechanisms: - Are not fully aligned with SR.III’s interpretative note definition of “freeze” (prohibit transfer, conversion, disposition or movement of funds or other assets on the basis of an action initiated by a competent authority or court). - Do not allow “freezing without delay” as required by SR.III. - For immovable goods: - Freezing is effected by denying registration of contracts constituting rights subject to court registration; registration is a condition to transfer property rights. - For rights not subject to registration (e.g., lease), authorities maintain the contract will be considered null and void under Article 879 of the AGBG. - Austrian court case law established there is no obligation for property registers to annotate that an immovable good is subject to freezing under EU regulations; absence of annotation hinders information on frozen goods. - For companies, businesses, undertakings, and vehicles: - Implementation is unclear in practice; when share sales are subject to company-register registration (e.g., limited liability companies), registers could deny registration by analogy with immovable goods, but no case law or official instructions confirm this. - For EU internals (persons/groups/entities based or resident in the EU meeting Article 1,c of UNSCR 1373): - These are excluded from Regulation 2580/2001 direct freezing requirements; they are listed in an Annex to Common Position 2001/931/CFSP which does not set directly applicable requirements. - Common Position 2001/930/CFSP requires EC countries to adopt freezing measures for funds and other financial assets or economic resources related to EU internals, but it is not directly applicable domestically. - Austrian authorities consider implementation for EU internals is via OeNB Official Announcements pursuant to Article 3 of the DevG to restrict capital movements under certain conditions. - OeNB regulation adopted on 25 September 2008 incorporated Common Position 2007/871/CFSP; an updated version incorporating Common Position 2009/67/CFSP was published by OeNB on March 13, 2008 (noting sequence in source). - OeNB regulations under the DevG: - Apply only to transactions described by Article 4 of the DevG (transactions by or affecting rights of non-residents, foreign property owned by a resident, or involving foreign means of payments, foreign currency or foreign securities). - Do not constitute freezing mechanisms in the terms required by UNSCR 1373 and SR.III due to more limited scope. ### Procedures, urgent actions and non-EU freezing requests - For persons/entities not on EU lists but subject to direct freezing requests from other jurisdictions or where STRs indicate possible FT financing: - Austria has a judicial-based mechanism for seizure and confiscation of terrorist funds. - The A-FIU has the power to block or postpone execution of imminent transactions reasonably suspected of serving ML or FT. - Austria can use DevG freezing mechanisms under their conditions. - Exigent circumstances: - Austrian law allows seizure without a court order in exigent circumstances (first instance by prosecutor or police). - Authorities indicated requests from foreign authorities to freeze assets (via mutual legal assistance or A-FIU) can be acted on swiftly; a 24-hour hotline exists within the MoI for urgent measures. - Criminal-procedure freezing requires the prosecutor to have evidence to substantiate suspicions to maintain assets frozen by court sequestration. - Confiscation or forfeiture is possible in principle without conviction, but court-admissible evidence is needed to prove property is at disposal of a terrorist group or provided/collected as means of financing terrorism; the court must establish a “terrorist group” offense per Article 278b (subject to limitations such as the exemption in Article 278c, paragraph 3). ### Extension of freezing to assets controlled by designated persons - EU Regulations define frozen assets broadly: funds, other financial assets and economic resources “belonging to, or owned or held by” designated persons/entities “however acquired,” covering directly or indirectly owned or controlled assets. - EU Regulations implicitly recognize joint ownership; EU Best Practice (November 29, 2005) applied by Austrian authorities indicates: - “Funds and economic resources jointly owned by a designated person or entity and a non-designated one are in practice covered in their entirety. The nondesignated person or entity may subsequently request an authorization to use such funds and economic resources, which may include severing the joint ownership so that person’s share can be unfrozen.” - “Holding or controlling should be construed as comprising all situations where, without having a title of ownership, a designated person or entity is able lawfully to dispose of or transfer funds or economic resources he, she or it does not own, without any need for prior approval by the legal owner.” ### Communication, guidance and operational issues for the financial sector - Publication and notification: - Council and European Commission publish regulations and decisions in the Official Journal of the European Union; publication in the Official Journal is considered sufficient notification. - Publication in the Official Gazette and on OeNB website is considered sufficient notification to the financial sector for OeNB regulations. - Practical dissemination: - Some financial institutions with US correspondent relationships reported they also receive OFAC lists; various lists are supplied by external data providers. - Austrian authorities disseminate sanctions-related information, including changes to foreign “national terrorist lists” (e.g., OFAC lists) forwarded by diplomatic representations to MoFA or MoF. - Financial institutions interviewed were not clear which lists came or went or whose responsibility it was to send them. - Guidance: - Austria relies largely on EU regulations themselves to guide financial institutions, given direct applicability. - MoF, OeNB or WKO provide sanctions-related information on request (telephone or written) or for important recent developments. - Private sector reported difficulties in ascertaining accuracy of false hits in the absence of an official provider of information on listed names. - Operational gap: - Although law enforcement checks listed names against various databases, there is not a routine check of property ownership registers (e.g., companies register) to determine whether a named individual or organization holds property in Austria and to take encumbrance action. - MoJ has issued guidance to courts maintaining immovable goods registers not to grant registration to real estate transactions if one party is in the EU lists. ### De-listing and unfreezing procedures - National autonomous de-listing/unfreezing decisions are not provided for by relevant European regulations; requests must be directed through MoFA and its representative to the UN Sanctions Committee or the European Commission, as appropriate. - Requests for de-listing from UN and EU restrictive measure lists are to be directed to OeNB as the Austrian designated competent authority. - Delisting challenges: - Applicants may pursue delisting before Austrian and EU courts. - If a request for delisting is refused, applicants can present the matter to a national Austrian court or the European Court of Justice. - Legality challenges under the regulations must be made to the European Court of Justice within two months after designation, or a national court may refer a prejudicial question to the European Court of Justice. - Unfreezing for mistaken identity: - May be pursued per EU Best Practices via OeNB as Austrian competent authority, via the AVG, or by filing a case before an Austrian court. *Source: _cr09298 - 249. There was only one case concerning the freezing of funds pursuant to UNSCR 1267. The* ### 280. Designations under the Regulations adopted by the OeNB pursuant to the Exchange of ### _cr09298 - 280. Designations under the Regulations adopted by the OeNB pursuant to the Exchange of ### Unfreezing procedures and legal remedies - Designations under the Regulations adopted by the OeNB pursuant to the Exchange of Control Act may be challenged under the AVG. - Usual protections under Austrian law to the rights of bona fide third parties apply in the case of freezing under the EU lists or a seizure otherwise ordered in the Austrian system. - There is access to the courts in Austria to challenge aspects of a freeze that adversely affects a person or entity; the court may seek advice from the European Court of Justice. - Persons or entities designated or frozen under Regulation 881/2002 or 2580/2001 may institute proceedings before the European Court of Justice, which is invested with authority to review the legality of such freezes. - EC regulation 881/2002 at Article 6 protects the good faith actions of freezing entities except when a freeze is due to negligence. - A person or entity erroneously listed by an OeNB regulation or whose funds were wrongly frozen by a financial institution may seek damages under Austrian law of damages and, where applicable, the Public Liability Act (Amtshaftungsgesetz, AHG). ### Access to frozen funds for expenses and exemptions (UNSCR 1267 / 1452; EC Regulations) - UNSCR 1267 as amended by UNSCR 1452 is implemented in the EU through Article 2a in EC Regulation 881/2002—directly applicable in Austria. - Article 2a authorizes access to funds frozen for basic expenses, certain fees or for extraordinary expenses. - The OeNB is the designated competent authority to receive exemption requests from affected persons. - The OeNB notifies the Al-Qaeda/Taliban Sanctions Committee which has 48 hours to object to the exemption. - The OeNB must promptly notify the person making the request, and any other known directly concerned person, body or entity in writing whether the request has been granted or not. - If granted, the OeNB must inform other Member States. - Articles 5 and 6 of EC Regulation 2580/2001 (designations from UNSCR 1373): - Article 5: OeNB may grant specific authorization to unfreeze funds for essential human needs under conditions it deems appropriate. - Article 6: Competent authorities of Member States may grant specific authorizations after consultations with other Member States, the Council and the Commission to protect the interest of the Community and its citizens/residents. ### Review of freezing decisions and case law - Any natural or legal person directly and individually affected can challenge EC regulation freezing mechanisms at the European Court of Justice under Article 230 of the Treaty establishing the European Community. - Court of First Instance judgments in 2006 and 2007 (T-228/02, People's Mujahedin of Iran (OMPI); T-47/03, Sison; T-327/03, Stichting Al Aqsa) held the Council must provide a statement of reasons to designated individuals/groups/entities to allow them to make their views known and to permit judicial review. These judgments are final. - The Court of First Instance upheld this approach on 3 April 2008 in T-229/02 and T-253/04, Kurdistan Workers’ Party (PKK) and Kongra-Gel. - On September 3, 2008, the European Court of Justice judgment in Kadi and Al Barakaat International Foundation (C-402/05 P and C-415/05 P) annulled the 2002 EU Council regulation implementing UNSCR 1267 insofar as it concerned the appellants, but allowed up to three months for the European Commission to remedy violations. The Court found violations of fundamental human rights, specifically the right of defense and the right to an effective legal remedy. - Where EU internals are designated by OeNB regulation, general principles of Austrian administrative law apply, in particular Article 26 to 29 of the Administrative Court Act 1985 (Verwaltungsgerichtshofgesetz, VwGG). ### Freezing, seizing, confiscation and protection of third parties - Rights of bona fide third parties affected by freezing under the EU lists, OeNB designations or otherwise ordered seizures are protected by the relevant EC-Regulation and general principles of Austrian law. - Bona fide third parties may institute proceedings before the European Court of Justice when freezes are imposed through Regulation 881/2002 or 2580/2001. - Under Austrian law of damages, a person generally can only be held liable when it acted at least with negligence (Article 1295 et seq. ABGB). - Articles 20c and 26, paragraph 2 StGB provide a legal basis for abstention from forfeiture and confiscation if the property is legitimately claimed by a person not having participated in the offense or in the criminal organization, consistent with Article 8 of the Terrorist Financing Convention. ### Enforcement of obligations under SR.III and sanctions - Compliance with relevant legislation is generally monitored in the financial supervisory process: - FMA for the overall sector; - OeNB for banks; - External auditors as part of annual review. - Assessment of FT is integrated into the OeNB examination procedure; methodology includes procedures to verify bank compliance with FT provisions. - Assessors could not confirm routine monitoring of obligations under SR.III and consider further steps necessary, especially regarding implementation of the DevG. - Sanctions authority: - The DevG stipulates non-compliance with EC or relevant Austrian Federal Government regulations concerning freezing of funds is an offense punishable with a fine up to EUR 30,000 or a term of imprisonment of up to one year. - The conclusion of a transaction which constitutes an offense under this Act is null and void. - No sanctions have been issued so far under this provision. ### Implementation of best practices and procedures - Authorities indicated implementation of the best practice paper for SR.III by way of EU and domestic legislation and full cooperation with foreign jurisdictions. - Procedures to access frozen funds discussed under criterion III.9 apply (see Access to frozen funds above). ### Recommendations (paragraph 298) - The authorities should: - set up procedures within Austria that will ensure freezing without delay of assets other than funds (such as immovable goods, companies and businesses and vehicles); - modify the OeNB regulations adopted pursuant to the DevG in order to make possible freezing of funds and assets held by EU-internals in all instances set forth by SR.III; and - provide more guidance to the private sector, especially the non banking financial industry and DNFBPs, on the freezing obligations stemming from the international standard. ### Compliance with Special Recommendation III (SR.III) — Rating summary - SR.III: PC - Factors underlying the rating: - Lack of effective procedures to allow freezing or to freeze without delay in the case of assets other than funds in many instances. - The OeNB regulations adopted pursuant to the DevG (for EU-internal terrorists) do not constitute freezing mechanisms in the terms required by UNSCR 1373 and SR.III, because they are mainly applicable to non residents and they do not encompass the full range of the economic resources. - Insufficient guidance provided to financial institutions and other persons or entities concerning their obligations under freezing mechanisms. ### The Financial Intelligence Unit (FIU) and its functions (R.26) - Austrian laws and regulations do not explicitly provide for establishment of a Financial Intelligence Unit (FIU), but ten laws/regulations covering subjected entities refer to an authority competent for reception of STRs in ML or FT cases. - The competent authority varies by reporting entity; in practice STRs are reported to the Austrian Financial Investigation Unit (A-FIU) in the BKA. - The A-FIU both receives all STRs and conducts criminal investigations on ML cases; the same law enforcement officers perform both tasks. - Operational practice and statistics: - In 2007, out of the 1,085 information recorded as “STRs” in the A-FIU statistics, 197 cases were related to 419 letters or phishing emails, which did not meet the definition of an STR. - When the A-FIU receives STRs related to FT, it must forward them to the BVT (competent authority for FT). Both are law enforcement units and need opening of a case to exercise powers (requests for information, international cooperation, freezing of assets, special investigative techniques). - There is technically no dissemination of information by the A-FIU; investigations are conducted by the A-FIU or forwarded to another competent authority. - Rights of suspects/defendants under StPO: - Article 1, paragraph 2 StPO: criminal proceedings start as soon as police or public prosecution initiate investigations against a known or unknown person to clarify suspicion of a criminal act. - Article 49, paragraphs 1 and 3 StPO; Article 50 StPO; Articles 51-53 StPO: rights to be informed about nature of suspicion and to access files (with limitations for security and during preliminary proceedings). - Article 100, paragraph 3 StPO: BKA reports to the Prosecutor’s Office shall include “the names of the persons who filed the criminal complaint, names of the victims and, if applicable, other informants.” - Article 194 StPO: when preliminary proceedings end or case is final, suspect/defendant may view all files related to the investigation, including the STR with the reporting entity name (with limited exceptions). - Protection measures for reporting entities and employees: - Following complaints by credit and domestic financial institutions about exposure to threats, a joint action plan by MoF, A-FIU, MoJ, FMA, BVT, Federal Chancellery and the financial sector (WKO) was agreed early November 2008. - A MoJ ordinance of November 11, 2008 gives guidelines regarding protection of employees of reporting credit and domestic financial institutions. - Establishment and role of A-FIU as national centre: - Despite slight legal differences, common understanding and practice is that all STRs are sent to the A-FIU. - The A-FIU acts as a national center for receiving STRs and other reports concerning suspected ML and FT. - STRs are transmitted by email, fax, post or courier. - A-FIU also receives reports based on suspicion of violation of fiduciary relationship disclosure (Article 40, paragraph 2 BWG) and withdrawal requests on savings deposit with a balance of at least EUR 15 000 when customer identity not ascertained. - Based on Article 4(2) of the BKA-G, local police services must inform the A-FIU about ongoing ML cases. - Under Article 22 B-VG, BKA is recipient of ML-related information from other administrations; authorities consider additional written guidance unnecessary. - Historical/legal notes: - BKA-G entered into force in 2002; until then only certain laws contained ML and FT provisions. - A unit specialized on money laundering (A-FIU) evolved from a unit named EDOK until 2002. - Since November 1, 2000, customer identity has to be ascertained for savings accounts (including withdrawal and deposits on “old” savings accounts). *Italic: Content derived from IMF country report _cr09298, sections 280–306, 289–307, 298–307.* ### 309. In 2007, the A-FIU received 2,247 information, including 1,599 reports from the professions ### 309. In 2007, the A-FIU received 2,247 information, including 1,599 reports from the professions ### Reception of reports and operational intake - In 2007, the A-FIU received 2,247 information, including 1,599 reports from the professions subjected to reporting obligations. - Of those reports: 460 came from other law enforcement units, 514 were mandatory reports in relation to savings accounts and 1,085 were recorded as “STRs”. - Of the 1,085 STRs, 197 cases were related to 419 letters or phishing emails, which did not meet the definition of an STR. - STRs are received by an officer on duty in charge of the reception of the STRs; this “officer on duty” function changes on a daily basis. - Outside business hours, STRs are received by the SPOC (Single Point Of Contact) of the BKA. - The A-FIU provides a specific reporting form for STRs available from the Ministry of Interior website. Reporting entities must check a box on the STR form to indicate if the suspicion is based on ML or FT. - The A-FIU estimates being contacted more than 10 times a day by reporting entities concerning their reporting requirements. ### Division of responsibilities: ML versus FT (receiving, forwarding) - The A-FIU (part of the BKA) is the competent authority for receiving STRs (ML/FT) de facto; statutory responsibilities differ somewhat by law. - With the exception of FT-related STRs from reporting entities, the A-FIU is not responsible for receiving other FT-related information from other administrations; the BVT is solely responsible for investigating FT. - Article 17c (2) ZollR-DG: customs authorities must pass cash-control data to the competent authority — A-FIU for ML and BVT for FT — when necessary to perform statutory tasks. - If the A-FIU receives FT-related information, it forwards it to the BVT. - A 16 June 2003 letter from the BKA to the BVT states: “Notification of suspicion of terrorist financing or of membership in a terrorist organization remains the direct responsibility of the BVT because of its original competence for such matters.” - At the BVT’s request the BKA can provide support to FT investigations; the BVT must immediately inform the BKA (Money Laundering Notification Office, SPOC) if grounds for an order cease to exist. ### Analytical and dissemination functions (or absence thereof) - The A-FIU, being a law enforcement unit, investigates complaints or STRs received under its competence and must systematically start criminal proceedings to clarify suspicion (Article 1, paragraph 2 of the StPO). - Consequently, an investigation is opened for each information received from a reporting entity when it meets the requirements of an STR (e.g., not one of the 419 letters or phishing emails). - The A-FIU has no analytical function; reception of an STR amounts to the beginning of a police or judicial investigation (police investigation under Article 16 SPG or criminal investigation under Article 100 StPO). - The A-FIU has no dissemination function. After reception of information that meets the STR requirement, the first step is the opening of an investigation by the A-FIU; investigations are then performed by the BKA or local police authorities for ML, and by the BVT for FT. - Police and judicial authorities involved are empowered to conduct investigative actions (surveillance, interrogations, wire-tapping, search of premises, warrants of arrest). ### Competence and internal allocation (BKA, A-FIU, BVT) - Pursuant to Article 4(2) of the BKA-G, the BKA competence is “the fight against ML in relation to the BWG, BörseG and WAG”; the BKA will be in charge of ML-related STRs received pursuant to these laws. - The circular allocating functions inside the BKA makes clear that the A-FIU is the unit in charge concerning information received pursuant to section 41 of the BWG. - ML-related STRs based on the VAG, the GSpG and the GewO could theoretically be received and investigated by any police service, including the BKA. - The BKA, for ML investigations within its single competence, may entrust local police services with investigations at any time. - FT-related STRs are directly forwarded by the A-FIU to the BVT for investigation; the BKA can support at the BVT’s request. ### Procedures for additional information and access to records - As investigations start immediately after reception of STRs that meet legal requirements, all additional information is requested by the police authority in charge of the investigation as part of the investigative process. - The BKA is authorized to request directly all available and necessary information for ML and FT investigations from lawyers, notaries and accountants (see RAO, NO, WT-ARL and BiBu-ARL specify that it is the A-FIU) if released from the duty of secrecy by the client or if a judicial order is issued by the public prosecutor. - For casinos, gaming secrecy does not apply if released by the client or in the case of proceedings before civil courts and in connection with a criminal procedure subject to the StPO (Article 51 (2) GSpG). - For banks, insurance, investment and securities institutions, and other DNFBPs (see BWG, VAG, WAG, BörseG, and GewO), relevant laws devolve the power to request information to the Federal Ministry of Interior; in practice this power is exercised by the A-FIU. - Authorities consider that the BVT would need a court order to request financial information from a reporting entity. - When related to suspicion of ML or FT, the requested information is not subject to banking secrecy provisions; persons and entities are obliged to provide requested information to the relevant police authority. - Sanctions for refusal: Article 93, paragraph 2 StPO or a search warrant under Article 116, paragraph 6 StPO. Example case: one known refusal was deferred to the Independent Administrative Tribunal (UVS), which decided the BKA request was legal and information was transmitted. - BKA requests to banks: 44 in 2004, 24 in 2005, 23 in 2006 and 105 in 2007. - In practice, demands are centralized by unit 3.4.2 (A-FIU), which acts as a single point of contact for requesting additional information from reporting entities during ML and FT investigations. ### Publication, reporting guidance and international cooperation - The A-FIU provides information on reporting manners and procedures in informative meetings with reporting entities, either directly or organized by reporting entities, the WKO, and the FMA. - Since 2004 the A-FIU publishes annual reports presented in a press conference; these annual reports are retrievable from the MoI website and describe trends and typologies and include statistics (number of STRs, breakdown by reporting entities, anonymous savings account reports, cooperation with other countries, predicate offenses, number of criminal charges for ML and number of convictions). These reports are mainly oriented toward ML and do not explicitly address FT. - The BVT includes a section on terrorism financing in its annual report; in the report for 2008, three pages were dedicated to FT. - Austria is a founding member of the Egmont Group (1995) and is represented by the A-FIU of the BKA since 2004. - The A-FIU applies the Egmont Principles of Exchange of Information among FIUs (adopted June 13, 2001). In 2007, the A-FIU sent/received information on 383 cases via the Egmont secure website. ### Operational independence, protection of information and integrity - Unit 3.4.2 (A-FIU) is part of the BKA, which is subordinated to the MoI. The BKA has its own budget but there is no specific budget line for staff and operations related to reception of STRs. - A-FIU staff in charge of receiving and investigating STRs is subject to general rules of the Austrian police. Inside unit 3.4.2 there is no distinction of responsibilities between staff performing FIU reception/guidance and staff conducting police or criminal investigations for ML; each staff member performs tasks across the unit’s scope. - The A-FIU maintains separate archives and its own file management; access is protected and only A-FIU staff have access to locked archives. - Information received by the A-FIU is recorded in the general BKA database with restricted access and different access rights. In general, except for A-FIU staff, a positive request is linked to a number and the information that a file is possessed by the A-FIU. Some high ranking BKA officials have full access rights. - Reporting entities mentioned examples of STRs leaking to the press or to suspected persons during an investigation; authorities indicate leaks to the press were forwarded by suspects’ lawyers and other involved persons. Local police disclosed STRs to suspects to justify ongoing investigations in reported cases. - Article 20, paragraph 3 of the B-VG obliges all police officers and civil servants to professional secrecy; breach can result in disciplinary measures (fines, dismissal). No specific provision applies concerning dealing with information contained in STRs. ### Resources, staffing and training - The Money Laundering Unit (A-FIU) staff consists of the head, one secretary and three teams (total of 10 detectives). Footnote: 11 detectives as of March 1, 2009. - The FIU functions of the Money Laundering Unit are fully merged with investigative functions; those investigative functions are the unit’s main activity and the A-FIU is the only team dedicated to investigate ML in Austria. - Reception of STRs is not the most costly function; STR levels are relatively low and there is no automated electronic transfer of data from reporting entities. Reports may be sent by email but are not automatically integrated into the A-FIU database. - The dual role (FIU reception + investigations) constrains resources and limits the unit’s ability to raise awareness on ML/FT typologies to reporting entities. - Training: Money Laundering Unit staff may attend “refresher courses” offered by the police forces/MoI training agency; “training on the job” is used. Courses available at the Vienna University of Economics and Business Administration. Unit participates in international projects and seminars (Interpol, Europol, Egmont Group, Council of Europe, EUROJUST, FATF-Typologies workshops) and in exchange programs with FIUs and law enforcement in Liechtenstein, Switzerland, Hungary and Slovakia. ### Statistics (STRs and related reports) - Statistical Table 19. STRs Received by the A-FIU: - 2004: ML-Related STRs 373; FT-Related STRs 12; Reports on Anonymous Savings Accounts 1,206 - 2005: ML-Related STRs 467; FT-Related STRs 19; Reports on Anonymous Savings Accounts 1,009 - 2006: ML-Related STRs 692; FT-Related STRs 15; Reports on Anonymous Savings Accounts 1,174 - 2007: ML-Related STRs 1,085; FT-Related STRs 23; Reports on Anonymous Savings Accounts 514 - Statistical Table 20. ML-Related STRs — breakdown by reporter type: - 2004 totals (ML-Related STRs 373): Financial institutions 360; Banks 349; Insurance 11; DNFBPs 8; Casinos 2; Lawyers 1; Notaries 2; Accountants 0; Real Estate Agents 0; Dealers 3; TCSPs 0; Austrian administrations 5; FMA 5; Customs 0. - 2005 totals (ML-Related STRs 467): Financial institutions 426; Banks 417; Insurance 9; DNFBPs 12; Casinos 1; Lawyers 4; Notaries 3; Accountants 0; Real Estate Agents 1; Dealers 1; TCSPs 2; Austrian administrations 29; Ministry of Finance 27; FMA 2; Customs 0. - 2006 totals (ML-Related STRs 692): Financial institutions 658; Banks 651; Insurance 7; DNFBPs 12; Casinos 0; Lawyers 4; Notaries 2; Accountants 1; Real Estate Agents 0; Dealers 3; TCSPs 2; Austrian administrations 12; Ministry of Finance 7; FMA 5; Customs 0. - 2007 totals (ML-Related STRs 1,085): Financial institutions 1,045; Banks 1,039; Insurance 6; DNFBPs 13; Casinos 1; Lawyers 1; Notaries 3; Accountants 1; Real Estate Agents 1; Dealers 4; TCSPs 2; Austrian administrations 27; Ministry of Finance 21; FMA 5; Customs 1. - Statistical Table 18. Authorities competent for investigating STRs: - ML-related suspected activities, in relation to the BWG, WAG, BörseG, GSpG: BKA (A-FIU) - Other ML-related suspected activities: Federal Police - FT-related suspected activities: BVT *Source: IMF assessment text (excerpt provided).* ### 339. It has to be noted that the statistics of the A-FIU envisage STRs in a broad sense as it also ### _cr09298 - 339. It has to be noted that the statistics of the A-FIU envisage STRs in a broad sense as it also ### STR statistics and scope - The A-FIU envisages STRs in a broad sense and includes exchange of information from other administrations that are not STRs by the standard definition. - The A-FIU considers every information received from a reporting entity as an STR, even if it does not meet the legal definition (131 information on “419 letters” and 66 phishing emails received in 2007 are included in the total number of STRs). - Statistical Table 21. FT-Related STRs - 2004: Banks 9; Money transmitters 3; Total 12 - 2005: Banks 16; Money transmitters 3; Total 19 - 2006: Banks 14; Money transmitters 1; Total 15 - 2007: Banks 20; Money transmitters 3; Total 23 ### STR analysis, investigation and outcomes - Every STR on a transaction that serves the purpose of ML or FT is investigated. - Every STR on a transaction that serves the purpose of ML or FT has to be investigated by the A-FIU, the BVT, or the local police services. - According to the StPO, every investigation case has to be submitted to the Prosecutor’s Office. - Investigations often determine the suspect is the primary offender ("self-launderer") and charged for the predicate offense (fraud, drug-related crimes, embezzlement, human trafficking, criminal organization, etc.). - In some STRs the suspect turns out to be the victim of fraud, leading to charges against real offenders. - Cases submitted by the police to the prosecutor therefore include cases concerning the predicate offense itself. - There is no information concerning the number of STRs resulting in convictions. - Statistical Table 22. Cases submitted to the Prosecutor - Cases Submitted to the prosecutor re. ML by the Austrian Police: - 2004: 100 - 2005: 70 - 2006: 183 - 2007: 229 - Cases Submitted to the prosecutor by the A-FIU, not Limited to ML: - 2004: 147 - 2005: 109 - 2006: 121 - 2007: 88 ### Recommendations (2.5.2) and compliance (R.26) - Authorities should: - Review the legal framework in order to clearly establish a Financial Intelligence Unit that serves as a national center for receiving, analyzing and disseminating disclosures of STRs and other relevant information concerning suspected ML or FT activities; - Empower this FIU to analyze STRs, prior to any police or criminal investigation, with access to the financial, administrative and law enforcement information and authorization to obtain additional information from reporting parties. - Compliance with Recommendation 26 - R.26: PC - Summary of factors underlying rating: - A-FIU not a national centre for analyzing and disseminating STRs. - A-FIU not a national centre for receiving, analyzing and disseminating information concerning suspected FT activities other than STRs. ### Legal framework for law enforcement, prosecution and confiscation (R.27 & R.28) - Key laws: - Criminal Code (StGB) - Code of Criminal Procedure (StPO) - Federal Act on the Organization of Security Administration and the Exercise of Security Police Services (Security Police Act, SPG, enacted in 1991 and amended in 2005) - Prosecutorial duty: - Article 34, paragraph 1 of the StPO requires prosecutors prosecute ex officio all criminal acts which get to their knowledge ("Offizialprinzip"); ML and FT are prosecuted mandatorily. ### Designation and roles of authorities for ML/FT investigations - Federal Criminal Police (BKA) has general authority to conduct investigations under the StGB, including ML. - Pursuant to Article 4(2) of the BKA-G, the BKA is competent to investigate ML in relation to the BWG, the BörseG and the WAG; the A-FIU is located within the BKA and, according to internal distribution, would be the authority in charge of ML investigations. - If FT is involved, the competent authority is the Federal Agency for State Protection and Counter Terrorism (BVT). - The office of the public prosecutor has general responsibility to prosecute all criminal acts, including ML and FT; larger public prosecutor’s offices have groups of prosecutors dealing only with organized crime and financial crimes (10 such prosecutors operate in Vienna). - Division of responsibilities: - The A-FIU receives STRs nation-wide from reporting entities and information from other authorities (e.g., Customs). - Criminal investigations can be undertaken by the A-FIU, delegated to local Federal Police, or by the Local Federal Criminal Police territorially competent. - If sufficient elements indicate a particular predicate offense, the A-FIU passes the case to the competent law enforcement authority; the BKA and Federal Police report to the public prosecutor’s office. - BKA organization and A-FIU placement: - BKA organized in 6 departments; department 3 houses the A-FIU and is responsible for “Organized Crime and general Crime.” - Department 3 divisions include Organized Crime; Capital Crimes and sexual Offenses; Property Offenses; Economic and financial Investigations; Drug-Related Crime; central service for Combating Traffic in Human Beings and Illegal Immigration. - The A-FIU is a sub-division of the Economic and Financial Investigations Division. - A-FIU’s ML investigations are divided into three major areas: ML through the use of offshore; ML through frauds; ML related/associated to former Member States of the Union of Soviet Socialist Republics. - BVT: - BVT is established within the MoI, Directorate General II for Public Security, legally responsible for investigation on cases related to FT. - Law enforcement authorities that detect suspected FT must forward it to the BVT (e.g., Customs under Article 17c, paragraph 2 of the Customs Code). - BVT has 9 regional departments and reports to the public prosecutor’s office. ### Authority to postpone/waive arrest or seizure (c. 27.2) - Article 99, paragraph 4 of the StPO allows police to postpone investigations and adoption of coercive measures if: - this was conducive to the clarification of a more grave offense or the investigation of a leading person in the offense and the postponement caused no serious danger for life, health, physical inviolability or the freedom of third people; or - otherwise a serious danger for life, health, physical inviolability or the freedom of a person was caused. ### Special investigative techniques (c. 27.3–27.5) - Permitted techniques (StPO or SPG): - Observation (secret surveillance of the conduct of a person; Article 130 StPO) - Undercover investigation (use of officers or other persons not disclosing official position; Article 131 StPO) - Fictitious purchase (attempt or feigned committing of a criminal act; Article 132 StPO; admissible only for crimes, therefore not for ML) - Monitoring of data, interception of telecommunications, audio-visual monitoring by technical means and computer-aided data cross-referencing (Articles 134-143 StPO) - Authorization: - These techniques can be undertaken by the Criminal Police at their discretion or with authorization of the public prosecutor’s office. - Use in ML/FT: - Special investigative techniques are mostly used in organized crime and terrorist crime investigations. - The A-FIU pointed out frequent use of interception of communications and surveillance of target persons during ML investigations. - Specialized units and cooperation: - Larger public prosecutor’s offices have groups of prosecutors dealing only with organized crime and financial crimes; authorities estimate approximately 10 percent of 300 prosecutors (i.e., about 30 prosecutors) are specialized in ML and financial crime investigations. - BKA has a specialized division for economic and financial investigation (housing the A-FIU) and a division for tracing proceeds of crime for asset forfeiture. - BVT regularly uses financial investigations to understand terrorist group structures. - Cooperation including use of special investigative techniques is possible at EU level within joint investigative teams among law enforcement authorities of EU Member States. ### Ability to compel production of and search for documents and information (c. 28.1) - The A-FIU is the only law enforcement agency entitled to request directly all available and necessary information from persons and entities subject to reporting obligations without the need of a court order (according to the authorities). - Concerning banks, insurance, investment and securities institutions, and other DNFBPs (BWG, VAG, WAG, BörseG, GSpG and GewO), this power is devolved to the MoI, meaning the BVT is theoretically empowered to access directly financial information in the case of suspicion of FT without a court order. - Persons and entities are obliged to disclose information to the A-FIU; such information requested in suspected ML/FT cases is not subject to banking/professional secrecy provisions. - Other law enforcement agencies and the A-FIU need a court order when they must compel production of or search persons and premises for documents held by financial institutions/persons (a “judicial admission” procedure). - Judicial admission (Article 116 StPO): - Other law enforcement agencies must be authorized with judicial admission to request information on bank accounts and bank operations. - Disclosure is admitted “if it seems necessary to ascertain a criminal offense or a misdemeanor under the jurisdiction of the regional courts (that includes ML)” and sets the principle of “judicial admission” requiring the public prosecutor to demand a court order and admission of disclosure. - Conditions for admitting the order are restrictive: the prosecutor must show, on the basis of other evidence (“ascertained facts”), that the business relation of a person with the credit or financial institution is actually “connected to committing a criminal act” and that: - either the holder of the account himself/herself is suspected of having committed the act or it is presumed that a person suspected of having committed the act will operate or has operated a transaction via the account, or - the business relation will be used for the transaction of a financial benefit that was gained through criminal acts or gained for them (Article 20 StGB) or is subject to the disposition of a criminal organization or terrorist group or is provided or collected as a means of financing terrorism (Article 20b StGB). - Paragraph 4 of Article 116 requires the order and admission of disclosure to contain: 1. the denomination of the court case and the criminal act it is based on as well as its legal denomination, 2. the credit or financial institution, 3. the designation of the documents to be handed over and the information to be disclosed, 4. the facts that constitute the grounds for the necessity and proportionality (section 5) of the order, 5. in the case of an order according to paragraph 2 the time frame concerning which the operations are to be disclosed, and 6. in the case of an order according to paragraph 2, the facts that constitute the grounds for the connection between the business relation and the subject of the proceeding. - The court must consider proportionality, i.e., whether disclosure and expected results are justifiably proportionate to the presumed infringement upon the rights of disinterested third parties and whether the same result could be achieved by less intrusive measures. - DNFBPs with professional privilege: - For lawyers and notaries, conditions in Article 9(4) RAO and 37(4) NO apply; a very broad notion of “legal advice” may substantially limit law enforcement access to information. ### Search, seizure and sequestration (c. 28.1 continued) - Search of credit and domestic financial institutions (Article 1, paragraph 2 BWG), search of persons protected by professional secrecy, and their premises always requires a judicial admission. - Seizure and sequestration of documents (including transaction records, identification data from CDD, account files) can be obtained under Articles 110 and 115 StPO: - Only if these objects are required for evidentiary purposes, securing civil right claims, confiscation of profits (Article 20 StGB), forfeiture (Article 20b StGB), confiscation (Article 26 StGB) or other property-rights orders provided by law. - Not admitted if the purpose is only ascertaining the commitment of a crime. - Ordered by the public prosecutor’s office or by the court. - Sequestration of business correspondence follows Articles 110 and 115 StPO, unless it concerns closed correspondence not yet reaching the recipient, in which case Article 135 (sequestration of letters) applies with more restrictive conditions. ### Witnesses and protective measures (c. 28.2) - Competent authorities (office of the public prosecutor and the courts) have the power to take witnesses’ statements for use in investigations and prosecutions (Articles 151–166 StPO). - Protective measures for at-risk witnesses include: - hearing witnesses without identity disclosure, - allowing pre-trial records of cross-examination, - questioning by telecasting if a witness cannot appear in court without serious threat, - conducting closed court hearings. - Application of such measures is decided by the public prosecutor and/or the court (Articles 161 and 165 StPO). ### Resources and specialization (c. 30.1–30.2) - Authorities estimate that out of 300 prosecutors operating in Austria approximately 10 percent is specialized in ML and financial crime investigations. - BKA has specialized divisions for economic and financial investigations (housing A-FIU) and for tracing proceeds of crime for asset forfeiture. - The BVT regularly uses financial investigations to understand terrorist group structures. *Excerpt from IMF country report section contained in the provided PDF content.* ### 371. The offices of public prosecution are autonomous agencies of the judicial administration ### _cr09298 - 371. The offices of public prosecution are autonomous agencies of the judicial administration ### Public prosecution: structure, appointment, and accountability - The offices of public prosecution are autonomous agencies of the judicial administration, separate from the courts, and safeguard the interests of the state in the adjudication of law. - Key tasks: - Lead the preliminary investigation. - Represent the public prosecution in penal proceedings. - These tasks are governed by the Public Prosecution Act. - Instruction and hierarchy: - Public prosecutors are bound by the instructions of their superiors. - Instructions from higher authorities concerning actions in a specific proceeding must be justified and issued to the public prosecutors in writing and become part of the file. - At first-instance courts responsibilities are vested in the public prosecutor; at the court of appeal in the senior public prosecutor; at the Supreme Court in the general procurator. - Offices of senior public prosecutors and the General Procurator’s Office are each only subordinate to the MoJ. - A general procurator does not have authority to issue instructions to senior public prosecutors or public prosecutors. - Staffing and eligibility: - At present, there are about 300 public prosecutors in Austria. - Only judges or former judges, who continue to meet the requirements for being appointed as professional judges, may become public prosecutors. - Established posts for public prosecutors are advertised publicly to applicants. - The Federal President appoints public prosecutors upon proposal by the staff commission; for most established public prosecutor posts the President has delegated the right of appointment to the Federal Minister of Justice. - Discipline and liability: - If a public prosecutor is found guilty of violating professional and ethical obligations, he/she is responsible to a disciplinary commission set up with the MoJ. - Sanctions that this commission may impose include termination of the employment relationship. - Public prosecutors also have penal-law liability. - In civil law, public prosecutors may only be held responsible by the state, similarly to judges; parties involved in a case may only bring an action against the state for official liability. ### Criminal Police, BVT, and staffing/resources - Police staffing (as of December 1, 2008): - 26,984 policemen - 5,407 administrative staff - Audit and capacity: - A recent report of the Audit Agency stated that the Police may not be staffed enough; this view is shared by the Police. - The Police is otherwise adequately structured and funded, and provided with sufficient technical and other resources to fully perform their functions. - Staff is required to maintain high professional standards, including confidentiality. - BVT: - Number of officials working for the BVT could not be disclosed for confidentiality. - Officials met by the assessors stated that the number of officials employed is sufficient, and that the agency is adequately funded and provided with sufficient technical and other resources to fulfill its functions. ### Training for competent authorities (criterion c. 30.3) and special training for judges (c. 30.4) - Training provision: - Training is provided to administrative, investigative, prosecutorial, and judicial authorities. - Judicial authorities receive training in the frame of the annual further training program organized by the MoJ. - On ML and FT topics the MoJ organizes two to three seminars every year concerning financial crimes; some in cooperation with other institutions such as the MoI. - An extensive ML and FT training was last organized in 2006 (Ottenstein): one-week course attended by about 55 judges and public prosecutors. - International training: - Since 1998, the MoJ encourages judges and public prosecutors to participate in international trainings on combating ML and FT. - Examples include attendance at EUROJUST conferences on terrorism in 2004 and 2005 in The Hague. - Police and FIU training: - The training department of the BKA organizes special training courses at regular intervals for police services on ML and predicate offenses such as human trafficking and narcotics trafficking. - The A-FIU is very active in providing training for the private sector and other authorities; specific training seminars are held upon request of local police services. - The total number of training and awareness-raising seminars offered is listed in the A-FIU's annual reports. - BVT training: - BVT employees working in the CFT area have access to further training opportunities nationally and internationally. - BVT aims at participating in as many international trainings and workshops as possible, including workshops organized by EUROPOL, Interpol, foreign partners, and training courses of the German Federal Criminal Police Office. - Acquired experiences and information are spread to the LVTs in regular meetings to ensure investigators in the federal states receive up-to-date knowledge. - Special training for judges: - See reference to training for judges under criterion 30.3. ### Recommendations and compliance (section 2.6.2 and 2.6.3) - Recommendation (paragraph 382): - The authorities should soften the requirements for law enforcement authorities to obtain access to information held by financial institutions and by lawyers and notaries: - For financial institutions: envisage also access to such information for the purpose of ascertaining a crime or allow the police to obtain such information with ex post judicial authority’s intervention in cases of serious crime. - For lawyers and notaries: revisit the notion of “legal advice”. - Compliance summary for Recommendations 27 & 28: - R.27 C - R.28 LC - Underlying factor: Strict conditions for obtaining/compelling information subject to secrecy and scope of legal privilege hinder the possibility for law enforcement authorities to locate and trace property. ### Cross-border declaration or disclosure (SR.IX) — legal framework and implementation - Legal framework: - Austria applies EC Regulation 1889/2005 on controls of cash entering or leaving the community to cross-border transportation of currency and bearer negotiable instruments at its borders with non-EU countries (Switzerland and Liechtenstein). - The EC Regulation is directly applicable in Austria as an EU member. - For EU-internal borders (Germany, Hungary, Italy, Slovakia) Austria applies the Customs Law (ZollR-DG), with exceptions of Jungholz and Mittelberg (Austrian enclaves subject to German customs law by international treaty). - EC Regulation establishes an obligation to declare cash of a value of EUR 10,000 or more when entering or leaving the EU space. - ZollR-DG subjects to customs supervision cash and cash-equivalent means of payments brought in the “area of application” and establishes an obligation to disclose upon request cash or equivalent of a value of EUR 10,000 or more. - Definitions and modalities: - Article 2 of the EC Regulation defines cash to include currency and bearer negotiable instruments including monetary instruments in bearer form, negotiable instruments in bearer form, endorsed without restriction, made out to a fictitious payee, otherwise such that title passes upon delivery, and incomplete instruments signed but with payee’s name omitted. - Article 17b, paragraph 3 ZollR-DG clarifies the declaration can be rendered verbally or in written form. - ZollR-DG Article 17b, paragraph 1 defines “cash-equivalent means of payments” in same terms as EU Regulation and adds “gold and other precious metals.” - Declaration/disclosure requirement is applicable at EU-borders except Jungholz and Mittelberg, where no obligation exists as required by SR.IX — identified as a potential ML/FT risk given disproportionate number of bank accounts relative to residents. - Detection approach: - Vienna airport: risk-based approach for flights to areas considered at risk or random checks. - Borders: targeted risk-based approach only as part of anti-smuggling operations (especially cigarette-smuggling). ### Statistical data: Cash Control Austria (Table 23) — exact figures preserved - Periods covered: 15.06.2007-30.09.2007 | 01.10.2007-31.12.2007 | 01.01.2008-31.03.2008 | 01.04.2008-30.06.2008 - Declarations: - 494 | 461 | 627 | 645 - Total Sum (EUR): - 918,301,298 | 1,155,292,204.58 | 810,960,980 | (no entry shown for the last period) - Oral Declarations: - 3 | 5 | 7 | 1 - Written Declarations: - 491 | 456 | 620 | 644 - Declaration by Private Persons: - (numbers of declarations not fully tabulated in source for first period) 82 | 100 | 99 | (no value shown) - Sum (Private Persons) (EUR): - 8,667,324 | 12,374,909.88 | 9,433,504.25 | (no value shown) - Declaration by Cash Couriers: - 379 | 520 | 546 | (no value shown) - Sum (Cash Couriers) (EUR): - 909,633,974 | 1,142,917,294.70 | 801,527,475 | (no value shown) - Non Declared: - 0 | 2 | 7 | 1 - Sum (Non Declared) (EUR): - 659,219 | 453,686 | 26,500 | (no value shown) - Export to US: - 2 | 3 | 5 | 0 - Sum USD / EUR entries: - Sum USD 99,107 EUR 121,539 EUR 392,715 0 - Import from US: - 1 | 2 | 1 | 3 - Sum USD / EUR entries for imports: - Sum USD 18,385 EUR 78,325 EUR 31,683 45311 - Export DE -to CH: - 10 | 11 | 49 | 65 - Sum DE - CH: - 287,803.6 | 686,360 | 87,866,861 | 90,894,877 ### Requests for information on origin and use; restraint; data retention; FIU access; cooperation; and sanctions - Request information on origin and use (c. IX.2): - Article 17b ZollR-DG establishes a general obligation to provide, upon request of Customs authorities, “information on the origin, the beneficiary and the intended use of the cash.” - This authority applies in disclosure cases (paragraph 2) and in declaration cases (paragraph 3), including false declaration or failure to declare. - Restraint of currency (c. IX.3): - Article 17c ZollR-DG: when “certain facts give rise to the assumption that cash or equivalent means of payment are introduced for the purpose of ML or FT, the Customs authorities are authorized in case of danger to seize the cash or means of payments.” - Customs must report immediately to the public prosecutor’s office, which determines whether Article 115 StPO conditions are met to apply a sequestration. - If conditions are not met the seizure must be terminated without delay; otherwise provisional measure remains in place for up to six months (unless court orders termination). - No statistics available on cases/amounts of seizure; provisional measure appears rarely applied. - Authorities indicated a recent case where USD 600,000 were found in luggage and seized on grounds of ML, but seizure was dismissed by the public prosecutor’s office. - Retention of information and identification data (c. IX.4): - Customs authorities authorized to collect, process and use personal data from declarations/disclosures (Article 17c, paragraph 2 ZollR-DG). - No central database exists to store/query all data from this process; all declarations are stored in hard copies at the customs offices. - Data are summed and reported quarterly in electronic form to the MoF (who forwards to the EC), but these data only include number of declarations by border points and overall amounts. - Currently no analysis is carried out on these data for developing AML/CFT intelligence; cannot target a person as cash courier based on declaration frequency. - Authorities plan to set up a computerized database to use declaration/disclosure information for AML/CFT intelligence. - Access of information to FIU (c. IX.5): - Obligatory transmission to A-FIU and BVT exists “to the extent that this is necessary to perform their statutory tasks” (Article 17c, paragraph 2 ZollR-DG). - In practice the information is not currently made available to the A-FIU except when Customs suspect ML. - Austria implements a system where the A-FIU is notified about suspicious cross-border transportation incidents: occurred once in 2007 and five times in 2008 (for ML only). - In cases of FT suspicion information is passed to the BVT; no cases were reported to the BVT. - Domestic cooperation between Customs, Immigration and related authorities (c. IX.6): - No formal coordination mechanism established. - Customs undertake regular meetings between the MoF (Division for Enforcement of Taxes and Customs) and the BKA to discuss and coordinate on common interests or issues linked to tax/customs fraud and organized crime. - Informal information exchange occurs on a case-by-case basis in urgent matters. - Customs have access, via the investigation branch of the Customs Office, to the contact point within the MoI and to the criminal record database. - International cooperation (c. IX.7): - Articles 6 & 7 of EC Regulation No. 1889/2005 govern exchange of information with third countries and between EU member states where indications exist that cash sums relate to illegal activities associated with movement of cash. - As an EU member Austria also applies EC Regulation 515/97 on mutual assistance in customs matters. - Austrian Customs have signed bilateral cooperation agreements with 20 countries within the EU and with 50 countries outside the EU; these agreements require ratification by parliament (which occurred in all these cases). - Austrian Customs participate in the EC-Cash Control Committee to discuss best practices, procedures, and concrete cases. - Sanctions for false declarations/disclosures (c. IX.8): - Sanctions laid down in Article 48b of the Fiscal Penal Code (FinStrG). - Penalties: up to EUR 50,000 (intent) or up to EUR 5,000 (negligence). - Sanction is a criminal sanction applied by Customs in the context of an administrative penal procedure; compliant with Recommendation 17 requirements. - Authorities indicated six offenses by intent and two by negligence in 2008; monetary fines imposed in all cases, but concrete amounts not available in the Fiscal Penal Register. - Sanctions applicable to legal persons (Article 28a FinStrG in connection with VbVG) if: - the duty to declare refers to the legal person; or - the infringement was done in favor of the legal person; and - either decision makers or management failed to declare/disclose or did not ensure employees complied. - Sanctions for cross-border transportation for purposes of ML or FT: - (Section title present; substantive details on these sanctions follow in the source beyond the excerpt provided.) *Source: _cr09298 - 371. The offices of public prosecution are autonomous agencies of the judicial administration* ### 399. Persons who are carrying out a physical cross-border transportation of currency or bearer ### 399. Persons who are carrying out a physical cross-border transportation of currency or bearer ### Confiscation and seizure authorities (ML/FT) - Persons carrying out a physical cross-border transportation of currency or bearer negotiable instruments that are related to FT or ML can be held responsible under Article 165 StGB and Article 278d StGB. - Confiscation of Currency Related to ML/FT (applying c. 3.1-3.6 in R.3, c. IX.10): - Article 17c of the ZollR-DG: when “certain facts give rise to the assumption that cash or equivalent means of payment are introduced for the purpose of ML or FT, the Customs authorities are authorized in case of danger to seize the cash or means of payments.” - In such cases Customs must report immediately to the public prosecutor’s office, which can either dismiss or apply a sequestration under Article 115 StPO. - Confiscation of profits (Article 20 StGB) or forfeiture (Article 20b StGB) can be applied if it can be proved that the money or bearer negotiable instruments are at the disposal of a criminal organization or a terrorist group, or they have been provided or collected as a mean for financing terrorism. - Confiscation of Currency Pursuant to UNSCRs (applying c. III.1-III.10 in SR.III, c. IX.11): the seizure regime in Article 17c ZollR-DG can also be applied in the case of FT. ### Notification, information exchange, and precious metals - Notification of Foreign Agency of Unusual Movement of Precious Metal and Stones (c. IX.12): - Obligation to disclose upon request of the customs authorities applies also to gold and other metals. - Conditions for exchange of information with third countries are laid out in EC regulation No. 1889/2005 and in various bilateral agreements signed by Austrian Customs. - Authorities referred to a recent case involving a shipment of platinum from Switzerland to Austria, cooperated with Swiss authorities; Austrian authorities believe the case is related to VAT fraud rather than to ML. ### Safeguards for proper use of information - Information gathered through declaration/disclosure procedures is subject to the Law on data protection (Datenschutzgesetz, DSG). - DSG provides confidentiality requirements and the obligation to use information only for purposes set forth by law. - Data and information acquired from declarations is only used in the circumstances allowed by Article 17c, paragraph 2 ZollR-DG. ### Implementation of SR.IX best practices and operational measures - Additional Element—Implementation of SR.IX Best Practices (c. IX.15): - Police have canine units; Customs have X-ray, scanners and endoscopes. - At the beginning of 2009 Austrian Customs planned a project to train customs dogs for cash detection. - Risk- and intelligence-based controls reflecting passenger and destination profiles are used at Vienna airport, including information from airports and direct access to airline databases. - Procedures: - Inspections conducted by at least two persons. - Technical equipment including photo documentation, secure handling, storage and accounting systems standard for Austrian Customs. - Police has run seminars for customs officers to detect counterfeit currency. - Customs officers serve as judicial officers in penal investigations; in ML/FT cases A-FIU and BVT are consulted immediately. - Additional Element—Computerization of Database and Access (c. IX.15): - See discussion under Paragraph 351. - Authorities informed that after the evaluation team declarations and detections electronically. - Next step: authorization for registration of this data bank in the Data Bank Register by the Data Protection Commission, expected by December 2008. - Request for registration specifically entails provision of information to the A-FIU and the BVT. - Pending issue: development of technical modalities for giving the A-FIU and the BVT access to the database. ### Effectiveness assessment and operational gaps - System is relatively recent; no specialized techniques/strategies beyond traditional controls against cigarette smuggling or drug trafficking have been developed to target cash couriers. - No systematic use yet of information from declarations/disclosures to build AML/CFT intelligence. - Lack of a computerized database restrains ability to target cash couriers. - Customs only recently started to report to the A-FIU suspected grounds of ML; number of reports is extremely low relative to declaration/disclosure figures. - From statistics provided: - Majority of controls done at external EU-borders; effectiveness of controls at EU-borders can be questioned. - Controls at these borders are part of routine actions against cigarette-smuggling or drug trafficking, not specifically targeting cash couriers. - Volumes of declared cash are rather high; in most cases declarations rendered on behalf of legal persons. - Very few instances where a seizure was applied or a suspicious ML case reported to the A-FIU were related to failure to declare/disclose rather than to declared cash whose origin was doubted. - Example described: individual regularly goes to a country that may pose ML risk, bringing each time cash amounting to EUR 800,000–1,000,000; provided reason: company in that country and preference to avoid banking system. - Very few penalties applied since introduction of requirements. - Borders with municipalities Jungholz and Mittelberg: - Completely free from any control under SR.IX requirements. - Exemptions are not in line with SR.IX and pose ML risk. - Anecdotal evidence: Jungholz has more than 15,000 bank accounts for a population of 300 inhabitants. - Kleinwalsertal (Mittelberg) valley has several bank branches for a population of 5,000 inhabitants; one branch claims to be the largest branch in Austria. - FMA indicated banking assets of one large credit institution are equivalent to EUR 1 billion. ### Recommendations and comments (Paragraph 413) - The authorities should: - Subject to disclosure or declaration obligations the transportation of cash or other bearer negotiable instruments into/out of the municipalities of Jungholz and Mittelberg; - Develop a computerized database for the storage of the information gathered through the declaration/disclosure process which should be used to build up intelligence to target cash couriers and to fight against ML/FT; - Assess the risk and develop a strategy for containing the ML/FT risk associated to the transportation of cash or other bearer negotiable instruments into/out the municipalities of Jungholz and Mittelberg; - Enhance cooperation between the customs and the A-FIU and develop a system to enhance the reporting of cases of cross-border transportation to the A-FIU. ### Compliance with Special Recommendation IX - SR.IX rating: PC - Summary of factors underlying rating: - Exception from the declaration/disclosure obligations for the municipalities of Jungholz and Mittelberg not in line with the requirements of SR.IX. - Lack of monitoring and checks of cross border transportation of cash into Jungholz and Mittelberg posing a serious risk of ML. - Implementation of the declaration/disclosure requirements not effective. ### Preventive measures—Financial institutions (overview) - Customer due diligence (CDD) and record keeping requirements have been in place in Austria for several years. - As an EU Member State, Austria was required to implement the Third EU ML Directive (Directive 2005/60/EC) and the implementing Directive (Directive 2006/70/EC) into national legislation by 15 December 2007. - New AML/CFT provisions issued in 2007 came into force on January 1 2008; they: - Require financial institutions to adopt preventive measures adjusted to risks. - Provide for variable levels of CDD, depending on the risk of money laundering and terrorist financing, in more circumstances than previously. - Strengthened identification requirements, added identification requirements regarding beneficial owners, and introduced requirements to monitor transactions and relationships with politically exposed persons (PEPs) and cross-border correspondent banks. - Austria had adopted a limited risk-based approach for certain transactions or customers prior to the Third EU Directive (e.g., non-face-to-face business subject to enhanced due diligence since 2003). ### Risk of money laundering or terrorist financing (Paragraphs 415–416) - Financial institutions required to conduct a risk-analysis of their business and take appropriate risk-based measures to ascertain customer information and conduct ongoing monitoring. - Legal requirements frame instances of risk-based approach, including simplified CDD for low risk and reduced CDD for certain credit or financial institutions per Article 1, paragraph 2 of the BWG and under restricted conditions for fiduciary accounts held by attorneys at law or notaries from EU Member States or third countries imposing equivalent AML/CFT measures and supervision. - Enhanced due diligence required on a risk-sensitive basis generally, and specifically for: non-face-to-face business, cross-border correspondent banking, PEPs. - The risk-based approach modeled on the EU Directive; it is not the result of a specific risk assessment of the Austrian financial sector. - Characteristics increasing vulnerability: possibility to issue shares in bearer form; significant private banking industry, pointing to an elevated vulnerability to abuse for ML and FT not mitigated by enhanced due diligence measures. - Assessment conducted on legislation in force at date of onsite visit in September 2008 and immediately thereafter; covers new AML/CFT legal framework effective January 1 2008. - Several FMA operational circulars are still pending and should be completed in forthcoming months. ### Legal framework—scope and definition of credit institutions (Paragraphs 417–421) - AML/CFT measures apply to all persons and entities conducting as a business in Austria one or more financial activities listed in the FATF Glossary. - Sector-specific laws contain AML/CFT measures: - Banking Act (Bankenwesengesetz, BWG) for credit and domestic financial institutions; - Insurance Supervision Act (Versicherungsaufsichtsgesetz, VAG) for insurance companies; - Securities Supervision Act (Wertpapieraufsichtsgesetz, WAG) for securities firms. - FMA issued Circulars (Rundschreiben), such as the Circular on Identification and Verification of Identity, to clarify legal requirements; Circulars are not binding but non-compliance may result in sanctions under law. - BWG applies to all “credit institutions” and “financial institutions according to Article 1, paragraph 2 of the BWG”. - Definition of “banking transactions” under BWG includes (as listed in the source): 1. The acceptance of funds from other parties for the purpose of administration or as deposits (deposit business); 2. The provision of non-cash payment transactions, clearing services and current-account services for other parties (current account business); 3. The conclusion of money-lending agreements and the extension of monetary loans (lending business); 4. The purchase of cheques and bills of exchange, and in particular the discounting of bills of exchange (discounting business); 5. The safekeeping and administration of securities for other parties (custody business); 6. The issuance and administration of payment instruments such as credit cards and traveler’s cheques; 7. Trading for one's own account or on behalf of others in: a) Foreign means of payment (foreign exchange and foreign currency business); b) Money-market instruments; c) Financial futures contracts, including equivalent instruments settled in cash as well as call and put options on the instruments listed in lit. a and d to f, including equivalent instruments settled in cash (futures and options business); d) Interest-rate futures contracts, forward rate agreements (FRAs), interest-rate and currency swaps as well as equity swaps; e) Transferable securities (securities business); f) Derivative instruments based on lit. b to e; unless these instruments are traded for private assets; 7a. Trading in financial instruments pursuant to Article 1, paragraph 1, no. 6, lit. e-g and j of the WAG for the credit institution's own account or on behalf of others, except in the case of trading conducted by persons pursuant to Article 2, paragraph 1, nos. 11 and 13 of the WAG; 8. The assumption of suretyships, guarantees and other forms of liability for other parties where the obligation assumed is monetary in nature (guarantee business); 9. The issuance of mortgage bonds, municipal bonds and covered bank bonds as well as the investment of proceeds from such instruments in accordance with the applicable legal provisions (securities underwriting business); 10. The issuance of other fixed-income securities for the purpose of investing the proceeds in other banking transactions (miscellaneous securities underwriting business); 11. Participation in underwriting third-party issues of one or more of the instruments listed under no. 7 lit. b to f as well as related services (third-party securities underwriting business); 12. The acceptance of building savings deposits and the extension of building loans in accordance with the Building Society Act (Bausparkassengesetz, BSpG) (building savings and loan business); 13. The management of investment funds in accordance with the Investment Fund Act 1993 (Investmentfondsgesetz, InvFG) (investment fund business); 13a. The management of real estate investment funds in accordance with the Real Estate Investment Fund Act (Immobilien-Investmentfondsgesetz, ImmoInvFG), (real estate investment fund business); 14. The establishment or management of participation funds in accordance with the Participation Fund Act (Beteiligungsfondsgesetz) (participation fund business); 15. The business of financing through the acquisition and resale of equity shares (capital financing business); 16. The purchase of trade receivables, assumption of the risk of non-payment associated with such receivables – with the exception of credit insurance – and the related collection of trade receivables (factoring business); 17. The conduct of money brokering transactions on the interbank market; 18. The brokering of transactions as specified in: a) No. 1, except for transactions conducted by contract insurance undertakings; b) No. 3, except for the brokering of mortgage loans and personal loans by real estate agents, personal loan and mortgage loan brokers, and investment advisors; c) No. 7 lit. a where this applies to foreign exchange transactions; d) No. 8. 19. The issuance of electronic money (e-money business); 20. The acceptance and investment of severance payment contributions from salaried employees and self-employed persons (severance and retirement fund business); 21. The purchase of foreign means of payment (e.g., notes and coins, cheques, traveler’s letters of credit and payment orders) over the counter and the sale of foreign notes and coins as well as traveler’s cheques over the counter (exchange bureau business). *Italic source: IMF staff country report _cr09298 - 399. Persons who are carrying out a physical cross-border transportation of currency or bearer* ### 22. The transfer of funds, except for physical transports, by accepting money or other ### _cr09298 - 22. The transfer of funds, except for physical transports, by accepting money or other ### Supervision and definitions - All “credit institutions” are supervised by the FMA (Article 69, paragraph 1 of the BWG). - “Financial institution” (Austrian legislation) refers to an institution which is not a credit institution and which conducts one or more of the following activities for commercial purposes if they are conducted as the institution’s main activities (Article 1, paragraph 2 of the BWG): - leasing business; - provision of advice to undertakings on capital structure, industrial strategy and related questions, as well as advice services related to mergers and the purchase of undertakings; - provision of credit reporting services; and - the provision of safe deposit services. - “Financial institutions” referred to in Article 1, paragraph 2 of the BWG are supervised by local district authorities (not the FMA). - VAG applies to domestic and foreign insurance undertakings when insurance contracts are concluded within Austria or advertised in Austria (Article 1 of the VAG). Measures to prevent ML/FT are set out under Article 98a-98h of the VAG and apply to “insurance undertakings within the scope of the operation of the life assurance business” (Article 98a, paragraph 1 VAG). - Insurance intermediaries are subject to the Trade Act (Gewerbeordnung, GewO) and not the VAG; there are 18,374 intermediaries. ### Terminology used in the report - “credit institution”, or, where relevant, “banks” — institutions that carry out activities listed in Article 1, paragraph 1 of the BWG; - “domestic financial institutions” — institutions covered by Article 1, paragraph 2 of the BWG; - “financial institutions” — used in the FATF sense to mean credit institutions, domestic financial institutions, insurance undertakings (but not insurance intermediaries) and securities firms. - AML/CFT provisions applicable to credit and/or domestic financial institutions set forth in Articles 40, 40a-40d and 41 of the BWG are described under “Credit and domestic financial institutions.” ### Prohibition of anonymous accounts (c. 5.1) Credit and Domestic Financial Institutions - Anonymous accounts prohibited explicitly (Article 40d paragraph 2 of the BWG) and via identification requirements (Article 40, paragraph 1 BWG). - Article 40d of the BWG came into force on January 1, 2008 (Article 107, paragraph 55 of the BWG). - Historical timeline of identification requirements: - Mandatory identification requirements regarding non-residents were passed in 1991; - Mandatory identification requirements for all customers and specific identification provisions for Treuhand (identification of Treugeber and Treuhänder) were adopted in 1993; - Mandatory identification requirements for securities accounts were adopted in 1996; - Mandatory identification requirements for savings accounts were adopted in 2000. - 2000 BWG amendments prohibit opening new anonymous savings deposit accounts and subject existing anonymous savings deposit accounts to special diligence transactions. - Savings deposit characteristics (Article 31, paragraph 1 and Article 32, paragraph 3 of the BWG): - funds deposited for sole purpose of investment and accepted only against the delivery of certain documents (savings documents); - all withdrawals from savings deposits can only be made in cash at the counter; funds can be transferred to but not from a savings deposit. - Identification required for credit and domestic financial institutions: - before initiating savings deposit transactions (considered permanent business relationship; full CDD) (Article 40, paragraph 1, no. 1 BWG); - before receiving any deposit or operating any withdrawal amounts to at least EUR 15,000 or an equivalent value (Article 40, paragraph 1, no. 4, and paragraph 6 BWG); - when there are reasonable grounds to suspect terrorist financing or money laundering, or doubts as to veracity or adequacy of previously obtained identification data (Article 40, paragraph 1, nos. 3 and 5 BWG). - Savings documents cannot be established under a name other than that of the identified customer but may include “a certain designation” (Article 31, paragraph 1 BWG); the initial customer must nevertheless be identified. - Banks may open and maintain numbered accounts at customer request; CDD rules apply, but identification data access is limited internally; numbered accounts and holding correspondence are not treated as risk criteria for opening/monitoring relationships. Insurance Undertakings - VAG does not specifically prohibit anonymous contracts or contracts under fictitious names, but Article 98b identification requirements preclude anonymous contracts and contracts under fictitious names. Securities Institutions - Articles 6 and 2, paragraph 4 of the WAG make Articles 40, 40a, 40b, 40d and 41 applicable to investment firms and investment services companies, including the prohibition on anonymous accounts. ### When CDD is required (c. 5.2) Credit and Domestic Financial Institutions (Article 40, paragraph 1 BWG) - CDD is required: - before initiating a permanent business relationship; - before carrying out an occasional transaction of EUR 15,000 (or an equivalent value) or more (single operation or multiple operations with obvious connection); - if the institution suspects or has reasonable grounds to suspect customer belongs to a terrorist organization or participates in transactions serving money laundering or terrorist financing; - for every deposit into and every withdrawal from savings deposits if amount deposited or withdrawn comes to at least EUR 15,000 or an equivalent value; - when there are doubts as to the veracity or adequacy of previously obtained customer identification data. - EU Regulation No. 1781/2006 requires identification and complete originator information in cross-border wire transfers (see Special Recommendation VII write-up). - FMA Circular on Identification and Verification of Identity definitions: - “ascertaining identity” = obtaining information on the identity of the natural or legal person to be identified; - “verifying the identity” = validating the information on identity obtained against meaningful supporting documents and information; - ascertaining and verifying may be performed at the same time; information must be documented; obligation to keep information per Article 40, paragraph 3, no. 1 BWG applies. Insurance Undertakings - Article 98b, paragraph 1 VAG provides similar requirements as Article 40 BWG, except provisions dealing with savings accounts (not relevant to insurance). Securities Institutions - Article 12, paragraph 4 WAG requires investment companies and investment services companies to implement Article 40 BWG provisions; savings deposit provisions do not apply to securities sector. ### Identification measures and verification sources (c. 5.3) Credit and Domestic Financial Institutions - Identity must be ascertained on the basis of personal presentation of an official photo identification document (Article 40, paragraph 1 BWG). - “Official photo identification documents” defined: issued by government authority; bear a non-replaceable and recognizable photograph; include name, date of birth and signature and issuing authority. Foreign passports need not contain complete date of birth if compliant with issuing country law. - Official documents not enabling clear facial recognition (e.g., passports with photographs of veiled persons) are not deemed sufficient. - FMA Circular on Identification and Verification of Identity provides further guidance (paragraphs 24-36). - Law exceptions (Article 40, paragraph 1 in fine BWG): - reliance on other credit or financial institutions to carry out identification procedures (ultimate responsibility remains with initial institution); - where the customer is a credit or financial institution supervised for compliance with similar identification obligations (Article 40a, paragraph 1 BWG). - No legal requirement to maintain a copy of identification document, but common practice is to include a copy in files to evidence compliance. Insurance Undertakings - Article 98b, paragraph 1 VAG mirrors Article 40, paragraph 1 BWG including exemptions (see simplified CDD). Securities Institutions - Article 40, paragraph 1 BWG provisions apply mutatis mutandis to investment firms and investment service companies (Articles 6 and 12, paragraph 4 WAG). ### Identification of legal persons or other arrangements (c. 5.4) Credit and Domestic Financial Institutions - Required to identify: - the natural person authorized to represent the legal entity (on the basis of an official photo identification document) and his or her powers to represent the legal entity (Article 40, paragraph 1 BWG); - the legal person itself on the basis of “meaningful supporting documentation which is available under the usual legal standards of the country in which the legal person is incorporated” (for Austrian legal persons, an extract of the Commercial Register). Insurance Undertakings - Article 98b VAG wording with respect to identification of legal persons is similar to BWG. Securities Institutions - Measures for credit and domestic financial institutions apply directly to investment firms and investment services companies (Articles 6 and 12, paragraph 4 WAG). ### Effectiveness and industry practice - Assessors were told CDD measures are applied before entering into permanent business relationships or conducting one-time transactions above EUR 15,000. - Most institutions use a questionnaire to collect identity and activity information; verifications conducted on risk basis, using external databases and internet research (notably for nonresident customers); files often include excerpts from the Commercial Register. - Financial institutions view ML/FT exposure as very low in domestic/EU activities, higher for CESE and CIS activities. - Some internationally active banks have initiated formal risk assessments and defined higher-risk categories with specific verification procedures; other institutions are implementing the risk analysis required under new legal provisions. - Institutions often decline new business where provided/collected information is not fully satisfactory; Article 40, paragraph 2d BWG requires consideration of filing a report to A-FIU in such cases, but institutions do not routinely file an STR and frequently contact the A-FIU by phone. - A-FIU reported receiving at least 50 STRs in 2008 related to terminating or declining taking up a business relationship. - Institutions tend to interpret country risk as country of residence/origin rather than country where income/wealth is generated. *Source: _cr09298 - 22. The transfer of funds, except for physical transports, by accepting money or other* ### 454. Financial institutions are required by law to ask the customer whether he or she is acting on ### _cr09298 - 454. Financial institutions are required by law to ask the customer whether he or she is acting on ### Identification of person acting on behalf of another (trustee/trustor) and beneficial owner - Financial institutions are required by law to ask the customer whether he or she is acting on behalf of another person (Article 40, paragraph 2 BWG). - The customer must comply and provide evidence of the identity of the “trustor” by presenting the original or a copy of the “trustor’s” official photo identification document. - FMA Circular on Identification and Verification of Identity: - Defines “trustor” as “the natural or legal persons for whose account or on whose behalf a business relationship is established or a transaction is executed.” (paragraph 77) - States that “like the beneficial owner of a legal person, the trustor is the beneficiary of the banking transaction conducted on his behalf” (paragraph 79). - Customer acting on behalf of another must submit a written declaration that he or she has ascertained the identity of the “trustor” personally or through “reliable sources.” - Considered “reliable sources”: courts and other government authorities, notaries, attorneys at law, and other credit or financial institutions. - The customer (trustee) must be identified in person; identification of the trustee by a third party is explicitly ruled out (Article 40, paragraph 2 BWG). - Identity verification standard: must be done so that the obliged entity is satisfied that it knows who the beneficial owner is and understands the ownership and control structure of the customer (Article 40, paragraph 2a BWG). - Ultimate responsibility for identification of the “trustor” remains with the credit or financial institution; institutions may not initiate or pursue business where identity of the person acted for has not been adequately established. ### Special cases and exceptions - Special fiduciary accounts of authorized real estate administrators acting on behalf of joint ownership associations: - Presentation of an extract of the property register is valid evidence of the trustor’s identity for joint owners who are natural persons (Article 40, paragraph 2 in fine BWG). - Savings deposits exception: - Pursuant to Article 31, paragraph 3 BWG, savings deposits amounting to less than EUR 15,000 may be registered under a designation other than the customer’s name. - The party presenting the savings documents must provide the password defined by the customer. - No requirement for credit institutions to obtain and take reasonable measures to verify the identity of the holder of the savings documents (i.e., the beneficial owner). - Credit institutions interviewed had not implemented identification and verification procedures for those persons. - No limitation on the number of savings deposit accounts a customer may open under a certain designation. ### Legal definition and timing for beneficial owner requirements - Article 40, paragraph 2(a), no. 1 BWG requires credit and domestic financial institutions to: - Ask the customer to reveal identity of the customer’s beneficial owner. - Take risk-based and appropriate measures to verify the identity of the beneficial owner. - BWG definition of “beneficial owner” (exact wording preserved): - “the natural persons who ultimately own or control the customer. In particular, the term” "beneficial owner" includes the following: - a) in the case of corporate entities: - aa) the natural persons who ultimately own or control a legal entity through direct or indirect ownership or control over a sufficient percentage of the shares or voting rights in that legal entity, including ownership or control through bearer share holdings, other than a company listed on a regulated market that is subject to disclosure requirements consistent with Community legislation or subject to equivalent international standards; a percentage of 25 percent plus one share is considered sufficient to meet this criterion; - bb) the natural persons who otherwise exercise control over the management of a legal entity; - b) in the case of legal entities such as foundations, and in the case of trusts which administer and distribute funds: - aa) where the future beneficiaries have already been determined, the natural persons who are the beneficiaries of 25 percent or more of the property of a trust or legal entity; - bb) where the individuals who benefit from the trust or legal entity have yet to be determined, the class of persons in whose main interest the trust or legal entity is set up or operates; and - cc) the natural persons who exercise control over 25 percent or more of the property of a trust or legal entity.” - Timing: - Obligation to identify the “trustor” has been in place since 1993. - Provisions requiring identification of the beneficial owner came into force on January 1, 2008 as part of implementation of the Third EU ML Directive. ### Insurance and securities sector requirements - Insurance undertakings: - Must ask whether person is acting as a “trustee” and, if so, identify the trustee in person; identification by a third party is ruled out (Article 98b, paragraphs 2 and 1 VAG). - Trustee must “furnish proof of the trustor’s identity to the insurance undertaking”: - For natural persons: original or copy of trustor’s official photo identification document. - For legal persons: “meaningful supporting documents which are available pursuant to the legal standard prevailing in the country of the head office of the legal person.” - Must ask the customer to disclose the identity of the beneficial owner and take risk-based and adequate measures to verify identity and understand ownership and control structure (Article 98b, paragraph 3 VAG). - VAG definition of “beneficial owner” mirrors BWG, including: - a) corporate entities: aa) a percentage of 25 percent plus one share deemed sufficient; bb) natural persons exercising control over management; - b) legal entities/trusts: aa) beneficiaries of 25 percent or more of allocations; bb) class of persons for undetermined beneficiaries; cc) natural persons who exercise control over 25 percent or more of the property. - Securities institutions: - Provisions described for credit and domestic financial institutions apply mutatis mutandis to securities institutions (Articles 6 and 12, paragraph 4 WAG). ### Effectiveness and implementation status - Beneficial owner identification requirements (as in criterion 5.5 and 5.5.2) are recent, in force since January 1, 2008. - Financial institutions are in the process of applying new requirements to existing portfolios. - Common approach: collect beneficial owner information from customer and conduct simple investigations (database or internet searches) to ensure plausibility. - Institutions reported holding very few accounts for legal arrangements such as foundations and indicated ability to ascertain natural persons who are beneficial owners when required. - Financial institutions are required to take risk-based measures to obtain information on purpose and nature of intended business relationship (Article 40, paragraph 2a, no. 2 BWG; Article 98b, paragraph 3, no. 2 VAG; Articles 6 and 12, paragraph 4 WAG). - This requirement came into effect on January 1 1 2008. - Institutions integrated required information into overall customer assessment but had not formally defined risk levels and related diligences. ### Ongoing monitoring and enhanced due diligence - Ongoing due diligence: - BWG, VAG and WAG require institutions to take risk-based and adequate measures to conduct ongoing monitoring of the business relationship. - Ongoing monitoring includes scrutiny of transactions during the relationship to ensure consistency with the institution’s knowledge of the customer, business, and risk-profile, including source of funds where necessary, and to keep documents/data up to date (Article 40, paragraph 2a, no. 3 BWG; Article 98b, paragraph 3, no. 3 VAG; Articles 6 and 12, paragraph 4 WAG). - Legal provisions came into effect on January 1, 2008 and require enhanced monitoring systems (software, joint IT solutions, risk matrices). - Enhanced due diligence (higher risk customers) — legal triggers: - All three laws call for enhanced due diligence in: - (i) situations which by their nature can present a higher risk of money laundering or terrorist financing (Article 40b, paragraph 1 BWG; Article 98d, paragraph 1 VAG; Articles 6 and 12, paragraph 4 WAG); and - (ii) circumstances explicitly enumerated in the laws (Article 40b, paragraph 1, nos. 1 to 3 BWG; Article 98d VAG; Articles 6 and 12, paragraph 4 WAG). - Specific additional measures are listed only for the statutory enumerated circumstances; for other higher-risk situations institutions must determine appropriate additional measures. - Specific higher-risk circumstances requiring additional measures (Credit and Domestic Financial Institutions; Article 40b, paragraph 1, nos. 1 to 3 BWG): - non-face-to-face relationships (customer not physically present for identification); - cross-border correspondent banking with banks established in non-EU members; - transactions or relationships with politically exposed persons (PEPs) from any country other than Austria. - VAG requires same additional CDD measures for insurance undertakings in cases of non-face-to-face business and PEPs. - WAG refers to BWG; same provisions apply to securities sector. - Observations and gaps: - General obligation to apply additional measures in higher-risk situations exists, but law/guidance do not define the types of additional measures for many higher-risk examples. - Basel Committee example higher-risk categories (non-resident customers, private banking, personal asset holding vehicles, nominee shareholders, bearer shares) are not explicitly categorized as higher risk in Austria; institutions must decide case-by-case. - At time of assessment, none of the credit and domestic financial institutions interviewed reported applying additional CDD measures to those Basel-examples. ### Simplified/Reduced CDD measures (Article 40a BWG) — permitted derogations and thresholds - Article 40a BWG: “Simplified customer due diligence obligations” — derogation from standard CDD (Article 40, paragraph 1, nos. 1, 2, and 5, and paragraphs 2 and 2a) in specified circumstances. - Circumstances where standard CDD obligations do not apply: - Customer is a credit institution or financial institution pursuant to Article 1, paragraphs 1 and 2 or pursuant to Article 3 of Directive 2005/60/EC, or a credit institution or financial institution situated in a non-EU country which imposes obligations equivalent to those set forth in Directive 2005/60/EC and supervised for compliance with such obligations. - Provided the risk of money laundering and terrorist financing is considered low in accordance with paragraph 4, if the customer(s) is (are): 1. exchange-listed companies whose securities are admitted to listing on a regulated market in one or more Member States, or exchange-listed companies from third countries which are subject to disclosure obligations pursuant to a regulation to be issued by the FMA on the basis of its power to issue regulations pursuant to Article 85, paragraph 10 Stock Exchange Act and such disclosure obligations are equivalent or comparable to those set forth in Community legislation; 2. domestic authorities; or 3. authorities or public bodies where: - a) they are entrusted with public functions pursuant to the Treaty on European Union, the Treaties on the Communities or Community secondary legislation; - b) the identity of which is publicly available, transparent and certain; - c) the activities and accounting practices of which are transparent; and - d) if they are accountable either to a Community institution or to the authorities of a Member State, or appropriate check and balance procedures exist ensuring control of the customer’s activity. - Paragraph 2 also applies to: 1. customers with regard to electronic money (Article 2, no. 58) where, if the device cannot be recharged, the amount stored in the device is no more than EUR 150, or where, if the data medium can be recharged—a limit of EUR 2,500 is imposed on the total amount transacted in a calendar year, except when an amount of EUR 1,000 or more is redeemed in the same calendar year by the bearer pursuant to Article 6 E-Money Act or pursuant to Article 3 of Directive 2000/46/EC; 2. savings activities for classes of school pupils, subject to conditions: - Cooperation of the legal representative not required in identification of the school pupil; - Unless Article 40, paragraphs 1, 2 or 2a is applied in its entirety: - a) For savings deposit accounts opened for individual minors, identification can be performed by the school pupil himself/herself in the presence of a teacher or through a teacher as a trustee; identification data can be ascertained by the credit institution on the basis of school identification cards, copies, or a list containing names, dates of birth and addresses; - b) For collective savings deposits for school classes, identification of minor school pupils entitled to the savings deposit can be performed by a teacher as a trustee using a list containing names, dates of birth and addresses. *Italicized source: Content derived from the provided IMF PDF excerpt (_cr09298 - 454. Financial institutions are required by law to ask the customer whether he or she is acting on).* ### 475. Despite the clear wording of Article 40a, of the BWG, the authorities stated that the intention ### _cr09298 - 475. Despite the clear wording of Article 40a, of the BWG, the authorities stated that the intention ### Simplified CDD — legal wording vs. authorities' view - Article 40a of the BWG is titled as introducing “simplified customer due diligence” but, per the law’s text, creates exemptions from identification requirements under Article 40, paragraph 1 rather than prescribing reduced CDD measures. - Authorities stated the legislator’s intention was to introduce an option for simplified due diligence rather than an exemption, but no guidance has been issued to reconcile this discrepancy; the authorities intend to address it further. ### Mandatory attention to activities/products when assessing low risk (Article 40a para.4) - Credit institutions and financial institutions must pay special attention to: - the activities of customers; and - the types of products and transactions which may be regarded as particularly likely, by nature, to be used or misused for ML/FT purposes. - If available information suggests a ML/FT risk, institutions are prohibited from classifying customers or products/transactions as low-risk and must apply standard CDD measures. ### Fiduciary accounts exception (Article 40a para.5 of the BWG) - Exception applies to fiduciary accounts held by attorneys at law or notaries (Austria or other countries) that are subject to AML/CFT requirements and supervision equivalent to international standards. - In such cases, evidence of identity of each individual “trustor” need not be provided if all of the following requirements are fulfilled: 1. individual verification is infeasible due to the representation of large co-ownership communities of changing composition; 2. the ‘trustee’ submits a written declaration to the credit institution stating that he/she has identified his/her clients in accordance with Article 40, paragraphs 1, 2 and 2a, nos. 1 and 2 or the requirements of Directive 2005/60/EC, that he/she has stored the corresponding documents and will present them to the credit institution upon request; 3. the ‘trustee’ provides the credit institution with complete lists of the clients assigned to each fiduciary account within two months after the end of each calendar year; 4. the ‘trustor’ does not have his/her place of incorporation or place of residence in a noncooperative country or territory; and 5. no suspicion pursuant to Article 40, paragraph 1, no. 3 exists. - Second and third conditions do not apply to clients for whom the respective individual transaction conducted or whose share of the claim on the respective trustee arising from fiduciary accounts does not amount to a total of EUR 15,000. - The law thus explicitly exempts these circumstances from any CDD as long as there is no suspicion of ML/FT and the trustor is not domiciled in a “noncooperative country.” - Authorities noted all “trustees” are clients of specific lawyers or notaries and thus have been identified pursuant to lawyers’ and notaries’ CDD requirements. ### Broad exemptions and FATF standard concerns - Credit and domestic financial institutions (and securities firms) are fully exempt from identification requirements when dealing with a foreign credit or financial institution deemed subject to equivalent AML/CFT measures, with no requirement to assess ML/FT risk prior to invoking the exemption. - Exemption from CDD for fiduciary accounts under EUR 15,000 applies when there is no risk of ML/FT. - Rather than providing for “simplified” due diligence, the law creates blanket exemptions; this is not aligned with the FATF standard which requires minimum CDD even where ML/FT risk is low and requires prior risk assessment. - The exemptions create potential loopholes that criminals may misuse. ### Insurance undertakings (Article 98c of the VAG) - Article 98c contains provisions very similar to the BWG and additionally: - insurance undertakings are included among institutions that do not require identification (Article 98c, paragraph 1, nos. 1a and 1b); - a minimum threshold is set for certain insurance contracts: - life insurance contracts where the annual premium is no more than EUR 1,000 or the single premium is no more than EUR 2,500; - insurance contracts for pension schemes if there is no surrender clause and they cannot be used as collateral for a loan (Article 98c, paragraph 1, no. 2 of the VAG). - Article 98c entails exemptions from CDD rather than simplification and is therefore not in line with the standard. ### Securities institutions - Provisions applicable to credit and domestic financial institutions apply mutatis mutandis to securities institutions (Articles 6 and 12, paragraph 4 of the WAG). - It is unclear whether securities firms consider the BWG exemption for “credit institutions” to apply by analogy; authorities confirmed exemptions in the BWG do not apply to the securities sector despite Articles 6 and 12 of the WAG. ### Simplified CDD and overseas residents (c. 5.10) - The BWG and VAG lists of circumstances allowing simplification/exemption are exhaustive; simplified CDD is not available in situations other than those explicitly mentioned. - Mere fact of customers residing abroad does not justify simplified CDD; standard CDD obligations apply. ### Simplified/Reduced CDD not to apply when suspicion/high risk exists (c. 5.11) - Article 40a (paras. 2 and 6 BWG), Article 98c para.1 VAG, and Articles 6 and 12 para.4 WAG prohibit simplified CDD in circumstances presenting a suspicion of ML/FT, except for the BWG Article 40a para.1 case (foreign credit/financial institutions subject to “equivalent” AML/CFT measures) where exemption applies without prior risk assessment. ### Risk-based guidance (c. 5.12) - At assessment time, no formal guidelines had been issued on the risk-based approach adopted in the laws. - The FATF Guidance on the Risk-Based Approach to Combating Money Laundering and Terrorism Financing (June 2007) was circulated by the MoF to Austrian financial institutions via the WKO. - The FMA is preparing a circular to provide guidance on applying CDD measures on a risk-sensitive basis. ### Timing of verification of identity and exceptional circumstances (c. 5.13–5.14) - General rule: customer identification and verification before establishing business relationship or conducting a transaction. - Credit and domestic financial institutions: - Derogation: a bank account may be opened provided there are “adequate safeguards in place to ensure that transactions are not carried out by the customer or on the customer’s behalf” until full compliance with identification requirements and other information is obtained (Article 40, paragraph 2c BWG). - Example safeguard: an IT-system that automatically blocks any transaction until the institution has obtained all relevant information and fulfilled identification requirements. - Insurance undertakings: - May defer verification of the identity of the beneficiary to a later stage but must complete identification and verification at time of payout or when beneficiary exercises contract rights (Article 98b, paragraph 5 VAG). - Securities institutions: - WAG refers to relevant BWG provisions; Article 40, paragraph 2c of the BWG should apply rarely. ### Failure to complete CDD before or after commencing relationship (c. 5.15–5.16) - Credit, domestic financial institutions and securities firms: - If unable to comply with identification requirements under Article 40 paras.1, 2 and 2a, they are prohibited from carrying out any transaction or establishing a business relationship, must terminate ongoing relationships and consider filing a suspicious transaction report (Article 40, paragraph 2d BWG). - Insurance undertakings: - Similar prohibition under Article 98b, paragraph 6 VAG. - Financial institutions reported to assessors that they do not initiate transactions before CDD is completed. ### Existing customers — CDD requirements (c. 5.17) - Credit and domestic financial institutions: - Required to identify existing customers “on a risk-sensitive basis at the appropriate time” (Article 40, paragraph 2e BWG). - Authorities indicated a timeframe of one year after entry into force (in January 2008) of the new BWG provisions is reasonable; institutions not complying by January 2009 will be in violation of the law. - Insurance undertakings: - Article 98b, paragraph 7 VAG mirrors Article 40, paragraph 2e BWG; authorities deem one year after entry into force appropriate. - Securities institutions: - Same requirements apply pursuant to Articles 6 and 12, paragraph 4 WAG. - Financial institutions mentioned differing timeframes depending on size of customer base; no reference to prioritization based on risk-adjusted approach. ### Existing anonymous-account customers (c. 5.18) - Authorities stated there are no anonymous banking accounts in Austria. - For pre-existing anonymous savings accounts amendments to the BWG (effective November 1, 2000) require: - ascertain customer identity before receiving any deposit or allowing any withdrawal (Article 40, paragraph 7 BWG); and - immediately inform the A-FIU of all withdrawal requests from a savings account with balance equivalent to or above EUR 15,000 (Article 41, paragraph 1a BWG). - Statistics and estimates: - Savings deposits amounted to EUR 148.3 billion (as of June 30, 2008). - Estimated number of savings deposit accounts was 24.2 million. - OeNB review at end of 2007 on a sample of 26 largest banks (representing 65 percent of total banking assets) found: - 74 percent of savings books’ owners were identified, amounting to 98 percent of total savings book deposits. - On this basis, estimated in-country figures: 6.3 million accounts are not identified, amounting to EUR 2.97 billion, i.e., an average balance per savings book of EUR 472. - Most of these savings deposits are considered dormant accounts. - Authorities indicated a fee charged for closing a savings deposit account may act as a deterrent when the deposited amount is lower than the fee. ### Foreign PEPs — identification and definitions (c. 6.1) - BWG requires appropriate risk-based procedures to determine whether a customer or beneficial owner is a PEP from another country (Article 40b, paragraph 3). - PEPs defined as natural persons who are (or were up to one year ago) entrusted with prominent public functions and their immediate family members or persons known to be close associates. - “Prominent public functions” include: - heads of state, heads of government, ministers and deputy or assistant ministers; - members of parliaments; - members of supreme courts, constitutional courts or of other high-level judicial bodies whose decisions are not subject to further appeal, except in exceptional circumstances; - members of courts of auditors or of the boards of central banks; - ambassadors, chargés d'affaires or high-ranking officers in the armed forces; and - members of the administrative, management or supervisory bodies of state-owned enterprises. - Except for the last category, all categories also apply to positions at the European Community level and to positions in international organizations. - “Immediate family members” include: - spouses; - partners equivalent to spouses under national law; - children and their spouses or partners equivalent to spouses under national law; and - parents. - “Persons known to be close associates” include: - any natural person known to have joint beneficial ownership of a legal entity or of a trust with a person entrusted with a prominent public function, or who has other close business relations with such person; - any natural person who has sole beneficial ownership of a legal entity or of a trust which is known to have been set up de facto for the benefit of a person entrusted with a prominent public function. - Austrian definition does not explicitly include “important political party officials” as in the FATF Glossary; authorities maintained most important party officials are nevertheless captured through participation in government or Parliament. - BWG sets a one year timeframe from the end of official functions after which a person is no longer considered a PEP; beyond that, enhanced due diligence is mandatory only if ex-PEP is still considered higher-risk. - No provision addresses a customer becoming a PEP during an ongoing business relationship; senior management approval is required only before establishment of business relationship with a PEP. ### PEPs — risk management, source of wealth/funds, ongoing monitoring (c. 6.2–6.4) - Banking institutions (Article 40b, paragraph 1 no. 3 lit. b–d BWG) must, for PEPs in addition to standard CDD: - obtain senior management approval before establishing business relationships with such customers; - take adequate measures to establish source of wealth and source of funds involved in the business relationship or transaction; and - conduct enhanced ongoing monitoring of the business relationship. - Insurance undertakings: similar provisions in Article 98d, paragraph 1, no. 2 VAG. - Securities institutions: BWG provisions apply via Articles 6 and 12, paragraph 4 WAG. - Assessors found financial institutions have programs to detect PEPs and approval procedures, but it was unclear to what extent procedures address determining source of wealth/source of funds and enhanced monitoring. ### Domestic PEPs and related elements (c. 6.5–6.6) - Domestic PEPs are not subject to enhanced due diligence measures: BWG and VAG mention PEPs “from other [EU] Member States and from third countries.” - Austria ratified the United Nations Convention against Corruption on January 11, 2006. - To comply with the Convention, Austria amended its StGB with new bribery provisions effective January 1, 2008: - New provisions criminalize bribery in the “private sector” (Articles 168c–168d) and in the “public sector” (Article 304). - Articles 168c & 168d prohibit accepting inappropriate gifts by employees or other authorized representatives of a (private) undertaking as well as bribery. - In the public sector, “office holders” (Amtsträger), arbitrators (Schiedsrichter), personnel of senior management of public undertakings and expert advisors (sachverständige Berater) are addressees of the new provisions. - “Office holders” are defined broadly (Article 74, paragraph 1 StGB); parliamentarians are excepted from that definition and addressed specifically by Article 304a, StGB which sanctions bribery with regard to parliamentary votes or elections only. *Source: IMF staff report excerpt (content unit _cr09298 - 475).* ### 513. Austria also volunteered to take part in a pilot program launched in 2007 with the aim to ### _cr09298 - 513. Austria also volunteered to take part in a pilot program launched in 2007 with the aim to ### Correspondent banking and payable-through accounts - Correspondent banking between Member States of the European Economic Area (EEA) "is not considered to be 'cross-border.'" Authorities justify this by EU/EEA single market and common requirements; only correspondent banking with "third countries" (non-EEA) is deemed higher risk (Article 2, paragraph 8 of the BWG). - Article 40b, paragraph 1, no. 2 of the BWG requires credit and domestic financial institutions with respect to correspondent banking with non-EEA countries to: - "gather sufficient information about a correspondent bank to understand fully the nature of its business and be able to ascertain the reputation of the institution and the quality of supervision on the basis of publicly available information;"; - "satisfy themselves of the correspondent bank's anti-money laundering and anti-terrorist financing controls;"; - "obtain approval from senior management before establishing new correspondent banking relationships;"; - "document the respective responsibilities of each institution;"; and - with respect to payable-through accounts, "satisfy themselves that the correspondent bank has verified the identity of and performed ongoing due diligence on the customers having direct access to accounts of the correspondent, and that it is able to provide relevant customer due diligence data to the correspondent bank upon request." - Effectiveness observations: - Most banks maintain a limited and selected number of correspondent accounts subject to the new legal requirements. - Senior management and management board approval is generally required for new correspondent relationships. - Multinational institutions exercising strict transaction vigilance have filed STRs based on suspicions. - Banks reported not offering payable-through account facilities to their customers. ### Misuse of new technology for ML/FT (Recommendation 8.1) - No specific legal provision requires financial institutions to define and implement policies/measures to prevent misuse of technological developments in money laundering or terrorist financing. - Authorities consider such diligence falls within the risk-based approach and expect financial institutions' risk analysis to classify misuse of new technologies as high risk, requiring additional due diligence (Article 40b, paragraph 1 of the BWG; Article 98d, paragraph 1 of the VAG; Articles 6 and 12, paragraph 4, of the WAG referring to the BWG). - Some new technology risks could be addressed under non-face-to-face transaction requirements, but "altogether, the overall provisions fall short of fulfilling the conditions of criterion 8.1." - Financial institutions reported: - Internet services are the only new technology instruments provided for accessing account information and conducting secured transactions. - "In no circumstances can accounts be opened through the internet." - At the time of the mission, none of the financial institutions met had included misuse of technological developments in a high risk category. ### Risk of non-face-to-face business relationships (Recommendations 8.2 & 8.2.1) - Legal basis: Article 40b, paragraph 1, no. 1 of the BWG; Article 98d, paragraph 1, no. 1 of the VAG; Articles 6 and 12, paragraph 4 of the WAG (referring to the BWG) define non-face-to-face business relationships as presenting a higher risk requiring mandatory enhanced due diligence on a risk-sensitive basis to ascertain and verify customer identity. - Minimum requirements for non-face-to-face relationships include: - Use of an electronic signature or registered mail; - Identification data known to the financial institution; customer confirms in writing that place of incorporation equals seat of central administration; a copy of identification documents obtained; - When customer resides or is incorporated outside the EEA: written declaration from a credit institution with a permanent business relationship stating identification completed in accordance with Austrian rules or, for third countries, consistent with Articles 16-18 of Directive 2005/60/EC; identification and confirmation by Austrian representation on the third country or a recognized certification authority is also permissible. - Alternative minimum requirements: - "The first payment is carried out through an account opened in the customer's name with a credit institution situated in an EU Member State or a third country having an AML/CFT regime consistent with the EU rules; the customer identification data, whether natural or legal person, must be known to the financial institution." - Financial institutions must have required documents to verify identity, or obtain written declaration from the credit institution through which the payment is made stating identification per Austrian rules or Article 8(1)(a) to (c) of Directive 2005/60/EC. - Insurance undertakings exception: - Waiver for life insurance contracts where the annual premium is below EUR 1,000 or the single premium is lower than EUR 2,500 (Article 98d, paragraph 1, no. 1 in fine of the VAG). Business relations must be avoided where there is suspicion or reasonable grounds for suspicion of ML/FT. - Implementation notes: - BWG, VAG and WAG set minimum mandatory diligence but do not require specific policies/procedures for non-face-to-face risks; non-face-to-face transactions recognized as higher risk, triggering additional due diligence on a risk-sensitive basis. - Some financial institutions reported enhanced scrutiny of non-face-to-face business, limited to activity intermediated by agents and brokers; intermediaries operate as commercial staff or under intermediary provisions. ### Recommendations and comments (overall CDD, PEPs, correspondent banking, technology) - Observations: - BWG, VAG and WAG broadly align with the standard in substance but suffer shortcomings and unestablished effectiveness. - Blanket exemptions from CDD and additional measures for cross-border correspondent banking fall short of the standard. - No evidence of a domestic risk assessment of the overall financial sector; specific high-risk business types (e.g., private banking) lack adequate CDD obligations. - FMA operational circulars pending after the January 1, 2008 revision; new requirements (PEPs, correspondent accounts, beneficial ownership) at an early implementation stage. - PEPs: former PEPs are no longer subject to enhanced due diligence after one year from end of official functions; Austrian law does not address a customer becoming a PEP during an existing business relationship and requires management approval for establishing a relationship with a PEP but not for continuing one. - Recommendation 8 requirement to have policies/procedures to prevent misuse of technological developments is left to financial institutions; Austrian regime establishes specific additional identification/verification at inception of non-face-to-face relationships. - In light of the above, authorities should: - Recommendation 5: - Require that holders of savings documents for savings deposit accounts which balance is lower than EUR 15,000 and are not registered in the customer’s name, be considered as beneficial owners and be subject to corresponding identification and verification obligations; - Extend CDD measures to customers that are credit and financial institutions established in EU member countries; - Remove the blanket exemption for fiduciary accounts below EUR 15,000; - Conduct domestic ML/FT risk assessment and require enhanced due diligence measures with respect to business relationships and transactions that are of higher risk; - Issue guidelines on the extent of the CDD measures on a risk sensitive basis; - Consider requiring banks to remove the fee charged for closing a savings deposit account. - Recommendation 6: - Request financial institutions to apply enhanced due diligence when a customer becomes a PEP after the establishment of the business relationship. - Recommendation 7: - Apply the measures listed under Article 40b, paragraph 1, no. 2 of the BWG to all correspondent banking, that is, also with respect to EEA Member States. - Recommendation 8: - Require financial institutions to have policies in place or to take measures to prevent the misuse of technological developments in ML/FT schemes. ### Compliance ratings and key factors (Recommendations 5–8) - R.5 PC: - Undue exemption from CDD measures for customers that are credit institutions established in EU member countries. - Undue blanket exemption from CDD measures for fiduciary accounts that amount to less than EUR 15,000. - No requirement to apply beneficial owner’s identification and verification diligence to holders of savings documents for savings deposit accounts which balance is lower than EUR 15,000 and are not registered in the customer’s name. - Current list of suggested high-risk customers omits some significant high risk business categories relevant to Austria. - No guidelines issued by the competent authorities on the extent of the CDD measures on a risk sensitive basis. - Effectiveness was not established for some criteria. - R.6 LC: - Measures in place limited to customers who fit the definition of a PEP at the beginning of a business relationship only. - Effectiveness not established. - R.7 LC: - Undue exemption from additional measures for correspondent relationships with credit institutions established in EEA member countries. - R.8 LC: - No requirement for financial institutions to have policies in place or to take measures to prevent the misuse of technological developments in ML/FT schemes. ### Third parties and introduced business (Recommendation 9) - Legal framework: - BWG (Article 40, paragraph 8) and VAG (Article 98e) set conditions for relying on third parties to meet obligations to identify and verify customers and beneficial owners and to collect information on purpose and nature of intended business relationship; Articles 6 and 12, paragraph 4 of the WAG carry over BWG provisions. - Third parties include: - credit institutions and financial institutions as defined in Article 3, paragraphs 1 and 2 of Directive 2005/60/EC (notably life insurance companies and insurance intermediaries, investment firms, collective investment undertakings marketing units/shares; institutions carrying out exclusively exchange bureau or money remittance services are explicitly excluded); and - auditors, external accountants, tax advisors, notaries and legal professions as defined in Article 2, paragraphs 1 and 3a, and b of Directive 2005/60/EC. - Conditions for third parties: - Must be subject to mandatory professional registration recognized by law; - Must apply CDD and record keeping requirements in Austrian law or the EU Directive and be subject to AML/CFT supervision per the Third EU ML Directive; - Third parties can only be located in a non-EU country which applies equivalent AML/CFT provisions and supervision. - Insurance intermediaries: - Subject to AML/CFT provisions of the Trade Act (Gewerbeordnung, GewO) and supervised by local district authorities (Bezirksverwaltungsbehörden). - Availability of CDD data: - Financial institutions must ensure third parties make CDD information available without delay and that copies of CDD data and documentation are immediately forwarded on request (Article 40, paragraph 8 BWG; Article 98e, paragraph 4 VAG). - Regulation and supervision of third parties: - Financial institutions may rely only on third parties subject to AML/CFT requirements and supervision as set forth in Directive 2005/60/EC or situated in countries with equivalent AML/CFT requirements and supervision. - FMA must inform other EU Member States and the EU Commission when it considers a third country does not meet requirements; to date, no country has been reported by the FMA. - FMA transmitted the EU list of "third countries" considered equivalent to financial institutions with no modification. - Ultimate responsibility: - Ultimate responsibility for meeting legal obligations remains with the financial institution relying on third parties (Article 40, paragraph 8 BWG; Article 98e paragraph 1 VAG). - Effectiveness observations: - Securities institutions and insurance undertakings use intermediaries for new business; intermediaries collect required customer profile information. - Financial institutions distinguish application process (by third party) from customer acceptance (retained by financial institution); institutions relying on intermediaries without face-to-face contact often lack photocopies of identification documents and may have only an indication of the type of identification presented. - Contract processing typically requires acceptance documents be mailed to client; funds processed through an account in the customer's name at a bank located in Austria. - Some insurance firms consider intermediary business higher risk and plan to include as a risk factor in transaction monitoring systems per new legal provisions. - Some institutions provide training to agents, but not to brokers. *IMF staff report text as provided in the source content unit.* ### 537. The authorities should determine whether EU and EEA countries where third parties are ### _cr09298 - 537. The authorities should determine whether EU and EEA countries where third parties are based adequately apply the FATF Recommendations. ### Compliance with Recommendation 9 - Rating: R.9 — LC - Summary factor underlying rating: - Presumption that all EU and EEA countries adequately apply the FATF recommendations. ### Financial Institution Secrecy or Confidentiality (R.4) — Description and Analysis - Legal basis and scope - Banking secrecy is set out in Article 38, paragraph 1 of the BWG: credit institutions, their members, members of their governing bodies, their employees as well as any other persons acting on behalf of credit institutions are prohibited from divulging or exploiting secrets revealed or made accessible exclusively on the basis of business relations with customers, or on the basis of Article 75, paragraph 3 (banking secrecy). - The secrecy requirement extends to functionaries of authorities as well as the OeNB that acquire knowledge subject to banking secrecy requirements in the course of their duties. - The obligation to maintain secrecy applies for an indefinite period of time. - Amendment of the banking secrecy provision may only be made by the National Council with at least one half of the representatives present and a two third majority of the votes cast (Article 38, paragraph 5). - Criminal sanction - Article 101, paragraph 1 of the BWG: Anyone who discloses or exploits facts subject to the banking secrecy to create an economical advantage for himself or others, or to place others at a disadvantage, is punishable by imprisonment for up to one year or with a fine of up to 360 days-fine. - Prosecution requires authorization of the person whose interest in secrecy was violated (Article 101, paragraph 2 of the BWG). - Note on daily fines: Pursuant to Article 19 of the StGB, monetary fines are to be pronounced in daily rates. The minimum fine is two daily rates. Daily rates range between a minimum of EUR 2 and a maximum of EUR 500. A substitute prison sentence is to be pronounced if the fine cannot be executed. One day of substitute prison sentence is equivalent to two daily rates. - Statutory exceptions to banking secrecy (Article 38, paragraph 2 BWG) - vis-à-vis public prosecutors and criminal courts in connection with criminal court proceedings on the basis of a court approval (Article 116 StPO), and vis-à-vis the fiscal authorities in connection with initiated criminal proceedings due to willful fiscal offenses, except in the case of financial misdemeanors; - reporting obligations such as the obligation to report suspicions of money laundering or terrorist financing and the obligation to provide the Police with all relevant information (Article 41, paragraphs 1 and 2); - vis-à-vis the probate court and the court commissioner in the event of the death of a customer; - vis-à-vis the competent court for guardianship or tutelage matters if the customer is a minor or otherwise under tutelage; - if the customer grants his/her express written consent to the disclosure of secrets; - for general information commonly provided in the banking business on the economic situation of an undertaking, unless the undertaking expressly objects; - where disclosure is necessary to resolve legal matters arising from the relationship between the credit institution and customer; - with regard to the reporting requirements pursuant to Article 25, paragraph 1 of the Inheritance and Gift Tax Act (Erbschafts- und Schenkungssteuergesetz); - in the case of obligations to provide information to the FMA pursuant to the Securities Supervision Act and the Stock Exchange Act. - Implicit exceptions and AML/FT-relevant provisions - Authorities state the catalogue of exemptions in Article 38, paragraph 2 BWG is not exhaustive per case law (High Administrative Court and Supreme Court of Justice) and Austrian expert literature. - Additional AML/FT-relevant bases for disclosure: - Article 78 StGB: FMA obliged to report suspicion of a crime to public prosecution or criminal police — permitted to provide information/documents underlying banking secrecy to comply. - Article 48i of the BörseG: FMA obliged to report suspicion of misuse of insider-information to public prosecution — permitted to provide information/documents underlying banking secrecy. - Public prosecution may mandate the FMA with further investigations on suspicion of misuse of insider-information; FMA must report results and provide obtained documents. - Article 41, paragraph 5 BWG: If FMA or the National Bank find reason to suspect a transaction serves purpose of ML/FT in supervisory duties, they must file a report to the A-FIU without delay and may provide information/documents underlying banking secrecy. - Formal legal access for ML/FT information - Article 41, paragraph 2 BWG: “Upon request, credit institutions and financial institutions must provide the authority with all information which the authority deems necessary in order to prevent or pursue cases of money laundering or terrorist financing.” Such disclosure is explicitly exempt from the banking secrecy obligation (Article 38, paragraph 2, no. 2 BWG). - StPO disclosure framework (Article 109 and Article 116) - Article 109, paragraph 3 StPO defines “information on bank accounts and bank operations”: - lit. a: name and other information about identity of the holder of a business relation, address, info whether an accused maintains business relations, entitled to economic advantages, authorization by such relation; presentation of documents regarding identity and authorization; - lit. b: documents and other papers regarding the nature and extent of a business relation and other business operations for a determined past or future period of time. - Access to information under 109(3)(a) (mainly name and address) is admitted if necessary to clarify a felony/criminal offense or misdemeanor within Provincial Court jurisdiction (Article 17 StGB in conjunction with Article 31, paragraphs 2-4 StPO). - Access to information under 109(3)(b) (e.g., extracts of a bank account) admitted only by Article 116, paragraph 2 StPO if, due to particular circumstances, it can be assumed that: 1. The business relation is connected to committing a criminal act and either the holder is suspected of having committed the act or it is presumed that a person suspected of having committed the act will operate or has operated a transaction via the account, or 2. The business relation will be used for the transaction of a financial benefit gained through criminal acts or is subject to disposition of a criminal organization or terrorist organization or is provided/collected as a means of financing terrorism. - Disclosure under Article 116 requires a request by the office of public prosecution and a court order (Article 116, paragraph 3 StPO). The request and court order must specify case denomination, legal basis, institution, documents/information designated, facts constituting necessity and proportionality, time frame (if applicable), and facts constituting connection between business relation and subject of proceeding. - Service requirements: request and order must be served to the credit or financial institution, the accused and persons entitled by business relation as soon as known; service to accused/entitled persons may be postponed if otherwise the aim of proceeding endangered. The credit or financial institution must keep the order and related facts secret against clients and third parties (Article 116, paragraph 5 StPO). - Article 116, paragraph 5 StPO obliges credit and domestic financial institutions and employees to disclose requested information, permit inspection of documents and hand them over. If more information/documents are needed beyond request and court order, procedure under Article 112 is to be initiated if requested by the institution. - Insurance sector - Article 108a of the VAG sanctions violation of duty of secrecy in insurance business, but secrecy is weaker than banking secrecy: Article 108a VAG does not apply “if the disclosure or use is justified as to content and form by a public or a legitimate private interest.” Disclosure is granted where justified by a “public interest”, which is always the case in criminal investigation. - Outside criminal proceedings: the FMA and the OeNB may require any information when performing their functions, but access in other circumstances is only possible through the A-FIU (Article 98e, paragraph 3 VAG). ### Financial Institution Secrecy — Effectiveness (practice) - Informal exchanges and STRs - Financial institutions have frequent informal exchanges with the A-FIU on AML/CFT issues, which may result in filing an STR. - Police vs court orders - Investigations by other police units must be presented in the form of a court order. - Some institutions told assessors they decline requests lacking sufficient evidence that legal conditions to lifting banking secrecy are material and adequate. - Credit and domestic financial institutions usually comply with requests emanating from the police acting on the basis of an STR, but are more reluctant to follow court orders and may refuse to execute the order when they consider the link between client/transaction and ML/TF suspicions not clearly established. - Institutions sometimes substitute their own appreciation of a specific case for that of the court, forcing courts/prosecutors to reconsider and re-establish the link. - Supervisory access - Supervisory authority does not appear to encounter difficulties obtaining information needed to fulfill obligations. ### Financial Institution Secrecy — Recommendations and Comments - Assessment - Provisions in the BWG and the StPO appear to enable authorities to access information required for AML/CFT functions. - In practice, access to information covered by banking secrecy raises difficulties during criminal proceedings: - Access to banking records by the police/A-FIU acting under Article 38, paragraph 2 BWG is unproblematic (police must only indicate suspicion of ML/TF). - Access in other circumstances is more difficult due to restrictive conditions for court orders under Article 116 StPO, particularly when seeking information beyond name and address. - Prosecutor must show on basis of “particular circumstances” that (i) business relationship is “connected to committing a criminal act”; and (ii) either account holder is suspected or a person suspected will operate/has operated transactions via the account, or the business relation will be used for laundering proceeds or financing terrorism. - Police and prosecution must possess a fair amount of information before applying for a court order; access to banking records appears impossible in early investigative stages unless link to offense is clear from start. - Recommendation - The authorities should lighten the conditions set out in Article 116 of the StPO for disclosure of banking information in order to facilitate access by the police to banking records. ### Compliance with Recommendation 4 - Rating: R.4 — PC - Summary factor underlying rating: - Disclosure of banking information under Article 116, paragraph 3, lit. b StPO is subject to restrictive conditions which hamper access to relevant information in practice. ### Record-Keeping and Wire Transfer Rules (R.10 & SR.VII) — Legal Framework - Applicable provisions - Retention of relevant information and wire transfers set out in sector-specific laws: BWG, VAG and WAG, and EU Regulation (EC) No. 1781/2006. ### Record-Keeping — Credit and Domestic Financial Institutions - Retention requirements (Article 40, paragraph 3 BWG) - Identification documents must be retained for at least five years after termination of the business relationship. - Documentation and records of all transactions must be retained for a period of at least five years after their execution. This applies regardless of whether transactions were domestic or international. - Reconstruction capability - Law ensures all necessary documents to reconstruct a specific customer relationship or transactions are maintained for at least five years. - Access for authorities - Relevant authorities may request information and documents during investigation following an STR under Article 41, paragraph 2 BWG, and in other criminal proceedings under Article 38, paragraph 2 BWG. - FMA and OeNB may access information in exercise of supervisory functions. - Article 212, paragraph 1 Commercial Code (UGB) requires entrepreneurs preserve an extensive list of commercial documents for seven years, or longer if relevant for pending court or administrative proceedings. - In practice, data are stored electronically which allows extended record keeping duration. ### Record-Keeping — Insurance Undertakings - Retention requirements (Article 98g VAG) - Any and all identification documents as well as supporting evidence and records of insurance contract for at least five years following termination of the insurance contract. - Supporting evidence and records for a period of at least five years following the carrying out of the transactions. - Limitation - Wording ensures A-FIU and FMA may access sufficient information of individual contracts and transactions but does not enable authorities to request a longer record retention period if necessary. ### Record-Keeping — Securities Institutions - WAG requires investment institutions and investment services companies to follow record keeping set forth in the BWG (Articles 6 and 12, paragraph 4). ### Availability of Records to Competent Authorities in a Timely Manner - Legal obligations to provide records - Financial institutions must provide the A-FIU with all information it requests to prevent or prosecute ML or FT (Article 41, paragraph 2 BWG; Article 98f, paragraph 2 VAG; Articles 6 and 12, paragraph 4 WAG applying Article 41 BWG). - Requirement to respond fully and rapidly exists for A-FIU or FMA inquiries about whether financial institutions maintain or have maintained during the previous five years a business relationship with specified natural or legal persons and on the nature of that relationship (Article 41, paragraph 4, no. 4 BWG; Article 98h, paragraph 1, no. 4 VAG; Articles 6 and 12, paragraph 4 WAG applying Article 41 BWG). - Authorities interpret “nature of the relationship” to mean all customer and transaction records and information. - Practical timeliness - Neither the A-FIU nor the FMA have mentioned excessive delays in obtaining relevant data and information from financial institutions. *Source: _cr09298 - 537. The authorities should determine whether EU and EEA countries where third parties are based adequately apply the FATF Recommendations.* ### 563. Requirements under SR.VII have been implemented within the EU through Regulation (EC) ### _cr09298 - 563. Requirements under SR.VII have been implemented within the EU through Regulation (EC) ### Implementation of SR.VII through Regulation (EC) No. 1781/2006 - Regulation (EC) No. 1781/2006 in force since January 1, 2007, lays down uniform law throughout the European Union and applies in full in all Member States, including Austria. - Member States are not allowed to set up provisions or practices of domestic law that would preclude the mandatory application of the Regulation. - National implementation is limited to establishing an appropriate monitoring, enforcement and penalties regime and to applying certain derogations allowed for in the Regulation. - Requirements applicable by credit institutions with respect to wire transfers are set out in the EU Regulation. ### Scope and Exceptions of the EU Regulation - The EU Regulation applies to transfers of funds, in any currency, sent or received by a payment service provider established in the EU, except: - transfers of funds carried out using a credit or debit card under specific conditions (Article 3, paragraph 2); - electronic money up to a threshold of EUR 1,000 (Article 3(3)); - transfer of funds carried out by means of a mobile phone or similar device (Article 3, paragraphs 4 and 5); - cash withdrawals, transfers related to certain debit transfer authorizations, truncated cheques, transfers to public authorities for taxes, fines or other levies within a Member State; - transfers where both the payer and the payee are payment service providers acting on their own behalf (Article 3, paragraph 7). ### Obtain Originator Information for Wire Transfers (c. 5.2 & 5.3 in R.5, c.VII.1) - Articles 4 and 5 require credit institutions to ensure that all transfers are accompanied by “complete information” on the originator, consisting of: - the name of the originator; - the originator’s account number; and - the originator’s address. - The originator’s credit institution must verify the full originator information on the basis of documents, data or information obtained from a reliable and independent source before executing a wire transfer, regardless of any threshold (Article 5, paragraph 2). - Pursuant to Article 40, paragraph 1 of the BWG, the identity of the customer must be verified against an official identification documents as described in the write-up on Recommendation 5. - Exceptions to verification requirements when transfers are executed from an account: - account of a customer identified in the course of account opening and whose identification records have been stored according to the requirements described under criterion 5.3; or - existing customer whose identity has to be verified at an appropriate time as described under the same criterion (Article 5, paragraph 3). - When transfers are not made from an account, the financial institution must verify the identity of the originator of transactions above EUR 1,000, or of several transactions of a lower amount but which appear to be linked and together exceed EUR 1,000 (Article 5, paragraph 4). ### Inclusion of Originator Information in Cross-Border Wire Transfers (c. VII.2) - Transfers between Austria and another EU member country are considered domestic for this assessment; transfers between Austria and non-EU member states are cross-border. - Article 7, paragraph 1: wire transfers from the EU to non-EU countries must be accompanied by full originator information. - For batch transfers, it is not necessary that each individual wire transfer be accompanied by full originator information provided: - the batch file contains the necessary information; and - the originator’s account number (or unique identifier) is attached to each individual wire transfer (Article 7, paragraph 2). ### Inclusion of Originator Information in Domestic Wire Transfers (c. VII.3) - Wire transfers between Austria and other EU member countries need not be accompanied by full originator information and may only contain the account number or a unique identifier allowing the transaction to be traced back to the originator (Article 6(1)). - If requested by the financial institution of the beneficiary, the originator’s financial institution must make the full originator information available within three working days (Article 6(2)). - Both originator and beneficiary financial institutions are required to respond fully and without delay to requests made by competent authorities (Article 14). ### Maintenance of Originator Information (c.VII.4) - Article 12: intermediary financial institution must ensure that all originator information received is kept with the transfer. - Article 8: beneficiary financial institutions must verify whether information on the originator is missing or incomplete and must ensure that originator information has been transmitted. - Article 13, paragraphs 2 and 5: in case of technical limitations to a payment system, intermediary financial institutions must keep records of all originator information received for five years. ### Risk-Based Procedures for Transfers Not Accompanied by Originator Information (c. VII.5) - Article 8: beneficiary financial institution must have effective procedures to detect any missing element in required originator information within the messaging or payment and settlement systems. - If required originator information is missing or incomplete, the beneficiary financial institution must either reject the transfer or request full originator information. - Article 9: if a financial institution regularly fails to supply required originator information, the beneficiary financial institution must take steps, including: - issuing warnings and setting deadlines; - rejecting any future wire transfers from the specific financial institution; - restricting or terminating the business relationship; - reporting this fact to the competent authorities. - Article 10: missing or incomplete originator information must be considered a factor in assessing whether the wire transfer is suspicious and whether it must be reported under the Third EU ML Directive (implemented through Article 41, paragraph 1 BWG). ### Monitoring of Implementation & Application of Sanctions (c. VII.6 & c. VII.7) - Article 15: Austria must lay down rules on penalties for infringements and ensure competent authorities monitor and take necessary measures to ensure compliance. - The competent authority is the FMA. - Financial institutions failing to comply are guilty of an administrative offense and are to be punished with a fine up to EUR 30,000 (Article 99, no. 19 BWG). - The FMA assesses compliance in the course of its usual supervisory procedures; at the time of the assessment, no practical failure to comply had been detected. ### Additional Elements: Elimination of Thresholds (c. VII.8 and c. VII.9) - Incoming cross-border transfers (originator’s institution outside the EU): Article 8(b) requires beneficiary financial institutions to detect whether such transfers are accompanied by full originator information; if not, beneficiary institutions must comply with obligations regardless of thresholds (batch-file exemptions applicable). - Outgoing cross-border transfers (beneficiary’s institution outside the EU): Article 7 requires any such wire transfer to be accompanied by full originator information, regardless of any threshold (batch-file exemptions applicable). ### Recommendations and Compliance on SR.VII and R.10 - Recommendation: Recommendation 10 and Special Recommendation VII are fully observed. - Compliance ratings: - R.10: C - SR.VII: C --- ### Monitoring of Transactions and Relationships (R.11 & R.21) — Description and Analysis Special Attention to Complex, Unusual Large Transactions (c. 11.1) - Credit and domestic financial institutions and securities institutions are required to “pay special attention to any activity which they regard as particularly likely, by its nature, to be related to money laundering or terrorist financing, in particular complex or unusually large transactions and all unusual patterns of transactions which have no apparent economic or visible lawful purpose”, and to keep suitable records (Article 41, paragraph 1 BWG; Articles 6 and 12, paragraph 4 WAG referring to the BWG). - For insurance undertakings, Article 98f, paragraph 1 VAG requires attention to “in particular complex or unusual contract terms and transactions which have no apparent economic or visible lawful purpose.” This diverges from the standard by not including “unusual patterns of transactions.” Examination of Complex & Unusual Transactions (c. 11.2) - Laws require financial institutions only to pay special attention and to keep suitable records; additional provisions related to the risk-based approach include: - Article 40, paragraph 2b BWG and Article 94b, paragraph 4 VAG: require financial institutions to subject their business to risk analysis using suitable criteria with regard to ML/FT risks and to demonstrate to the FMA that measures taken are appropriate. - Article 40b, paragraph 2 BWG (and Articles 6 and 12, paragraph 4 WAG, and Article 98d, paragraph 2 VAG): require credit institutions and domestic financial institutions to review with particular care transactions they regard as particularly likely to be related to ML/FT. - Assessors note these provisions do not fully address the standard: obligations refer to ML/FT risks arising from the business rather than transactions; the extent of diligence for transaction monitoring is left to financial institutions and may not include examination of background and purpose as required in c.11.2. Record-Keeping of Findings of Examination (c. 11.3) - Article 41, paragraph 1 BWG and Article 98f, paragraph 1 VAG require “suitable records” for transactions given special attention. - There is no obligation to keep such records for at least five years, and “suitable records” is undefined in law, regulation or other enforceable means. - General record-keeping provisions may apply for identification documents and transaction records but would not necessarily include investigative documentation relating to complex, unusual large transactions or patterns. Effectiveness - 2007 revision of BWG, VAG and WAG, effective since January 1 2008, introduced the requirement to pay special attention to activities likely related to ML/FT. - Financial institutions generally conduct largely manual surveillance; many were in the process of developing IT-based monitoring systems. - Assessors found examples of suspicious operations detected and analyzed; financial institutions maintain close relationships with the head of the A-FIU for guidance. Special Attention to Countries Not Sufficiently Applying FATF Recommendations (c. 21.1; c. 21.1.1; c. 21.2) - No explicit requirement to pay special attention to business relationships and transactions with persons from countries which do not or insufficiently apply the FATF Recommendations, to examine background and purpose, and to make written findings available to competent authorities. - Authorities consider such operations fall under the risk-based approach (Article 40, paragraph 2b BWG; Article 98b, paragraph 4 VAG) where geography is a suitable criterion. - Article 40, paragraph 4, no. 2 BWG (and Articles 6 and 12, paragraph 4 WAG; Article 98b, paragraph 8, no.2 VAG) require reporting to FMA of countries whose legislation does not permit customer identification as required under the BWG and taking additional measures; scope limited to identification issues. - MoF sent WKO a list of FATF-scrutiny countries; since November 28, 2008, FMA posts FATF and Moneyval statements on deficient AML/CFT regimes. - Assessors found evidence financial institutions give attention to operations with persons from such countries; some internationally-active banks include country risk among internal ML/FT risk criteria. - However, nature and extent of diligence are not defined in laws, regulations or other enforceable means; assessors view this as not corresponding to criteria which call for direct obligations. Ability to Apply Counter Measures (c. 21.3) - Article 78, paragraph 8 BWG: Federal Government, with Main Committee of the National Council, may issue a regulation designating NCCTs; violations of international standards may be assumed if Council of the European Union or FATF adopt resolutions. - Paragraph 9: measures applicable to persons resident or incorporated in an NCCT include: - ban on management positions or qualifying participation in a credit institution; - interdiction of non-face-to-face business relationships; - reporting of all transactions equal to or above EUR 100,000; - prohibition of simplified CDD measures. - Federal Government issued regulations based on Article 78, paragraph 8 BWG in 2002 (Nauru) and 2003 (Myanmar). ### Recommendations and Comments (R.11 & R.21) - Recommendation 11 (authorities should): - Define in law, regulation or other enforceable means a requirement for financial institutions to examine the background and purpose of all complex, unusual large transactions, or patterns of transactions, that have no apparent or visible economic or lawful purpose, and to keep resulting findings for at least five years. - For insurance undertakings, extend the requirement to monitor transactions to all unusual patterns of transactions. - Recommendation 21 (authorities should): - Define in law, regulation or other enforceable means a requirement for financial institutions to give special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations, to examine the background and the purpose of those transactions which have no apparent economic or visible lawful purpose and to keep written findings. ### Compliance Ratings and Key Factors - R.11: PC - No explicit requirement in laws, regulations or other enforceable means to examine the background and purpose of all complex, unusual large transactions or patterns and to set forth findings in writing and keep them for at least five years. - Monitoring of unusual patterns of transactions not required for insurance undertakings. - Concerns about the effectiveness of recently introduced provisions. - R.21: PC - No specific requirement in law, regulation or other enforceable means to pay special attention to business relationships and transactions with persons from countries which do not or insufficiently apply the FATF Recommendations. - No explicit requirement to examine the background and purpose of transactions with persons from those countries and to set forth and keep findings. *Source: _cr09298 - 563. Requirements under SR.VII have been implemented within the EU through Regulation (EC)* ### 3.7 Suspicious Transaction Reports and Other Reporting (R.13-14, 19, 25 & SR.IV) ### 3.7 Suspicious Transaction Reports and Other Reporting (R.13-14, 19, 25 & SR.IV) ### Legal framework and reporting obligation (c.13.1) - Relevant provisions: Article 41, paragraph 1, no. 1 of the BWG; Article 98f, paragraph 1, nos. 1 and 2 of the VAG; Articles 6 and 12, paragraph 4 of the WAG (refers to Article 41 BWG); Article 25, paragraph 5 of the BörseG; Article 365u(1) of the GewO. - Requirement: direct mandatory obligation to report suspicions of ML to the Federal Ministry of Interior (common practice: reports to the Austrian Financial Investigation Unit (A-FIU)). - Scope: obligation refers to Article 165 of the StGB and covers all predicate offenses required by the standard except counterfeiting and piracy of products. - Variations across laws: - BWG, VAG, BörseG: report when institution “suspects or has reasonable grounds to suspect” a transaction “serves the purpose of ML”; text explicitly references “Article 165 of the StGB – including asset components which stem directly from a criminal act on the part of the perpetrator.” - GewO (insurance brokers): obliged when “they know, suspect or have reasonable grounds to suspect” ML; refers to suspicion that ML “is being or has been committed.” - VAG additionally requires reporting when there is suspicion “that the intended establishment of a business relationship or an existing business relationship serves the purpose of money laundering (Article 165 StGB―including asset components which stems from a criminal offense committed by the perpetrator himself).” ### Volume, sources, and drivers of STRs (statistics and analysis) - Aggregate STR counts (all reporting entities): - 2004: Total 360 (Credit institutions 349; Insurance undertakings 11; Others 0) - 2005: Total 426 (Credit institutions 417; Insurance undertakings 9; Others 0) - 2006: Total 658 (Credit institutions 651; Insurance undertakings 7; Others 0) - 2007: Total 1,045 (Credit institutions 1,039; Insurance undertakings 6; Others 0) - Key observations: - STRs in 2007 (1,045) are relatively lower than comparable countries (noted by assessors). - Around 200 of the 2007 STRs related to phishing emails and “419 letters.” - Only six STRs from insurance undertakings in 2007 and none from other financial-sector reporting entities. - Money transfer specialists reported 392 STRs in 2007; one reporting entity in 2008 was filing at ~40 STR/month. - Excluding the money transfer sector and phishing/“419” letters: less than 650 STRs (2007); less than 450 if phishing and “419” letters deducted. - Offshore business involvement: 218 of the reports received in 2007 cited offshore involvement. - Explanations for low reporting levels given by authorities: - A-FIU provides frequent non-binding advisory calls (A-FIU receives on average 10 calls every day); banks commonly call A-FIU before filing. - Criminal procedure rules: STR treated as a complaint triggering police/prosecutor obligations, with potential disclosure of reporting entity identity to suspects, discouraging filings. - Historical lack of clear obligation to monitor business relationships reduced implementation of IT monitoring tools; purchase/development of such systems began recently. - Need for more training for non-banking financial institutions; resource constraints. ### Measures to protect reporting entities - Joint action plan agreed November 6, 2008 among MoF, A-FIU, MoJ, FMA, BVT, Federal Chancellery and private sector to promote protection of reporting entities and employees: awareness campaigns, ordinances, promotion of “anonymity” of STRs, information on protective mechanisms in the StPO. - MoJ ordinance issued November 11, 2008 to public prosecutors and judges clarifying delimitation/anonymization of files where personal security or higher data protection interests exist (Article 51, paragraph 2 and Article 68, paragraph 1 of the StPO). - Limitation: Article 51(2) StPO — restriction of right to access files is inadmissible if the suspect is in detention. ### STRs related to Terrorism Financing (c.13.2 and c.IV.1) - Reporting obligation applies to TF pursuant to same Articles cited for ML; four different texts apply across types of financial institutions. - BWG and VAG: obligation applies when suspicion or reasonable grounds to suspect “that a customer belongs to a terrorist group pursuant to Article 278b StGB or that a transaction serves the purpose of terrorism financing pursuant to Article 278d StGB.” - Assessors note potential technical shortcomings in section 278d of the StGB that could influence reporting; authorities advised to consider technical amendments and further guidance. - BörseG: mentions reporting obligation regarding suspicion that a transaction serves the purpose of FT (does not explicitly mention customer belonging to terrorist organization but “serving the purpose of FT” is practically sufficient). - GewO: reporting obligation when suspicion or reasonable grounds to suspect “terrorism financing is being or has being committed”; Article 365n, paragraph 2 defines TF for GewO purposes. - Volume: - STRs concerning financing of terrorism in 2007: 23. - STRs investigated by the BVT: - 2004: Total 12 (Credit institutions 9; Money transmitters 3) - 2005: Total 19 (Credit institutions 16; Money transmitters 3) - 2006: Total 15 (Credit institutions 14; Money transmitters 1) - 2007: Total 23 (Credit institutions 20; Money transmitters 3) - Reporting entities report FT-based STRs both on the basis of name-list matches (some false positives) and other grounds (possible relation with terrorist organization, conflict zone, or a sensitive NPO). ### No reporting threshold and attempted transactions (c.13.3, c.IV.2) - Reporting obligations apply irrespective of any threshold; requirement to report all suspicious transactions, including attempted transactions, is explicit in the laws. - Language capturing attempted transactions: - GewO Article 365u, paragraph 1 mentions “zu begehen versucht.” - BWG Article 41, paragraph 1; VAG Article 98f paragraph 1; BörseG Article 25, paragraph 5 mention “bevorstehende.” - Practicable reporting behavior: institutions often decline business relationships when doubts persist and rarely file STRs on potential customers; A-FIU indicates it receives some reports on attempted transactions and declined businesses, but numbers are very low. ### Relationship to tax matters and scope of predicate offenses (c.13.4, c.13.5) - Austria has not adopted an “all crimes” approach; Article 165 StGB refers to specific offenses. - Tax-related predicate coverage: - Two tax offenses related to international trade, smuggling and evasion of import or export taxes are included when value of evaded duties exceeds EUR 37,500. - Evasion of income tax, corporate tax, VAT or excise duties is not a predicate offense for ML unless value of evaded taxes exceeds EUR 500,000 (in which case it may constitute a crime). - Laws do not provide any exception to STR reporting on grounds of tax-related matters. - Reporting obligations include laundering of proceeds of all criminal acts that would constitute a predicate offense for ML in Austria, but do not require reporting funds that are proceeds of listed criminal acts absent an element showing the transaction serves the purpose of ML. ### Protection for reporters and tipping-off (c.14.1–14.2) - Civil/damages protection: - Article 41, paragraph 7 BWG and Article 98f, paragraph 8 VAG: claims for damages not permitted based on delayed/failed execution of a transaction due to negligent lack of knowledge that suspicion of ML or TF was wrong; protection covers employees (including management). - Article 25, paragraph 10 BörseG: identical protection but only concerning suspicion of money laundering. - Banking secrecy and liability: - Article 38, paragraph 2, no. 2 BWG: banking secrecy does not apply to information provided pursuant to Article 41, paragraph 1; banks and employees are protected from criminal and civil liability for making STRs. - No comparable secrecy requirements for investment, securities and insurance companies. - Article 365u GewO: reporting of suspicions by insurance intermediaries does not breach contractual or legislative disclosure restrictions and shall not lead to liability; no explicit requirement of good faith reporting in GewO text. - Prohibition against tipping-off: - Article 41, paragraph 3b BWG; Article 98f, paragraph 5 VAG; Article 25, paragraph 8 BörseG: financial institutions and employees prohibited from disclosing to clients or third parties that an STR or related information has been reported or provided to A-FIU or the police; prohibition extends to third parties. - When police issue an order to suspend or cancel a transaction (Article 41, paragraph 3b BWG; Article 98f, paragraph 3 VAG; Article 25, paragraph 7 BörseG), institutions may refer customers to police but may not disclose that an STR has been filed. *Source: _cr09298 - 3.7 Suspicious Transaction Reports and Other Reporting (R.13-14, 19, 25 & SR.IV)* ### 620. The prohibition does not apply to disclosures: ### _cr09298 - 620. The prohibition does not apply to disclosures: ### Exemptions to the prohibition on disclosure (paragraph 620) - Disclosures permitted: - towards the FMA, the OeNB, and for law enforcement purposes; - between financial institutions belonging to the same group as defined in Article 2 (12) of Directive 2002/87/EC and bound by obligations of the Third EU ML Directive or obligations equivalent to those set forth in the Third EU ML Directive and supervised for compliance with these obligations; - in cases related to the same customer and the same transaction involving two or more institutions, between the relevant institutions provided that they are bound by obligations of the Third EU ML Directive or obligations equivalent to those set forth in the Third EU ML Directive and that they are from the same professional category and are subject to equivalent obligations as regards professional secrecy and personal data protection. - Limitation on exchanged information: - The information exchanged is to be used exclusively for the purposes of the prevention of ML and FT. ### Cross-border group obligations and supervisory guidance (paragraph 621–623) - Rationale: - ML and FT are international phenomena; Articles 31(1) and 34(2) of the Third EU ML Directive require financial institutions to apply AML/CFT measures at least equivalent to those in the Directive and to communicate relevant policies to branches and subsidiaries abroad. - Implementation references cited: - Implemented in Article 40, paragraph 4, no. 1 and Article 41, paragraph 4, no. 2 of the BWG, Article 98b, paragraph 8, no. 1, and Article 98h, paragraph 1, no. 2 of the VAG and Articles 6 and 12, paragraph 4 of the WAG. - FMA list and restrictions: - On November 4, 2008, the FMA published a list of countries applying equivalent AML/CFT standards to implement Article 40, paragraph 8 and Article 40a, paragraph 8 of the BWG. - No guidance provided to financial institutions regarding implementation of Article 41, paragraph 3b of the BWG, Article 98f, paragraph 3 of the VAG, and Article 25, paragraph 7 of the BörseG, which are broader than Article 40, paragraph 8 of the BWG. - Austrian credit institutions are restricted to determining equivalence only via the FMA’s published list; they are not permitted to determine equivalence themselves. This was clarified in FMA circulars “Rundschreiben zur Feststellung und Überprüfung der Identität für Kreditinstitute“ and ”Rundschreiben zur Feststellung und Überprüfung der Identität für Versicherungsunternehmen“ (Recital 55). ### Confidentiality of reporting staff and handling of STRs (paragraph 623–624) - Insurance intermediaries: - Article 365x, paragraph 1 of the GewO: insurance intermediaries, and where applicable their directors and employees, shall not disclose to the customer concerned or to other third persons that information has been transmitted in accordance with Article 365u of the GewO or that a ML or FT investigation is being or may be carried out. - Article 365x, paragraph 2 of the GewO: the prohibition does not include the competent authorities or disclosure for law enforcement purposes. - Official secrecy and sanctions: - Article 20, paragraph 3 of the B-VG: authorities obliged to secrecy about facts obtained exclusively from official activity, save as otherwise provided by law. - Breach entails disciplinary sanctions up to dismissal and criminal proceedings under Article 310 of the StGB “disclosure of official secrets”, sanctioned by up to 3 years of imprisonment. - STRs and access to files: - Under the StPO, the STR must be forwarded with the case when the investigation is opened and stays in it. - Article 52, paragraph 2 of the StPO (witness protection) allows restriction of access to records by the suspect during investigation where immediate inspection would endanger inquiries; access is authorized after preliminary proceedings conclude. - In practice, reporting entities are encouraged to mention the compliance officer or head of legal department’s name instead of other employees when reporting an STR to the A–FIU; this practice was encouraged by the November 11, 2008 MoJ Ordinance (section 4.2). ### Consideration of automated reporting of currency transactions (paragraph 625–627) - Review conducted: - In November 2007, representatives of MoF, MoI, MoJ, MoE, FMA and OeNB analyzed advantages/disadvantages of implementing an automated reporting system, including for currency transactions. - Conclusion: - Introduction of an automated reporting system—either on the basis of threshold values or on other criteria—as set out in FATF Recommendation 19 is currently not recommended. - Elements supporting the conclusion: - Existing Austrian reporting systems deemed comparable to automated systems: mandatory reporting to public registers (real estate and company law), automated reporting regarding withdrawals from savings accounts under certain conditions (Article 41, paragraph 1a BWG), and not previously disclosed fiduciary transactions (Article 41, paragraph 1, no. 2 BWG, Article 98f, paragraph 1, no. 3 VAG, Articles 6 and 12, paragraph 4 WAG, Article 8b RAO and Article 36b NO). - MoI representative emphasized high quality of Austrian STR reporting and doubted added value of automatic reports; risk of reducing STR quality. - Mass reporting would require substantial additional human and financial resources to analyze data, possibly not reasonable relative to added value. - Follow-up: - Authorities decided that utility and feasibility of an automated reporting system will be subject to further evaluation. ### Guidelines, training, and feedback to reporting entities (paragraph 628–631) - A-FIU outreach: - A-FIU provides information via an annual report and direct training sessions. - Annual reports describe common ML techniques, methods, new trends; 2007 annual report mentions Islamic banking and new payment technologies. - Around 20 training sessions organized every year; some general, some sector-specific (money transfer services, companies, banks, leasing companies, insurance companies). - Compliance officers contact the A-FIU officer on duty regularly (10 calls per day) to discuss occurrences. - Potential confusion: - A-FIU’s mention of “419 letters” and phishing emails in ML typologies may confuse reporting entities on STR requirements under Article 41(1) of the BWG and others. - FMA guidance: - FMA issued circulars in 2004 on Controls and Suspicious Transaction Reports (credit institutions and insurances); circulars sent to MoE to forward to chamber of commerce competent for insurance intermediaries. - Circular contains guidance for credit institutions on reporting where there is ground to suspect violation of AML/CFT requirements but has not been reviewed after legal changes; introduction of subjective suspicion test may require further guidance. - Feedback mechanisms: - General feedback: A-FIU annual reports contain statistics on number of disclosures and results, techniques, trends, and sanitized case examples. - Specific feedback: new provisions oblige A-FIU to provide, wherever practicable, timely feedback on effectiveness of and follow-up to STRs (Article 41, paragraph 4 of the BWG, and Article 98h, paragraph 2 of the VAG). - Upon receipt of an STR, the A-FIU regularly contacts reporting entities requesting further documents (signature sample sheet, ID-documents, customer contact data, account behavior, account movement summary, cash withdrawals, vouchers, etc.) and uses this as an opportunity to give immediate feedback and improve reporting quality. ### Recommendations and supervisory priorities (paragraph 632–631, Recommendation 13, 14, 25, SR IV) - Recommendation 13 (authorities should): - Extend financial institutions’ requirement to report to the A-FIU in order to cover all situations when there is a suspicion that funds are the proceeds of a criminal activity, and not only when there is a suspicion that a transaction serves the purpose of money laundering; - Apply the obligation to make a STR to funds that are the proceeds of piracy and counterfeiting, and require professions under the GewO to report STRs in case of self-laundering; - Supervisors should issue guidance to clarify that the reporting obligations extend to situations where persons are suspected of being a terrorist or belonging to a terrorist organization; - Clarify and strengthen criminal law requirements concerning liability for financing individual terrorists and terrorist organizations; - Increase effectiveness of the reporting system and mitigate the current self-limitation of reporting entities due to the criminal procedure rules. - Recommendation 14: - Apply the protection for STR reporting only in case of good faith for insurance intermediaries; - Prohibit a financial institution from referring a customer to the police when a transaction has been suspended following an STR. - Recommendation 25: - Update FMA guidance on reporting. - Special Recommendation IV: - Supervisors should issue guidance to clarify that reporting obligations extend to situations where persons are suspected of being a terrorist or belonging to a terrorist organization; - Clarify and strengthen criminal law requirements concerning liability for financing individual terrorists and terrorist organizations. ### Compliance ratings and key factors (paragraph 3.7.3 and onward) - R.13 — PC (Partially Compliant) - Factors: - Reporting requirement not on funds that are the proceeds of a criminal activity, but limited to transactions that serve the purpose of ML; - No requirement to make an STR regarding funds that are the proceeds of piracy or counterfeiting; GewO does not require STRs in case of self-laundering; - Provisions in three of the four different reporting laws raise technical issues that could affect institutions’ decisions on whether they are obliged to file reports in relation to FT in certain situations; - Effectiveness questions raised by the low level of STRs. - R.14 — LC (Largely Compliant) - Factors: - Protection for STR reporting applies in the absence of good faith for insurance intermediaries; - Possibility to refer the customer to the police when a transaction is suspended creates an indirect “tipping off.” - R.19 — C (Compliant) - R.25 — LC (Largely Compliant) - Factor: - No up-to-date guidance on reporting for credit and domestic financial institutions, insurance undertakings, and securities institutions. - SR.IV — LC (Largely Compliant) - Factor: - Provisions in three of the four different reporting laws raise technical issues that could affect institutions’ decisions on whether they are obliged to file reports in certain situations. ### Internal controls, compliance and supervisory expectations (paragraph 633–640) - Legal framework overview: - BWG is lead law covering banking and broader Austrian definition of credit institution; VAG and WAG contain additional AML/CFT provisions for insurance and securities. - Core obligations: - Articles 39(1) and 39(2)(b)(5) of the BWG: require credit institutions to introduce systems and controls to manage operational risk (operational risk reasonably includes ML/FT risks). - Article 41(4) 1-6 of the BWG: specifically requires credit and domestic financial institutions to establish and maintain systems and controls to prevent ML and FT. - Article 98(h) 1 of the VAG: similar matters for insurance companies. - Article 6 of the WAG: relevant for securities institutions. - AML compliance officer requirements: - BWG Article 41, paragraph 4, no. 6: requires nomination of a “special officer” to ensure compliance with Article 40 et seq., but law silent on seniority, access rights, independence, and direct reporting line. - Explanatory note to Article 41, paragraph 4 of the BWG (Comments-Special Part 32 of the Annexure, Legislative Period XXIII): states AML compliance officer must report directly to the board of directors; authorities view explanatory notes as part of legal texts though this adds a new requirement and no sanctions have been applied solely on this basis. - FMA Circular (April 23, 2004) envisages an AML Compliance Officer who is competent, sufficiently independent, authorized to represent the institution to authorities, authorized to issue instructions on AML matters, authorized to conduct inspections, obtain/request/examine information, and have power to stop transactions if necessary. - The FMA intends to release guidance indicating the AML Compliance Officer needs internal inspection powers to meet Article 40 BWG risk management requirements. - Securities institutions: - Article 6 of the WAG imports Articles 39 and 41 from the BWG to investment firms and investment services undertakings. - Article 39 is oriented to credit institutions and may not translate effectively to investment business; certain credit-institution-specific risks are difficult to apply to investment services, while other relevant risks for securities businesses are not mentioned. - Article 41, paragraph 4, nos. 1–6 of the BWG apply internal control requirements to securities institutions with the caveat noted above. *Source: _cr09298 - 620. The prohibition does not apply to disclosures:* ### 641. Additionally, the WAG defines general organizational norms for all securities institutions: ### _cr09298 - 641. Additionally, the WAG defines general organizational norms for all securities institutions: ### Organizational norms for securities institutions and insurance undertakings - Article 17 of WAG: requires establishment of a general organization framework for the institution. - Article 18 of WAG: focuses on compliance arrangements. - Article 19 of WAG: addresses risk management. - Article 18, paragraph 4, no. 1: the person assigned to the general compliance function must have the necessary authority, resources and expertise, and have access to all relevant information. - For AML/CFT compliance officer matters: see imported Article 41, paragraph 4 of the BWG (commented above). - VAG Article 98(h): requires an insurance institution to establish a general framework of policies and procedures relating to customer due diligence, reporting, record keeping, internal control, risk assessment, risk management and compliance management; requires communication of these policies to branches and subsidiaries and dissemination to staff; provides for appointment of an Anti-Money Laundering Compliance Officer. - Legal provisions do not define the compliance officer function as a management position with independent authority reporting to senior management or the board. - No statutory right for the compliance officer to access CDD data and information, transaction records and other relevant information is stated in any of the financial laws. - In practice, assessors saw detailed AML/CFT procedures manuals; compliance officers who attended meetings held management positions and had access to relevant internal information; in some institutions the compliance officer reports to the chairman of the management board on a semi-annual or annual basis. ### Independent audit of internal controls to prevent ML and FT (c. 15.2) - Credit institutions: - General Due Diligence Obligations: required to have appropriate administrative accounting and control procedures; adequacy must be reviewed by internal audit at least once a year (Article 39, paragraph 2). - BWG Article 42 (1) to (7): sets expectations for internal audit functions, including: - internal audit unit reporting directly to the directors; - exclusive purpose of ongoing and comprehensive reviews of legal compliance, appropriateness and suitability of the institution; - unit must be adequately resourced (including competency of internal audit staff); - unit must report directly to the supervisory board on a quarterly basis, including results of its audit work. - Article 42, paragraph 4, no. 3: minimum mandatory areas for audit review include AML/CFT measures. - No requirement in law for the audit to include sample testing when testing compliance with AML/CFT. - Above-mentioned provisions do not apply to domestic financial institutions. - Securities institutions: - WAG Article 20: requires establishment of an internal audit function that is separate and independent. - Internal audit unit should create an audit plan, examine and evaluate adequacy and effectiveness of systems and controls, issue recommendations and verify implementation. - Unit required to report at least once per year to senior management and state if adequate measures taken to rectify previously identified defects. - No mention of auditing requirements specific to AML/CFT procedures and systems. - Insurance undertakings: - VAG Article 17(b): requires internal auditing unit reporting on a quarterly basis directly to management; sole purpose to continuously verify business is “lawfully, properly and expediently” conducted; requires identification, estimation and control of “risks connected with the insurance activity.” - Requires orders concerning internal auditing unit be jointly made by at least two management board members. - No specific mention of ML/FT or other operational risks. - Authorities’ position: - AML/CFT provisions are included in the WAG; securities firms required to have policies and procedures to ensure compliance; internal audit examines and evaluates adequacy and effectiveness. - Internal audit mandate defined in general terms; integrating AML/CFT compliance into internal audit program is not specifically required for securities institutions and insurance undertakings; modalities of examinations (e.g., sample testing) not included. - Practice: - All assessed financial institutions empower internal audit departments to conduct frequent and regular reviews of AML/CFT systems. - Auditors analyze procedures and internal controls and check some files and documents selected with IT-based analytical tools. ### Employee training and screening procedures (c. 15.3 and 15.4) - BWG Article 41(4)(3) and VAG Article 98h (1): obligation for financial institutions to take appropriate measures to ensure staff awareness of AML/CFT provisions and to train relevant employees to recognize and deal with transactions which may be connected to money laundering or terrorist financing. - WAG Articles 6 and 12, paragraph 4: carry over BWG provisions. - Assessed financial institutions: training programs in place for new employees and annual training for experienced staff; ongoing training often provided through IT and includes some form of testing. - Laws do not specifically refer to level of employee screening expected but require proper assessment of staff capabilities. - Industry reported practical difficulties in carrying out screening of future and current employees. - Authorities indicate common practice to ask for an extract from police records obtainable at each police office. ### Application of AML/CFT measures to foreign branches & subsidiaries (c. 22.1, 22.1.1, 22.1.2, 22.2) - All regulatory laws require financial institutions to ensure measures at branches and subsidiaries in third countries (non EU Member States) are at least equivalent to Austrian regulatory framework. - BWG Article 41, paragraph 4, nos. 1-6 and VAG Article 98h, paragraph 1, no. 2: require establishment of adequate and appropriate policies and procedures to “forestall and prevent operations relating to money laundering or terrorist financing.” - BWG Article 41, paragraph 4, no. 2 and VAG Article 98h, paragraph 1, no. 2: include obligation to communicate policies to branches and subsidiaries in third countries. - If a branch or subsidiary is unable to implement equivalent measures, they must inform the FMA and take additional measures to handle the risk effectively. - These provisions are contained within BWG Article 40, paragraph 4, nos. 1 and 2; VAG Article 98b, paragraph 8, nos. 1 and 2; and WAG Article 6. - Since November 28, 2008, the FMA posts on its website the FATF and Moneyval statements on countries with deficient AML/CFT regimes. - Industry discussions: certain countries have lower standards; banks informed the FMA they are unable to implement group standards in overseas operations. - FMA practice: would not approve participation in a foreign credit institution if Austrian AML/CFT requirements could not be met (reported never to have occurred). - Administrative rulings may allow delays in compliance with certain Austrian standards during “an appropriate period of time”; delay lasts from a few weeks up to several months depending on circumstances; few cases where delays were extended further. ### Consistency of CDD measures at group level (additional element, c. 22.3) - No legal requirement for financial institutions to apply consolidated CDD measures at group level. - BWG Article 40, paragraph 4, no. 1 and VAG Article 98b, paragraph 8, no. 1: require CDD and record keeping measures applied by branches and subsidiaries in third countries be equivalent to those applicable in Austria as a first step. - Confidentiality applicable to STRs does not prohibit information exchange within a financial group or between financial institutions from a member state or a third country, provided they belong to the same category and are subject to equivalent secrecy and data protection provisions (BWG Article 41, paragraph 3b, nos. 2 and 3; VAG Article 98f, paragraph 5, nos. 2 and 3). - Evidence: financial institutions subject to core principles do not apply consistent CDD measures at group level due to local laws in certain countries precluding application of equivalent AML/CFT procedures in foreign branches and subsidiaries. - Cooperative groups of different and independent credit institutions share reputation risk but cannot consolidate customer information across different legal entities. ### Recommendations and comments (3.8.2) - Financial institutions should be required by law, regulation or other enforceable means to: - Recommendation 15: - Give the AML/CFT compliance officer the right to access CDD data and information, transaction records and other relevant information; - Establish the compliance officer function as a management position; - Integrate AML/CFT compliance into internal audit work, notably for securities and insurance businesses; - Require domestic financial institutions to maintain an internal audit function; and - Conduct adequate staff screening. - Recommendation 22: - Extend in laws, regulations or other enforceable means the obligation to apply provisions consistent with home country requirements and the FATF Recommendations to all AML/CFT requirements. ### Compliance with Recommendations 15 & 22 (3.8.3) - R.15 — PC - No ad-hoc provision in law, regulation or other enforceable means giving the compliance officer right to access CDD data and information, transaction records and other relevant information; - Lack of specific provisions establishing that the compliance officer is a management position; - No requirement for domestic financial institutions to maintain an internal audit function; - Insufficient integration of AML/CFT compliance into internal audit work for securities and insurance business; - Inadequate staff screening requirements and practices. - R.22 — LC - Obligation to apply equivalent AML/CFT provisions limited to CDD and record keeping measures. ### Shell banks (R.18) - BWG defines shell bank: a credit institution incorporated in a jurisdiction in which it has no physical presence, that is, meaningful mind and management (Article 2 (74)). - BWG Articles 4 and 5: licensing criteria; Article 5 requires banks to have place of establishment and head office located in Austria (paragraph 1, no. 14) and to have one director who is resident in Austria (paragraph 1, no. 10). - FMA may revoke banking license if business operations do not commence within twelve months or have not been conducted for six consecutive months (BWG Article 6, paragraph 1). - Legal framework does not explicitly prohibit establishment of shell banks, but licensing and maintenance requirements appear sufficient to preclude establishment or continued operation of a shell bank. - BWG Article 40(d): prohibits credit institutions from entering into or continuing a correspondent banking relationship with a shell bank; Article 40(d)(1) requires institutions to take measures to ensure their correspondents do not enter into arrangements with shell banks. - Assessors were not aware of any shell bank operating in Austria; industry indicated cautious approach when opening correspondent banking relations. - Recommendation 18: fully observed. - R.18 — C ### Supervisory and oversight system — competent authorities and SROs (R.23, 29, 17 & 25) - Legal framework: Financial Market Authority Act (FMABG) and sector-specific laws (BWG, VAG, WAG). - FMA established in April 2002 as single regulatory body for banking, insurance, securities and pension company supervision (FMABG Article 1). - FMA regulates and supervises persons and entities under FATF definition of financial institutions, except insurance intermediaries (regulated by Trade Act (GewO)) and domestic financial institutions (regulated by AVG); insurance intermediaries and domestic financial institutions supervised by local district authorities. - FMA established as an autonomous institution under public law with own legal personality; not bound by instructions in performance of its duties. - FMABG Article 3, paragraph 2: FMA takes any and all supervisory measures necessary, expedient and appropriate after due consideration of specific circumstances; must take care to maintain financial market stability. - FMA may use audit reports of statutory auditors and company bodies as well as examination reports of the Austrian National Bank (OeNB). - FMA bodies: - Executive Board: two members appointed by the Federal President; responsible for managing entire operation and representing FMA (FMABG Articles 4 to 7). - Supervisory Board: chairperson, deputy, four additional members and two co-opted members; supervises organization and management of the FMA (FMABG Articles 4, 8 to 12). - OeNB responsibilities: - NBG Article 44b, paragraph 1: OeNB must monitor circumstances impacting financial stability in Austria. - In practice, FMA responsibility for supervision; offsite surveillance and onsite inspections of banks carried out by OeNB acting on FMA’s behalf. - Split of duties: - FMA: authorization and enforcement matters. - OeNB: offsite analysis and onsite examinations; consulted on approvals in practice. - Within FMA, Department IV2 (International Affairs and European Integration) houses a Money Laundering Competence Center that monitors national and international developments, delivers training, drafts guidance notes and supports supervisory departments. - Regulation and supervision of financial institutions (c. 23.1) and designation of competent authority (c. 23.2): - Credit institutions in Austria and EU-authorized institutions carrying out activities in Austria are subject to FMA regulation and supervision (FMABG Articles 1 and 2; BWG Article 69). - FMA’s banking supervision involves performing official tasks and exercising powers assigned by BWG and other laws, including AML/CFT provisions (FMABG Article 2, paragraph 1; BWG Article 69, paragraph 1). - FMA must consider national economic interest in maintaining efficient banking system and financial market stability (BWG Article 69, paragraph 1). - Onsite inspections: - Since 2008, OeNB conducts all onsite missions to banks under FMA mandate. - AML/CFT issues examined either within prudential inspections or focused missions. - Number of OeNB missions including AML/CFT: about 35 on annual average over past years, but less than a third (11) were comprehensive reviews of AML/CFT preventive measures. - FMA made “Company Visits”: 13 in 2007 and 14 in 2008 so far. - Statistical Table 26. Onsite Examinations of Credit Institutions (Mission Scope / Supervisory Body / 2004 / 2005 / 2006 / 2007 / 2008) - AML/CFT / OeNB / 9 / 9 / 13 / 13 / 11 - Prudential, incl. some AML/CFT / OeNB / 25 / 32 / 20 / 14 / 28 - FMA / 7 / 13 / 8 / 8 / - *Source: _cr09298 - 641. Additionally, the WAG defines general organizational norms for all securities institutions:* ### 669. The number of full AML/CFT onsite examinations appears to be very low, compared to the ### _cr09298 - 669. The number of full AML/CFT onsite examinations appears to be very low, compared to the ### Onsite examinations and supervision: overall findings - The number of full AML/CFT onsite examinations appears to be very low, compared to the number (871) of credit institutions which are under supervision. - Some activities, such as exchange offices (12), have never been inspected. - Although some examinations have been conducted outside Austria, relative numbers are low. - Domestic financial institutions are required to comply with BWG AML/CFT provisions, but the FMA is not in charge of their supervision; under the AVG (Articles 1 and 2) local district authorities (first instance) and the governor in each Land (second instance) are in charge of ensuring compliance with rules and regulations which “do not contain any provisions with regard to jurisdiction in the subject matter”, including in the case domestic financial institutions. - Authorities estimate each one of the local district authorities conducts 10 to 50 on-site controls in all areas of activities (i.e., DNFBPs, see chapter 4) which are under its administration. - No specific data were provided as to the type and scope of supervisory diligence by local authorities. ### Insurance undertakings: supervisory scope and activity - Legal basis and powers: - Article 1, paragraph 1 of the FMABG empowers the FMA to supervise insurance activities. - Pursuant to Article 99, paragraph 1 of the VAG, “the FMA shall, to the extent of the license granted (...), supervise all business practices of insurance undertakings, in particular the adherence to the provisions applicable to the obligation of the contractual insurance business.” - Article 104, paragraph 1 of the VAG limits supervisory actions to safeguard the “interest of the insured.” - Article 108a, paragraph 1, no. 2 gives the FMA power to sanction infringements of AML/CFT provisions as administrative offenses. - Onsite activity and adequacy: - The FMA conducted three inspections to insurance undertakings during 2008 that were specifically focused on AML/CFT, but no other more general examinations or management visits. - Two inspections were performed in 2007 and in 2006 respectively, in addition to, correspondingly, one and three company visits. - No proceedings were taken against firms. - Considering the size of the insurance business in Austria, 31 life insurance undertakings (and 51 non life insurance undertakings), the AML/CFT onsite supervisory process need to be expanded further. ### Securities institutions: supervisory scope and activity - Legal basis and powers: - Supervision by the FMA of investment firms and investment services undertakings is based on Article 1 of the FMABG and Article 91 of the WAG. - The WAG specifically mentions that “the FMA shall control compliance with [the WAG]” (Article 91, paragraph 1 WAG), and Articles 6 and 12, paragraph 4 of the WAG refer to BWG AML/CFT provisions. - Onsite activity and adequacy: - The FMA conducted 15 inspections to investment firms and investment services undertakings during 2008 that included AML/CFT elements, but no on-site inspections that were specifically focused on AML/CFT and no visits were made to the institutions’ management specifically for the purpose of discussing AML/CFT matters. - No AML/CFT oriented actions were taken against investment businesses. - Overall the number of inspections is low in comparison to the number of licensed investment firms, 308. ### Reliance on external auditors and supervisory effectiveness - Supervisory authorities rely heavily on external auditors (certified public accountants) to examine all other financial institutions and seek confirmation that AML/CFT controls are in place and operational. - External auditors: - Are subject to a professional code of conduct and follow auditing guidelines published by their professional association. - The FMA has the power to reject and rescind the appointment of an auditor (Article 60 of the BWG and Article 82 of the VAG). - Must complete checks following a prescribed checklist which address most of the AML/CFT provisions. - The AML/CFT system must be included in the audit review of insurance undertakings (Article 82, paragraph 6 of the VAG), although there is no checklist for external auditors of insurance undertakings. - Similar provisions are in place for securities institutions (Article 93 of the WAG). - Supervisory trend: - The increasing trend in examination numbers, plus meetings with senior management, demonstrate the OeNB and FMA are taking steps to ensure supervision is being carried out and, particularly in the credit institutions, the law is being enforced. - Additional efforts—and resources―are required to further extend the number of on-site missions focusing on ML/FT risks. ### Risk-based approach, priorities, and gaps - The FMA and the OeNB have developed a risk-based approach to supervision: - Every on-site mission, with the exception of market model validation, includes an AML/CFT examination, which focuses on systems and procedures in the context of a general inspection, and extends to customer file and transaction sampling in the context of a targeted AML/CFT examination. - The OeNB and FMA have access to a risk rating model and both contribute to it. - The model includes assessment of all risks an institution may face, including operational risks which in turn includes AML/CFT risk. - AML/CFT has a low-risk weighting in the model, but the analyst can increase this weighting on the basis of information collected from various sources. - As a result, some banks with high nonresident deposits, notably those located in Jungholz and Mittelberg, have been subject to on-site examinations. - Prioritization and exclusions: - The size of the business is a major factor when determining priorities for examinations, although it may not be fully relevant for some ML/FT typologies. - None of the 12 independent bureaux de change has ever been examined for AML/CFT compliance on the basis that turnover is low, while such activities are generally considered as particularly exposed to ML/FT risks. - The eight banks which are of systemic importance are examined on annual basis, while second tier banks are inspected every two years. - Other institutions are subject to onsite examination where offsite analysis, external auditors’ reports or other sources raise concerns. - Recommendation: - The authorities should consider putting resources in place to enable insurance and investment supervisors to raise the focus of their on-site work to assess these regulated entities’ compliance with their AML/CFT, and to step up AML/CFT examinations of credit and domestic financial institutions. - It is particularly important given the useful safeguard of the external auditor checklist does not apply other than to credit institutions. ### Fit and proper criteria and prevention of criminals from controlling institutions (c. 23.3 & 23.3.1) - Credit institutions: licensing and exclusion grounds - Pursuant to Article 5, paragraph 1, no. 6 of the BWG, conditions for licensing include the absence of “reasons for exclusion as specified in Article 13, paragraphs 1, 2, 3, 5, and 6 of the Trade Act of 1994.” - Reasons for exclusion include: - (1) instances where applicants, members of its management board, or chairman of its supervisory board: - 1. have been sentenced by any court - a) for certain offenses such as fraudulently withholding payment of social insurance contributions, fraudulent bankruptcy, damage to creditors, preference of any creditor, or grossly negligent injury to any creditors’ interests, or - b) for any other criminal offense to a term of imprisonment of more than three months or a fine of more than 180 daily rates, - 2. and the sentence has not yet been removed from the criminal record. - (2) Whoever has been sentenced by any fiscal prosecution authority for having committed fiscal offenses such as smuggling, evasion of import or export taxes, handling of smuggled goods, is also to be excluded … if he or she has been sentenced to a fine of more than EUR 726, or to both a fine and a term of imprisonment, and if no more than five years have elapsed since sentencing. - (3) Legal entities must also be excluded … if, for presumed lack of sufficient assets to cover the cost of bankruptcy proceedings, such proceedings have not been instituted or have been discontinued, and if the period of access to the insolvency case referred to above in the insolvency database has not yet elapsed. - (4) A natural person shall be excluded … if this person has or had substantial influence on the conduct of business operations of a legal entity other than a natural person which is or was excluded from carrying on any trade or business under paragraph 3. - (5) After having been deprived by court sentence of the right of carrying on a trade or business, or after having suffered withdrawal of one’s trade or business license under Article 87(1)3 or 4, a natural person shall be excluded … if the performance of such a trade or business activity could frustrate the purposes underlying deprivation by court sentence or withdrawal under Article 87(1)3 or 4. - Article 28a, paragraph 3 of the BWG establishes special additional requirements for the chairpersons of the supervisory boards in large credit institutions (total assets exceeding EUR 750 million), notably: - no bankruptcy proceedings have been initiated for their assets or any entity other than a natural person on whose business the chairpersons of the supervisory board have or have had a decisive influence; - the chairpersons find themselves in an orderly economic situation and no facts are known which would raise doubts as to their personal reliability; and - the chairpersons possess the professional qualifications and experience necessary for performing their function; such professional qualifications require expertise in the fields of bank finance and accounting as appropriate to the credit institution in question. - Article 5, paragraph 1, no. 7 of the BWG requires directors (management board members) to be “in an orderly economic situation” and that their personal reliability is not subject to any doubt. - Pursuant to Article 5, paragraph 1, no. 3 of the BWG, a license can be issued when no facts are known which would raise doubts as to the personal reliability of the persons who hold qualifying participations (defined in Article 2, paragraph 3 of the BWG as a direct or indirect participation (i) which represents 10 percent or more of the capital or voting rights or (ii) which makes it possible to exercise significant influence over the management). - The FMA must be notified in advance of any intended change in parties holding qualifying participations (Article 20, paragraphs 1, 2, and 5 of the BWG), and, at least once a year, of the names, addresses and holdings of qualifying participation holders. - However, the option for credit institutions to issue bearer shares appears to be a major impediment to FMA monitoring of significant or controlling interests. - Gaps and assessments: - There are no provisions which apply to members of the supervisory board or to senior managers (apart from the above-mentioned provisions for board chairpersons). - c. 23.3.1 explicitly requires supervisors to evaluate senior managers on the basis of fit and proper criteria, which is not fully reflected in current provisions. - Practices reported by assessors: - A full fit and proper assessment was made with regard to shareholders and members of the management board of credit institutions and chairmen of supervisory boards which included: - receipt of a police certificate confirming no criminal convictions; - checking qualifications/memberships claimed were indeed held; - taking up references from previous employers to check experience claimed; - taking up regulatory references from other regulators or other supervisory bodies within Austria or internationally. - Domestic financial institutions: - These institutions are subject to the general provisions of the GewO, which do not adequately cover the requirements of c.23.3 and c.23.3.1 for financial institutions. - Pursuant to Article 13 of the BWG, prior insolvency is the only cause prohibiting legal entities or natural persons from carrying on their business. - An additional cause is for natural persons to have committed a criminal offense and been sentenced by a court to a term of imprisonment of more than three months or a fine exceeding 180 daily rates (Article 13, paragraph 1 of the GewO). - These provisions fall short of meeting the licensing requirements defined by the criteria. - Insurance undertakings fit and proper: - Pursuant to Article 11a, paragraphs 3 and 5 of the VAG, the chairperson of the supervisory board of an insurance company with premium written of all business activities exceed EUR 500 million is subject to specific fit and proper requirements. - Under Article 4, paragraph 6, no. 1 of the VAG, the FMA is prohibited from granting a license if the members of the management board or the administrative board or the managing directors of an insurance company do not have the required personal reliability and professional qualifications. - The law specifies that “at any rate, the conditions of personal reliability shall not be deemed fulfilled if there is a ground for exclusion as defined in Article 13 of the GewO”. - Pursuant to Article 4, paragraph 6, no. 5 of the VAG, a license shall not be granted to persons who, holding direct or indirect participating interests of at least 10 per cent of the share capital or of the voting rights or exerting a decisive influence on the management in any other way, do not ensure a sound and prudent management of the insurance undertaking. - The FMA must be notified immediately of such changes in equity interests (Article 11b, paragraph 1 of the VAG), and be informed at least once a year of the names and addresses of those shareholders as well as the extent of their equity holdings. - Bearer share holdings restrict FMA’s ability to monitor significant or controlling interests. - Securities institutions fit and proper: - Before granting a license under the WAG, the FMA must satisfy itself that “due to their qualifications, managers (...) are suitably qualified and have the skills and experiences required for providing investment services” (Article 3, paragraph 5, no. 3 WAG). - Under Article 10, paragraph 1, managers must be of “sufficiently good repute” and sufficiently experienced. - Licensing requirements in Article 5 of the BWG must also be met. - The criteria for selection do not apply to supervisory board members and to senior managers. - Changes and amounts in qualified holdings must be notified to the FMA, together with the identities of shareholders (Article 11, paragraphs 1 and 2 of the WAG). - Pursuant to Article 11, paragraph 6 of the WAG, the FMA shall take appropriate measures where the influence of qualified shareholders “is likely to be prejudicial to the sound and prudent management” of the securities institution. - The identification of persons possessing qualified holdings is also subject to the limitations inherent to bearer shares. ### Application of prudential regulations to AML/CFT (c. 23.4) - Both FMA and OeNB apply their full range of prudential regulation to AML/CFT matters where it is appropriate to do so. - Examples: - Article 4, paragraph 3, no. 5 of the BWG and Article 11, paragraph 1 of the WAG require applicants to disclose the identity and shareholdings of owners over a certain percentage, indicate group structure and disclose information relating to the reliability of owners and directors. - Article 5, paragraph 1, nos. 3 and 4 of the BWG and Article 3, paragraphs 5 and 6 of the WAG require that shareholders meet appropriate standards (namely the fit and proper test). - The VAG has similar provisions with the addition in Article 4, paragraph 6, nos. 5 and 7 that the license must not be granted if there is a lack of transparency in the group structure, or if the FMA cannot fulfill its duties or if granting the license would be contrary to the interests of policy holders. - All license holders are required to have adequate risk management processes in place; the FMA and the legislative framework place high importance on establishing a robust risk management framework (which includes specifically ML/FT risks) and an internal audit function to check efficacy of risk management controls. - Ongoing supervision includes specific on site review of AML/CFT procedures and meetings with senior management regarding AML/CFT matters. ### Licensing or registration and supervision of value transfer/exchange services (c. 23.5 & c. 23.6) - Definition and licensing: - “Remittance services business” is defined under Article 1, paragraph 1, no. 23 of the BWG as “the transfer of funds, except for physical transports, by accepting money or other means of payment from the originator and paying out corresponding amount in money or other means of payment to the beneficiary by way of non-cash transfer, communication, credit transfer or other uses of a payment or clearing system.” - It is a type of “banking transactions” subject to licensing by the FMA (Article 1, paragraph 1 and Article 4 of the BWG). - Money and value remitters are therefore considered as “credit institutions” under Austrian law and, as such, are subject to AML/CFT supervision by the FMA. - All measures relating to licensing and prudential supervision apply to these businesses including specific AML/CFT on site assessment as outlined above. *Source: _cr09298 - 669. The number of full AML/CFT onsite examinations appears to be very low, compared to the (IMF PDF).* ### 693. Money and currency exchange business are defined as banking transactions which, as such, ### Money and currency exchange business are defined as banking transactions which, as such, ### Definitions, licensing and scope of supervision - Money and currency exchange business are defined as banking transactions which, as such, can only be conducted by credit institutions, once they have applied for and been granted the necessary license by the FMA (Article 1, paragraph 1, no. 22 and Article 4 of the BWG). - Stand-alone bureaux de change and money remitters are subject to the FMA’s supervision, including for AML/CFT purposes. - Supervisors classify stand-alone bureaux de change activities as low ML/FT risk because their volume of activity is considered small (currency exchange activities which are conducted by commercial banks are including in the supervisory review of those institutions). - The Austrian definition of credit institutions and financial institutions (Article 1, paragraph 2 of the BWG) is described as extremely wide; assessors did not identify Core Principles financial institutions excluded from the FMA’s AML/CFT prudential and conduct of business oversight. ### Guidelines, circulars and industry guidance - The FMA issues guidance in the form of circulars (Rundschreiben). Although not legally binding they contain interpretation of the provisions in the various regulatory laws and suggestions as to good practices; failure to comply with a circular is treated as a failure to comply with the law and will be sanctioned for breach of the law. - Circulars have been issued for credit institutions, insurance undertakings and securities institutions. - Four circulars published from 2003 to 2006 required revision in response to significant AML/CFT framework upgrades in January of the assessment year: - an updated Circular on Identification and Verification of Identity was issued on July 3, 2008 and had just been made available to the financial institutions at the time of the mission; and - a Rundschreiben der FMA zur Feststellung und Überprüfung der Identität für Versicherungsunternehmen (-revised- Circular on Identification and Verification of Identity for Insurance Undertakings) was published on November 14, 2008 (only in German). - Three additional circulars were being prepared, to be issued after consultation with the industry; until distribution, industry had to implement new legal provisions without complete regulatory guidance. - The Division Bank and Insurance of the WKO, acting as a professional body, may also prepare guidelines for its members. - Typology work is not carried out by the FMA to any significant extent; this is seen as falling to the A-FIU. ### Powers to monitor compliance and supervisory tools (Credit institutions, insurance, securities) - Pursuant to Article 69, paragraph 1 of the BWG, the FMA must monitor compliance with the BWG and other relevant laws by credit institutions carrying out activities in Austria; monitoring should consider the nature, scope and complexity of banking transactions and qualitative coverage of all material risks (Article 69, paragraph 2 of the BWG). - To monitor compliance the FMA may: - request interim financial statements, reports in specified forms, audit reports and information on all business matters from credit institutions (Article 70, paragraph 1, nos. 1 to 4 of the BWG); - request audit reports and information from bank auditors; - instruct bank auditors or other experts to conduct necessary audits; and - instruct the OeNB to conduct audits of credit institutions. - Evidence was seen of these powers being regularly applied, with off-site monitoring (including external auditor checklists) and a regular program of on-site examinations relating to general controls and AML/CFT matters, plus meetings with senior management. - For domestic financial institutions, local district authorities process complaints and may launch investigation procedures under Article 37 to 38a of the AVG; assessors noted lack of clarity whether such procedures are adequate for AML/CFT compliance of domestic institutions. ### On-site inspection authority and coordination with OeNB - The FMA may instruct the OeNB to conduct audits of: - credit institutions; - their branches and representative offices outside Austria; - credit institutions subject to supplementary supervision pursuant to Article 5, paragraph 11 of the Financial Conglomerates Act; and - undertakings within the group of credit institutions (Article 70, paragraph 1, no. 3 of the BWG). - The FMA mandates the OeNB to carry out on-site inspection work of credit institutions; annual plans for visits are drawn up and agreed between the two authorities, supported by a risk model using: - desk-based FMA work (applications, organization and business plans, compliance manuals, audited statements, external auditors’ checklists which include AML/CFT controls); - OeNB offsite monitoring and onsite examinations focusing on policies, procedures, books and records, and sample testing (AML/CFT-focused examinations concentrate on account opening procedures, customer due diligence, the risk based approach, account monitoring and reporting obligations); - OeNB prudential work on solvency and liquidity, which includes assessing AML/CFT risks and control environments in banks. - The FMA can request the OeNB to conduct additional inspections at any time. ### Sectoral inspection authority and practice - Insurance undertakings: FMA may request information and documents and carry out on-site inspections at any time (Article 100, paragraphs 3 and 101 of the VAG). Evidence shows comprehensive desk-based supervision and three AML/CFT-focused inspections in 2008; no general systems and controls examinations and no proceedings were taken against firms. - Securities institutions: FMA may access records, request information, carry out audits on-site, request telephone call/data transmission records, instruct restoration of legal compliance, prohibit directors, revoke licenses, apply for injunctive relief, request auditor information, suspend trading, revoke registration of financial instruments, and report suspicions to prosecuting/security authorities (Article 91, paragraph 3 WAG). Evidence shows regular inspections during 2008 that included AML/CFT elements but no on-site AML/CFT-specific inspections and no AML/CFT actions taken against investment businesses. - Prior to on-site examinations, FMA supervisors require substantial documentation (organization chart, business plan, policies, procedures, training and compliance manuals) and focus on books and records and sample testing, with particular attention to account opening procedures, customer due diligence, the risk based approach, account monitoring and reporting obligations. ### Power to compel production of records and cooperation with A-FIU - The FMA may in all three sectors compel production of or have access to all documents relevant to monitoring compliance with AML/CFT requirements on its own accord, without a court order; assessors heard evidence of regular exercise of these powers. - Financial institutions file STRs with the A-FIU. When A-FIU analysis suggests a financial institution is in breach of AML/CFT legislation, the A-FIU forwards the case to the FMA, which may initiate proceedings. - For domestic financial institutions, local district authorities can summon persons within their territorial jurisdiction (Article 19 of the AVG), but the procedure does not provide for on-site examinations nor access to internal records and documents; assessors found no evidence of effective AML/CFT supervision of domestic financial institutions. ### Enforcement powers, sanctions and statistical evidence - The FMA may take measures under the general supervisory regime and the Administrative Penal Act (VStG) to restore legal compliance. - Enforcement measures and sanctions: - Legal persons: under the supervisory regime, credit institutions, insurance undertakings and securities business can be fined up to EUR 30,000; ultimate sanction is losing their license and closing their business. - Natural persons: - under the supervisory regime, management board members of a credit institution or a securities business may be restricted or prohibited from managing such entities; - under the VStG, management board members responsible for a violation of AML/CFT requirements can be sanctioned with a fine up to EUR 30,000, unless the act constitutes a criminal offense. - The sanctioning regime does not apply to supervisory board members or senior managers. - FMA sanctioning regimes for credit institutions: - measures under the supervisory system (Article 70 BWG) including instructing restoration of legal compliance on pain of penalties (up to EUR 30,000), reiterating instructions with higher penalties, prohibiting directors from management, or revoking license; and - measures under the VStG (Articles 98 and 99 of the BWG). - Before issuing orders on pain of penalties, the FMA can request comments or reports and conduct additional investigations. - Publication of actions: instructions to restore legal compliance may be made public only if necessary to inform the public, considering nature and severity of the violation (Article 70, paragraph 7 of the BWG). Under Article 22, paragraph 1 of the FMABG, the FMA can enforce administrative rulings and impose monetary fines up to EUR 30,000. Appeals against these actions are not permissible under Article 22 FMABG, but may be reviewed by the Austrian Administrative Court and/or the Austrian Constitutional Court. - Administrative penal procedure provisions require penalties to be based on extent of damage or danger, consider aggravating/mitigating circumstances and degree of guilt (Article 19, paragraph 1 of the VStG). The FMA is the authority responsible for issuing administrative penal sanctions (Article 22 FMABG); enforcement of orders is competent to local district authorities under the VStG. ### Statistical evidence (supervisory actions and administrative criminal actions) - Statistical Table 27. Supervisory Actions related to AML/CFT Infringements - Comments required from financial institutions under administrative procedure law: 2006 na, 2007 21, 2008 2 - Reporting obligations under administrative procedure law: 2006 na, 2007 3, 2008 - - Further investigations under administrative procedure law: 2006 na, 2007 1, 2008 25 - Authorities report that instructions under threat of penalty were generally sufficient; enforcing sanctions and repeating orders are infrequent: only seven cases (all related to repeated infringements of prudential provisions) were sanctioned in 2003 and 2004. There have been no cases where members of the management board were prohibited from conducting business, or a license was revoked. - Statistical Table 28. Administrative Criminal Actions for AML/CFT cases: number and fines - Proceedings: 2007 9, 2008 27 - - dispensed: 2007 6, 2008 25 - 1 (EUR 6,000) 1 (EUR 4,000) - 1 (EUR 8,000) 1 (EUR 4,000) - Out of which: - - sanctioned 1 (EUR 12,000) - *Source: IMF assessment text provided in the content unit.* ### 725. In case of multiple offenses, sanctions can be imposed cumulatively. No such case has been ### _cr09298 - 725. In case of multiple offenses, sanctions can be imposed cumulatively. No such case has been ### Sanctions, liability and criminal provisions - In case of multiple offenses, sanctions can be imposed cumulatively. No such case has been mentioned to the assessors. (725) - Administrative penal proceedings require establishment of the defendant’s personal guilt. Negligence may automatically be assumed in case of a violation of AML/CFT preventive measures (Article 5, paragraph 1 of the VStG). Lack of knowledge of the provision may be an excuse if proven to be without the culprit’s fault (Article 5, paragraph 2 of the VStG). Circulars are published on the FMA website. (726) - Criminal Court may apply StGB sanctioning provisions for ML/FT. For legal persons and entities, the Verbandsverantwortlichkeitsgesetz (VbVG) provides general criminal liability for all penal offenses, including ML/FT. Jurisdiction over legal persons and entities follows StGB territorial and nationality rules. (727) ### Sanctions applicable to financial sectors and proportionality concerns - Domestic Financial Institutions: - Article 99, paragraph 8: person responsible for a domestic financial institution violating BWG AML/CFT provisions may be sanctioned by the FMA with a fine up to EUR 30,000. No sanction has been issued against a person responsible for a domestic financial institution. No provision for sanctioning the domestic financial institution itself. (728) - Insurance Undertakings: - Article 108a, paragraph 1, no. 2 of the VAG: violations constitute an administrative offense with fines up to EUR 30,000. License revocation possible under Article 7b, paragraph 1, no. 3 of the VAG. No sanction has been issued for infringement of AML/CFT provisions. (729) - Securities Institutions: - Article 92, paragraph 8 of the WAG; Article 94, paragraph 8: manager in violation subject to a EUR 30,000 fine. FMA has never issued a sanction for breach of AML/CFT rules. (730) - Assessors’ summary on proportionality: - a credit institution or a securities business can only be fined up to EUR 30,000; the other available sanction under supervisory regime is revoking the license. (731) - management board members can be sanctioned with a fine up to EUR 30,000 under the VStG, unless the act is a criminal offense. (731) - management board members may be restricted or prohibited from managing such entities under the supervisory regime. (731) - Systemic concerns: - The range of sanctioning provisions is limited under the supervisory regime, creating gaps hindering proportionality of sanctions. The level of maximum fines under both regimes is a very weak deterrent. The low amount of fines effectively issued lessens further the dissuasive effect. (732) - Article 70, paragraph 4, no. 7 of the BWG allows the FMA to make public supervisory actions "in light of the nature and severity of the violation." In practice, supervisory sanctions are not disclosed. (733) ### Adequacy of resources, structure, independence and training of competent authorities (c. 30.1–30.3) - Structure and independence: - The FMA is an autonomous institution under public law placed under parliamentary control. Article 3 of the FMABG addresses Federal Government liability for "damage caused by the FMA’s bodies and employees." An amendment to the AHG passed on October 27, 2008 limits Government’s liability to damages directly caused to the legal entity subject to supervision. No AML/CFT-related case has been brought to courts so far. (734) - FMA structure does not appear to undermine independence. Two FMA board members are nominated by industry representative bodies; assessors did not sense industry interference. FMA has good working relations with OeNB, MoI and agencies. (735) - Coordination requirements are high; some divisions have vertical responsibilities, others cross-divisional duties. An ML Competence Center supports AML/CFT skills development. There is an interagency Task Force meeting quarterly and a high level Markets Group for strategic issues. (736) - AML Competence Center is policy/support function within International Affairs and European Integration Division; it represents FMA in international/national working groups and spreads knowledge across FMA. (737) - As consequence, industry lacked updated guidance more than nine months after raised AML/CFT standards; financial institutions can contact FMA for clarification. (738) - Key AML/CFT risks and practical typologies remain relatively unformed; sector-specific typologies are needed. (739) - Resources and staffing: - Staff turnover in the FMA: 10.6 percent in 2005, 13.4 percent in 2006 and 13.9 percent in 2007. (740) - Gap between budgeted positions and positions filled within FMA: 4 percent in 2005 and 8 percent in 2007. A recruitment program aims at increasing workforce by 40 percent in the FMA. OeNB plans to augment onsite supervisors from 45 to 70 by 2010. (740) - Industry perceives OeNB and FMA with respect; FMA teams considered less experienced. Market competition for experienced compliance personnel noted. (741) - FMA financing: Article 19, paragraph 4 of the FMABG: financed in part by Federal Government budget (EUR 3.5 million); remaining funding charged to supervised financial institutions. OeNB may recover some supervisory costs from banks. (742) - Adequacy of local district authorities’ resources for AML/CFT supervision of domestic financial institutions cannot be assessed. (743) - Integrity and training: - Staff at FMA and OeNB assessed to have high integrity with good recruitment and follow up practices. (744) - High training and development needs due to relatively new regulator, young staff, new laws and industry expansion. (745) - FMA Academy initiatives exist; additional measures to consider include: (746) - short term secondments to regulatory bodies with established AML/CFT oversight programs; - medium term secondments or consultancy appointments to bring needed experience; - recruitment policies targeting AML/CFT practical experience (e.g., other regulators, forensic accountancy, police, compliance backgrounds). (746) - Statistics: - The FMA keeps comprehensive records of supervisory actions related to AML/CFT. However, data related to domestic financial institutions are scarce. (747) ### Recommendations (3.10.2) and supervisory ratings (3.10.3) - Authorities’ general observation: - Legal framework in FMABG, BWG and WAG adequately address AML/CFT monitoring and supervision and provide FMA with sufficient powers. Sanctions available to FMA are not proportionate and dissuasive; FMA rarely uses sanctioning powers. Extending range of approved persons beyond executive board level and making public statements (with suppressed names if needed) could improve prevention, warning and transparency. (748) - The authorities should: (explicit recommendations) - Recommendation 17: - Make sanctions sufficiently proportionate and dissuasive; - Extend sanctions under administrative criminal procedure to supervisory board and senior management members. - Recommendation 23: - Ensure that capital hold in form of bearer shares do not undermine assessment of significant or controlling interest in a financial institution; - Carry out fit and proper tests of senior managers and supervisory board members; - Increase onsite examinations on AML/CFT compliance, as well as supervisory oversight of standards within branches and subsidiaries located abroad; - Ensure that licensing requirements or other legal or regulatory measures would prevent criminals to control domestic financial institutions, and apply fit and proper test for their directors and senior managers. - Recommendation 25: - Develop additional guidance available to industry on the new legal requirements. - Recommendation 29: - Establish a regime of supervisory sanctions for domestic financial institutions. - Recommendation 30: - Provide resources, training and support sufficient to enable supervisory divisions to increase AML/CFT oversight. (748–750) - Compliance ratings and factors underlying ratings: - R.17 — PC - Sanctions not sufficiently proportionate and dissuasive. - No sanctions for senior management besides sanctions for criminal liability. - Limited effectiveness. - R.23 — PC - Assessment of significant or controlling interest undermined by capital held in form of bearer shares. - Insufficient licensing requirements or other legal or regulatory measures to prevent criminals controlling domestic financial institutions, and lack of adequate fit and proper test for directors and senior managers. - No requirements to carry out fit and proper tests of senior managers and supervisory board members in all types of financial institutions. - Low number of onsite examinations for AML/CFT compliance. - Effectiveness of AML/CFT supervision of domestic financial institutions was not established. - R.25 — LC - Insufficient guidance available to industry on the new legal requirements. - R.29 — LC - Low level of AML/CFT supervision of domestic financial institutions. - No supervisory powers of sanction against a domestic financial institution. ### Money or Value Transfer Services (SR.VI) - Legal and supervisory framework: - Article 1, paragraph 123 of the BWG defines remittance services and draws remittance services businesses into activities requiring a banking license. (750) - FMA empowered to require Money Value Transfer (MVT) service operators to be supervised under the BWG; names and addresses of licensed businesses and authorized activities are on the FMA website. Deficiencies in licensing of credit institutions also apply to MVT services. (751) - Full range of FATF recommendations apply to MVT operators; weaknesses in preventive measures for credit institutions are valid for MVT services. (752) - Oversight and effectiveness: - Full regulatory oversight applies to MVT operators but oversight has not been a priority in onsite visit program. Very limited meetings revealed generally good systems; one firm submitted regular and significant numbers of STRs. Industry noted risk of customers turning to unofficial ethnic transfer systems when blocked. Assessors consider increased attention to unauthorized activity prudent. (753–756) - New unit within FMA established as of January 1, 2009 in charge of combating unauthorized banking business, including identifying and sanctioning illegal/non-licensed transfer service operators. (756) - Sanctions and best practice: - Sanctions regime defined in the BWG applies to MVT; it exhibits the same deficiencies as for credit institutions. (755, 757) - Recommendation: - Authorities should revise the framework for preventive measures to address all deficiencies. (758) - Compliance with SR.VI: - SR.VI — LC - Deficiencies in the framework for preventive measures. ### Preventive measures for DNFBPs - Preventive measures for Designated Non-Financial Businesses and Professions (DNFBPs) are contained in sectoral laws and regulations. CDD measures have generally been in force since Directive 2001/97/EC and have been extended and refined in line with Directive 2005/60/EC. (759) - Recent legislative amendments implementing the Third EU ML Directive: - Lawyer’s Act (RAO) and Notarial Code (NO) amendments effective December 29, 2007. (760) - Trade Act (GewO) amendments effective February 2, 2008. (760) - WT-ARL and BiBu-ARL directives effective April 23, 2008 and May 1, 2008 respectively. (760) - Gambling Law (Glücksspielgesetz, GSpG) enacted June 30, 2008. (760) - WT-ARL and BiBu-ARL are based on Article 83, paragraph 2 of the WTBG and Article 69, paragraph 2 of the BiBuG respectively and are approved by the MoE; these Directives are regulations in the meaning of the Federal Constitutional Law (B-VG). (761) *Source: _cr09298 - 725. In case of multiple offenses, sanctions can be imposed cumulatively. No such case has been — IMF content unit* ### 762. The following table indicates which DNFBPs are covered by AML/CFT provisions. ### _cr09298 - 762. The following table indicates which DNFBPs are covered by AML/CFT provisions. ### Coverage of DNFBPs and Governing Acts - FATF DNFBPs and the governing acts as listed: - Casinos — Gambling Law (GSpG) - Real estate agents — Trade Act (GewO) - Dealers in precious stones — Trade Act (GewO) - Dealers in precious metals — Trade Act (GewO) - Lawyers — Lawyer’s Act (RAO) - Notaries — Notarial Code (NO) - Accountants — Directive concerning the Practice of the Chartered Public Accountants and Tax Consultants Professions (WT-ARL) and Directive concerning the Practice of the Accountancy Professions (BiBu-ARL) - TCSP (Business consultants) — Trade Act (GewO) - High-level finding: - All non-financial businesses and professions designated by the FATF are covered by AML/CFT laws and regulations in Austria. - Implementation issue: authorities chose to subject only “business consultants” under the GewO as the TCSP equivalent, while other professions continued to perform TCSP activities in practice (see details under Implementation and TCSP scope). ### Implementation and TCSPs (Trust and Company Service Providers) - Implementation issues and business profile mismatches: - Authorities subject to AML/CFT provisions of the GewO only business consultants, which were only partially involved in the scope of activities defined as performed by TCSPs. - The Chamber of commerce defines business profiles and did not review profiles of professions that used to provide trust and company services to conform to the new legislation. - Two professions were performing TCSP activities despite the GewO provisions: - The profession of office services consisting of writing, messenger services, receipt and forwarding of messages (Büroarbeiten). - The profession of office services consisting in the provision of office equipment and office facilities (Büroservice). - Clarification measure noted: - Authorities explained the chamber of commerce has to change business profiles so that only management consultants are authorized to perform TCSPs activities. ### Casinos — Legal framework and scope - Governing law and scope: - AML/CFT provisions for casinos and electronic lotteries are regulated in the Gambling Law (GSpG), particularly Article 25 and 25a for land based casinos. - The game monopoly is defined in Article 4 (1) GSpG; poker was judged a game of chance by the highest administrative court in 2005. - Amendment to the GSpG is under preparation. - “Gaming halls” operating as exception to the monopoly (e.g., slots where stake does not exceed EUR 0.50 and prize does not exceed the amount of EUR 20 — Article 4 (2) GSpG) are supervised by local district authorities and activities outside the gaming monopoly are not subject to AML/CFT requirements. - Key operational details: - Transactions in land-based casinos can include foreign exchange, purchases of chips in cash or credit card, payout of winnings in cash, cheque or transfer. No accounts are open. - Electronic lotteries are included in the monopoly by Article 12a GSpG; regulation based on Article 16(7) and administrative rulings of the MoF. ### CDD and record-keeping for casinos (R.12 / DNFBP-specific) - Entrance and identification requirements: - Casinos must undertake CDD measures at the casino entrance irrespective of whether the customer will engage in financial transactions (Article 25, paragraph l GSpG). - Identification and verification at the entrance consist in presentation of an official identification document with photo as required by Article 40(1) BWG (c.5.3). - Casinos are not permitted to keep anonymous player accounts or accounts in fictitious names (c.5.1). - A customer is identified each time he/she enters or re-enters a casino in Austria (c.5.17). - Transaction thresholds and monitoring: - Monitoring of business relationship when transactions exceed an average of EUR 700; this threshold is described as the minimum income level mentioned in the GSpG and is mandatory for Austrian, EU and EEA citizens. - CDD measures must be undertaken when a foreign exchange of more than EUR 15,000 is performed in the casino. - There is no legal requirement to identify transactions equal or above EUR 3,000 performed by non-EEA citizens (c.5.2). - Procedures for winnings and payouts: - Confirmation of winning is issued in head office after checking correctness; confirmations drawn only on recorded name of guest. - Winnings paid out in cash or by crossed cheque; amount of crossed cheque is only transferable to a registered bank account; opening of a bank account is subject to BWG AML/CFT regulations. - According to CASAG, less than 10 certificates of winnings or crossed checks are issued on a yearly average. - Non-compliance and enforcement: - If customer does not comply with CDD at entrance, customer not allowed to stay and licensee must inform the MoI (Article 25 (7) GSpG) — an obligation broader than the standard (c.5.15). - If a customer in the casino refuses CDD for a transaction above EUR 700, casino management shall question player on income/assets and may warn or ban him/her (Article 25 (3) GSpG). Management may deny entry without stating reasons pursuant to Article 25 (2) GSpG (c.5.16). - Risk-based and enhanced measures: - Ongoing monitoring at EUR 700 appears comprehensive and tied to responsible gaming rules; applied generally to every customer. - No specific review is undertaken for higher risk categories and no enhanced due diligence for higher risk categories such as nonresident customers (c.5.7, c.5.8). - Reduced or simplified CDD measures option is not implemented in the Gaming act (c. 5.9-c.5.12). - New amendments including enhanced identification measures and inclusion of terrorist financing were enacted in July 2008 but were too recent for effective implementation assessment. ### Internet casinos (Electronic lotteries) - Licensing and restrictions: - Article 56 (1) forbids providing means to receive winnings from foreign games of chance within Austria; MoF confronted with foreign based internet gambling and made several indictments for breaches. - One company in Austria authorized to conduct lottery business including electronic lotteries; gaming conditions are set and subject to prior approval of the Federal Minister of Finance (Article 16 (1), Article 16 (7)). - Gaming conditions and CDD-related provisions: - Gaming conditions in effect since October 31, 2006; include obligations to register and to provide ID (name, address and date of birth) and details of an Austrian bank account (Article 3.1. of the gaming conditions). Identity details are compared with entries in official registries. - Players may only use EUR 800 per week to take part in Electronic Lotteries (Article 3.7 of the Gaming conditions). - There is no requirement to check that the declared bank account actually belongs to the customer; database checks do not suffice to exclude identity theft. - CDD requirements are triggered when winnings are paid out as they can exceed EUR 3,000; however, many of the recommendations in criteria 5.1 to 5.18 do not apply except prohibition of fictitious accounts (c.5.1), identification of the customer (c.5.2) and prohibition of customers that are legal persons (c.5.4, c.5.5.2). - The licensee applies constant risk-based monitoring; a dedicated fraud team monitors transactions; accounts with pay-in of more than EUR 400 per week receive additional scrutiny — those accounts represent less than 2 percent of the total number of accounts. ### Real estate agents, dealers, and management consultants — CDD and thresholds - CDD prohibition on anonymous accounts: - Designated trade and business persons are not permitted to keep anonymous accounts or accounts in fictitious names (c.5.1). - Triggering events for CDD (Article 365o GewO): - Establishing a business relationship; - Carrying out occasional transactions amounting to EUR 15,000 or more, whether in single operation or several linked operations; - Suspicion of money laundering or terrorist financing, regardless of derogations, exemptions or thresholds; - Doubts about previously obtained customer identification data. - Threshold specifics: - A EUR 15,000 threshold applies to CDD requirement of real estate agents and management consultants (c.5.2). - CDD measures and flexibility: - CDD comprises identifying the customer and verifying identity on basis of documents, data or information obtained from a reliable and independent source (Article 365p(1)1 GewO). - Explanatory notes define official photo identification in relation to Article 40, paragraph 1 BWG. - Article 365p(2) provides that the extent of CDD shall be determined by actual risk profile depending on type of customer, business relationship, product or transaction; explanatory note states “the system is a flexible one” (c.5.3). - For real estate agents, law does not specify whether CDD applies to both purchasers and vendors, but explanatory note to GewO on Article 365y indicates “real estate agents have to keep copies of the documents of both the intermediated customers...” ### Lawyers, Notaries, and Accountancy professions — Governing instruments and key provisions - Lawyers: - AML/CFT requirements governed by the Lawyer’s Act (RAO) and the Disciplinary Statute (DSt, Federal Law Gazette Nr. 474/1990). - RAO includes AML/CFT requirements in Articles 8a-8f, 9, 9a and 12. - Additional statutory regulations in Directives of the Austrian Bar Association (RL-BA 1977). - Notaries: - AML/CFT requirements governed mainly by the Notary’s Act (NO), particularly Articles 36 to 37a. - Other relevant documents: Amendments to the Professional regulations 2008 (BRAG 2008), Notaries examination Act, and Austrian Chamber of Civil Law Notaries Recommendations on prevention of ML/FT (last updated April 2008). - Chartered Public Accountants and Tax Consultants (Wirtschaftstreuhänder): - Relevant provisions in WT-ARL; current version came into effect on May 1, 2008; relevant AML/CFT requirements in Articles 34 to 38 WT-ARL. - Accountancy Professions: - Relevant provisions in BiBu-ARL; current version came into effect on April 23, 2008; relevant AML/CFT requirements in Articles 17 to 21 BiBu-ARL. *Source: _cr09298 - 762. The following table indicates which DNFBPs are covered by AML/CFT provisions.* ### 793. For customers that are legal persons or legal arrangements, the GewO does not contain ### _cr09298 - 793. For customers that are legal persons or legal arrangements, the GewO does not contain ### Customer due diligence (CDD) requirements under the GewO - For customers that are legal persons or legal arrangements, the GewO does not contain specific requirements to verify that any person purporting to act on behalf of the customer is so authorized, and identify and verify the identity of that person. Reference to requirement to identify and to verify the legal status of the legal person or legal arrangement is made in the explanatory note to the GewO (c.5.4). (Paragraph 793) - Designated tradespersons must identify, where applicable, the beneficial owner and take risk-based and adequate measures to verify his identity so that it is satisfactorily known who the beneficial owner is. For legal persons, trusts and similar legal arrangements, this includes taking risk-based and adequate measures to understand the ownership and control structure of the customer (Article 365p(1)2 GewO). The GewO subjects CDD concerning the beneficial owner to a risk-based approach. Explanatory notes give general guidance on risks foreseen in Article 365p(1)2 GewO, but no specific guidance on what constitutes risk-based identification and verification of the beneficial owner. There is no mention in the law on the need to take reasonable measures to determine the natural persons that ultimately own or control the customer (c.5.5). (Paragraph 794) - Designated tradespersons are required to obtain information on the purpose and intended nature of the business relationship (Article 365p(2) GewO) (c.5.6). (Paragraph 795) - Ongoing monitoring requirement: designated tradespersons must conduct ongoing monitoring of the business relationship including scrutiny of transactions to ensure consistency with knowledge of the customer, the business and risk profile, including, where necessary, the source of funds, and ensure that documents, data or information held are kept up-to-date (Article 365p(1)4 GewO). The law and explanatory notes do not specify means to keep information up-to-date and relevant, particularly for higher risk categories (c.5.7). (Paragraph 796) - Verification timing: tradespersons must verify identity of a customer and beneficial owner before establishing a business relationship or carrying out a transaction. Real estate transactions by a real estate agent require verification if the annual rent amounts to EUR 15.000 or more (Article 365q(1)) (c.5.13). If the amount is unknown at the beginning, identity must be verified as soon as the amount is known or can be ascertained and it becomes obvious that the threshold will be reached or exceeded (Article 365q(1)). Derogation allowed: verification may be completed during establishment of a business relationship where necessary not to interrupt normal conduct of business and risk is limited; verification procedures should be completed as soon as possible after initial contact. No requirement for designated tradespersons to adopt risk management procedures concerning conditions under which use of the business relationship prior to verification may occur (c.5.14). (Paragraphs 802–803) - If unable to comply with CDD requirements, tradespersons should refrain from conducting transactions through a bank account, from establishing any business relationship, from carrying out the transaction, or terminate the business relationship; they should examine necessity of making a suspicious transaction report to the MoI (Article 365p(4)) (c.5.15). (Paragraph 804) - Where business relationship already commenced, tradespersons must complete CDD “as soon as practicable.” No guidance issued on when they should consider themselves unable to comply and follow Article 365p(4) (c.5.16). (Paragraph 805) - CDD obligations apply to existing customers (Article 365p(3)) (c.5.17-18). (Paragraph 806) ### Enhanced, simplified, and exempted CDD; risk-based guidance gaps - Except for PEPs and non-face-to-face transactions, designated tradespersons are not required to perform enhanced due diligence for higher risk categories of customers, business relationships or transactions (c.5.8). (Paragraph 797) - Simplified CDD: Article 365r(1) GewO mentions simplified CDD procedures. In listed cases there is no need for CDD at all (same cases as Article 40a(1) BWG). Article 365r(2) GewO provides other exemptions relating to low risk insurance products and low value electronic money transactions with same restrictions as Article 40a(3)1 BWG (c.5.9). (Paragraph 798) - Exemptions apply to customers resident in all EU countries and third countries under conditions. No detailed guidance on list of countries considered by Austrian authorities as compliant and effectively implementing the FATF recommendations. Authorities indicate European Commission is competent to list countries not under laws equivalent to Third EU ML Directive. Explanatory note gives general explanation of transposition but no specific guidance for designated tradespersons to determine precisely exempted customers (c.5.10). (Paragraph 799) - Obligation to perform CDD applies regardless of any derogation or exemption when there is a suspicion of ML or FT (Article 365o1 GewO). However, pursuant to Article 365r(1), Article 365p(2) (which refers to risk profile) should not apply in case of simplified CDD procedures. Consequently, there is no obligation to perform CDD measures when specific risk scenarios apply (c.5.11). (Paragraph 800) - No specific guidelines issued by the competent authority regarding extent of CDD measures on a risk sensitive basis. The WKO is the relevant institution for information of tradespersons (c.5.12). (Paragraph 801) ### Assessors’ observations on implementation by designated non-financial businesses and professions - Implementation of CDD requirements by non-financial businesses and professions subject to the GewO appeared generally superficial. Reasons cited: relatively recent legal framework, small size of most businesses with limited resources, perception that risks are low, and limited extent of AML/CFT supervision. (Paragraph 807) ### Lawyers and Notaries — scope and practice under RAO and NO - General: legal requirements on CDD are the same for lawyers and notaries, addressed jointly. Difference: existence of guidelines by the Chamber of Notaries (not binding) (c.5.1). (Paragraph 808) - Escrow accounts: RAO and NO do not allow lawyers and notaries to keep accounts other than escrow accounts to pay third party money; anonymous accounts or accounts in obviously fictitious names are not allowed. Escrow bank accounts regulated by BWG and RAO/NO and subject to supervision of professional organizations (c.5.1). (Paragraph 809) - Activities subject to CDD when preparing for or carrying out transactions for a client (Article 8a(1) RAO and Article 36a(1) NO): - buying or selling of real property or business entities; - management of client monies, securities or other assets, the opening or management of deposit, savings or securities accounts; and - creation, operation or management of trust companies, business entities or similar structures such as trusts or foundations, including procuring funds required for creation, operation or management of companies. (c.5.1) (Paragraph 810) - Scope clarity issue: wording of Article 8a(1) RAO and Article 36a(1) NO could be read as requiring a double condition (apparent connection with ML/FT and involvement in listed activities) to trigger CDD. Chamber of Notaries clarified in guidelines that the listed activities are susceptible to money laundering and CDD should apply; guidelines are not binding. Bar Association view: CDD applies to all listed activities regardless of apparent connection to ML/FT. Ministry of Justice plans to suggest clarifying amendments to Article 8a(1) RAO and Article 36a(1) NO (c.5.1). (Paragraph 811) - CDD triggers and thresholds for lawyers and notaries (Article 8b(1) RAO and Article 36b(1) NO): - establishing a business relationship on a continuing basis before acceptance of the mandate; or - other transactions with order sum of at least EUR 15,000 (total contract value assessed according to applicable fee acts), prior to realization of such transaction; if order sum initially unknown, identity must be established as soon as it is foreseeable that expected order sum will exceed EUR 15,000; or - when they know, suspect or have legitimate reason to assume the operation serves purpose of ML or FT; or - where there are doubts about veracity or adequacy of previously obtained identification data. (c.5.2) (Paragraph 812) - Identification and verification: lawyers and notaries must identify client and verify identity on basis of documents, data or information from a reliable and independent source. Notaries’ guidelines specify passports or personal IDs as suitable documents to prove citizenship (c.5.3). (Paragraph 814) - Legal persons and arrangements: same provisions require verification that any person purporting to act on behalf of the customer is so authorized and identification/verification of that person. Notaries’ guidelines indicate how to identify and verify legal status of legal person or arrangement (c.5.4). (Paragraph 815) - Beneficial owner identification: lawyer or notary must establish and verify identity of beneficial owner taking risk-based and adequate measures (Article 8b(4) RAO and 36b(4) NO). Article 8d RAO and Article 36d NO define beneficial owner: - corporate entities: - natural persons who ultimately own or control a legal entity through direct or indirect ownership or control over a sufficient percentage of the shares or voting rights, including through bearer share holdings, other than a company listed on a regulated market subject to disclosure requirements consistent with European Community Law or equivalent international standards; a percentage of 25 percent plus one share should be deemed sufficient to meet this criterion; - natural persons who otherwise exercise control over the management of a legal entity; - legal entities such as foundations, and legal arrangements such as trusts: - where future beneficiaries already determined: natural persons who are the beneficiary of 25 percent or more of the property of a legal arrangement or entity; - where beneficiaries yet to be determined: the group of persons in whose main interest the arrangement or entity is set up or operates; - natural persons who exercise control over 25 percent or more of the property of a legal arrangement or entity. (c.5.5) (Paragraphs 816–817) - Purpose and intended nature: lawyers and notaries must gather information on purpose and intended nature of business relationship (c.5.6). (Paragraph 818) - Ongoing monitoring: lawyers and notaries must conduct ongoing monitoring including scrutiny of transactions, ensure source of funds where necessary, and ensure documents/data are kept up-to-date. No requirement to ensure documentation is relevant by undertaking reviews of existing records, particularly for higher risk categories (c.5.7). (Paragraph 819) - No general enhanced due diligence requirement for higher risk categories other than specific risks assessed under R.6 and R.8 (c.5.8). (Paragraph 820) - Simplified CDD for lawyers and notaries: Article 8e(1) RAO and Article 36e(1) NO allow simplified procedures in cases largely aligned with Article 40a(1) and (2) BWG plus additional RAO/NO cases. Article 8e(1)6 RAO and Article 36e(1)6 apply simplified CDD for any legal person that: a) resides in a Member State subject to Article 4 of Directive 2005/60/EC and supervised as per Article 37(3) of the Directive with effective, proportionate and deterrent sanctions for non-compliance; b) whose identity can be publicly verified, is transparent and established beyond doubt; or c) requires mandatory authorization under national law before undertaking financial activities (authorization may be denied for lack of trustworthiness/expertise of natural person or beneficial owner) and is subject to comprehensive monitoring (including in-depth on-site examinations) by competent authorities. (c.5.9) (Paragraphs 821–822) - Difficulty in ascertaining exemptions: absent guidance, lawyers and notaries may find it difficult to ascertain that exemptions apply and to estimate what constitutes “sufficient information to be able to reliably determine that the exemption applies” (c.5.9). (Paragraph 823) - At time of on-site visit no guidance had been given by authorities to lawyers and notaries to limit scope of exceptions to countries considered equivalent to FATF Recommendations; subsequent footnote indicates guidance was later provided by Austrian Bar and Chamber of Civil Law Notaries via infomails, newsletters and January 2009 guidance. (c.5.10 and footnote) (Paragraph 824 and footnote) - Exemption caveat: exemption of CDD measures is not acceptable whenever there is a suspicion of ML or FT (reference to Article 8b(1)3 in Article 8e(1) RAO and 36b(1)3 in Article 36e(1) NO). No reference to requirement to perform CDD if specific higher risk scenarios apply (c.5.11). (Paragraph 825) - Austrian Bar preparing guidance to help members determine extent of CDD measures on a risk sensitive basis; Chamber of Notaries guidance on this subject is limited (c.5.12). Footnote indicates such guidance has been given to lawyers and lists of countries published via Infomail and the Austrian Lawyers’ Journal; Chamber of Civil Law Notaries informed members in newsletters (November 2008, January 2009); January 2009 AML/CFT guidance contains information on this subject. (Paragraph 826 and footnote) - Verification timing for occasional customers: lawyers and notaries required to verify identity of customer and beneficial owner before establishing business relationship or conducting a transaction for occasional customers (c.5.13 and c.15.14). (Paragraph 827) - If unable to comply with CDD requirements, no instruction can be accepted and transaction should not be carried out; ongoing business relationships should be discontinued. Notification to the BKA must be considered; reporting to the BKA is mandatory if the party did not comply voluntarily with requirement of disclosing its identity. These requirements do not apply when lawyer or notary is providing legal advice or representing party in court or before subordinate authority or public prosecution office, unless it is evident party sought legal advice solely for purpose of ML or FT (c.5.15 and c.5.16). (Paragraph 828) - No requirement to apply CDD requirements to existing customers on basis of materiality and risk and to conduct due diligence on such existing relationships at appropriate times (c.5.17). (Paragraph 829) *Source: IMF assessment text in the provided content unit.* ### 830. It is difficult to precisely assess the effective implementation of CDD measures by notaries ### _cr09298 - 830. It is difficult to precisely assess the effective implementation of CDD measures by notaries ### Notaries and lawyers: overall implementation and awareness - It is difficult to precisely assess the effective implementation of CDD measures by notaries and lawyers across the regions of Austria. - A high level of awareness was remarked from meeting with SROs and professionals, especially notaries. - Factors contributing to awareness: - AML/CFT issues are incorporated in routine supervisory missions. - Sanctions have already been pronounced based on non compliance of AML/CFT requirements. - Guidance work done by the SRO in the case of notaries. ### Chartered Public Accountants, Tax Consultants and Accountancy Professions — CDD legal framework and scope - Accountants may not keep anonymous accounts or accounts in obviously fictitious names as the opening of accounts by accountants is not foreseen by the professional regulations or the BWG (c.5.1). - Pursuant to Article 33 (1) WT-ARL and Article 16(1) BiBu-ARL, CDD requirements have to apply when: - establishing a business relationship; - carrying out occasional transactions amounting to EUR 15,000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked; - there is a suspicion of ML/FT; and - there are doubts about the veracity or adequacy of previously obtained customer identification data. (c.5.2) - The preparation of the above mentioned activities is not subject to CDD requirements. - Establishment of a business relationship can only be assumed if a free consultation is followed by further services and orders, and if a certain duration is envisaged at the beginning of the business relationship. - Consequently, activities like the creation of a company if the accountants’ fees are under EUR 15,000 are not subject to CDD requirements. - Drafting of Article 34(1),(2) and (3) WT-ARL suggests CDD requirements may be limited to services that "specifically suggest a connection with money laundering." There is no requirement of CDD in relation to FT in WT-ARL. (c.5.2) - BiBu-ARL Article 17(1) does not lead to the same ambiguities as WT-ARL regarding scope. - Extent of due diligence measures must be determined on a basis commensurate to the overall risk of the business relationship (Article 34(5) WT-ARL and Article 17(3) BiBu-ARL). (c.5.2) ### Accountants — customer identification, beneficial ownership, and ongoing due diligence - Identification and verification: - Article 34(3)1 WT-ARL and Article 17(1)1 BiBu-ARL require identification and verification of customers’ identity on the basis of documents, data or information obtained from a reliable and independent source, such as a valid official photo identity card. (c.5.3) - For legal persons/legal arrangements, legal status must be verified by obtaining a company register extract (Article 34(3)3 WT-ARL and Article 17(1)3 BiBu-ARL). Accountants must verify authorization of persons acting on behalf of the customer and identify and verify that person. (c.5.4) - Beneficial owner identification: - Where the customer does not act on its own behalf, identifying duty should also apply to the beneficial owner (Article 34(3)2, 34(3)3 WT-ARL and Article 17(1)2, 17(1)3 BiBu-ARL). (c.5.5) - Definition of beneficial owner in Article 34(4) WT-ARL and Article 17(2) BiBu-ARL is limited to natural persons holding more than 25 percent of direct or indirect ownership or control. This limitation "could prevent the ability to ascertain the natural persons that ultimately own or control the customer." - Identity of the beneficial owner has to be verified by means of appropriate measures, taken in accordance with the overall discernible risk of the business relationship. - No specific guidance on risk has been given to accountants. There is no requirement to understand the ownership and control structure of the customer. (c.5.5) - Purpose and risk profiling: - Accountants must obtain information on the purpose and intended nature of the business relationship (Article 34(3)5 WT-ARL and Article 17(1)5 BiBu-ARL). (c.5.6) - Accountants are required to take measures to ensure that the risk profile of the business relationship is up to date (Article 34(3)6 WT-ARL and Article 17(1)6 BiBu-ARL). The WT-ARL contains no other mention of ongoing due diligence or guidance to accountants. (c.5.7) ### Enhanced and simplified measures; timing and exemptions - Enhanced due diligence: - Article 37(1) WT-ARL and Article 20(1) BiBu-ARL require enhanced due diligence for higher risk business relationships, but specification is limited to non-face-to-face transactions and PEPs. No guidance to determine other higher risks. (c.5.8) - Low-risk and simplified CDD: - Low risk situations are determined under Article 36 WT-ARL and Article 19 BiBu-ARL (same situations as in the BWG). There is a total exemption of CDD measures in these cases, provided there is sufficient information to determine eligibility. (c.5.9) - This exemption can be applied to customers resident in another country of the European Union as well as to customers resident in third countries. Austrian authorities did not indicate which countries they consider to be in compliance with and have effectively implemented the FATF Recommendations. (c.5.10) - Simplified CDD measures are not acceptable whenever there is suspicion of ML or FT (Article 36 WT-ARL and Article 19 BiBu-ARL). (c.5.11) - No guidelines have been issued by the Austrian authorities concerning the extent of the CDD measures that can be determined on a risk sensitive basis. (c.5.12) - Timing: - Identity of the customer must be established and verified before the establishment of a business relationship or the performance of a transaction (Article 34(6) WT-ARL and Article 17(4) BiBu-ARL). - In low ML/FT risk situations to avoid interrupting normal business procedures, verification may be completed during the establishment of the business relationship, but procedures must be completed "as soon as possible after the first contact." Accountants are not required to adopt risk management procedures concerning conditions under which this may occur. (c. 5.13 and c.5.14) - Failure to comply: - When unable to comply with CDD, accountant is prohibited to establish a business relationship or to conduct a transaction; existing business relationships must be terminated; accountants must consider making a STR (Article 35(1) WT-ARL and Article 18(1) BiBu-ARL). These requirements do not apply within the framework of an assessment of the customer’s legal position or within the framework of a function as the customer’s defense counsel or representative in or in connection with a court proceeding. (c.5.15 and c.5.16) - Retrospective application: - Accountants must apply CDD requirements to existing business relationships, on a risk-oriented basis, before December 31, 2008 (Article 34(7) WT-ARL and Article 17(5) BiBu-ARL). This requirement does not clearly extend to the obligation to identify the beneficial owner when a customer does not act on its behalf. (c.5.17) ### Implementation and supervision for accountants - From meetings with authorities and professionals, the level of implementation of CDD measures by accountants "does not appear particularly important." - Contributing factors: - Absence of effective AML/CFT supervision of this profession. - Important number of accountants. - A shared view by professionals and their SROs that the risk of ML/FT is low in Austria and that other professions than accountants are more at risk. - Difficulty obtaining information from clients. ### DNFBPs in set circumstances — Land casinos - Recommendation 6: - No legal or regulatory requirement to put in place appropriate management systems to determine whether a potential customer, a customer or the beneficial owner is a politically exposed person. - Approximately two thirds of the total betting volume is related to foreign nationals, when they only count for approximately one third of the customers. - Recommendation 8: - No legal or regulatory requirements to have policies in place or to take measures to prevent the misuse of technological developments in ML or FT schemes. - Land-based casinos are generally not concerned, except for payments by credit cards which are specifically monitored according to the internal “Safety measures to prevent money laundering”, section 2.3.3. - Land-based casinos do not provide for non-face-to-face transactions. Specific internal procedures apply when a client requests funds to be transferred to a bank account. - Recommendation 9: - Not applicable in the case of Austrian land-based casinos. - Record keeping and secrecy: - Casinos required to maintain information on visitors identified at the entrance for at least five years (Article 25 (1) GSpG). It is the only information they are legally required to keep. - Internal guidelines: any purchasing or cashing transaction above around EUR 700 is recorded and allocated to the client’s name, unless identity already recorded and allocated (e.g., payments by traveler cheques and credit cards). Payment of winnings in chips is recorded similarly. All records transferred from all casinos to headquarters in Vienna on a daily basis. - No information on the period these records are maintained but according to the MoF and CASAG, the five years requirement is met. - Game secrecy (Article 51 GSpG) prevents casinos from ensuring all customer and transaction records are available to domestic competent authorities unless a court order is issued; game secrecy is lifted in that case (Article 51(2) GSpG). - Recommendation 11: - Article 25(6) GSpG requires casinos to "pay special attention to any activity which they regard as particularly likely, by its nature, to be related to ML or FT, in particular complex or unusually large transactions and all unusual patterns of transactions which have no apparent economic or visible purpose" but there is no mention of the duration of the record-keeping requirement. - CASAG internal guidelines provide for special attention in the case of payout of winnings in cash, by cheque or transfer to a bank account (section 2.3.3). ### DNFBPs — Internet casinos - Recommendation 6: - No legal or regulatory requirement to implement management systems to determine whether customers or beneficial owners are PEPs. - Only Austrian residents are allowed to play on www.win2day.at, limiting the possibility of a customer being a foreign PEP. - Recommendation 8: - Licensee aware of risks from misuse of technological developments; gaming conditions request both an identification document and an Austrian bank account. - Current checks do not enable verification that the customer is not using a fake identity or that the bank account matches the given identity. Authorities consider risk of this specific misuse very low. - Recommendation 9: - Not applicable, as the relation is directly between the customer and the casino. - Records and monitoring: - Licensee maintains records of all transactions but there is no legal obligation to this effect (R.10). - No requirement to pay special attention to complex, unusual large transactions, or unusual patterns lacking apparent economic or lawful purpose (R.11). ### Real estate agents, dealers, management consultants and insurance intermediaries (designated tradespersons) - Recommendation 6 (Article 365s(3) GewO) requires designated tradespersons to: - have appropriate risk-based procedures to determine whether the customer is a politically exposed person (PEP), also if holding a domestic public function; - have senior management approval for establishing business relationships with such customers; - take adequate measures to establish the source of wealth and source of funds that are involved in the business relationship or transaction; and - conduct enhanced ongoing monitoring of the business relationship. - Limitations and gaps: - Article does not require enhanced due diligence for PEPs that are only potential customers. - Definition of PEPs (Article 365n(4)) does not mention important political party officials. - No provisions for cases where a customer subsequently becomes a PEP. - Obligation to establish source of wealth and source of funds is limited to that involved in the business relationship or transaction. - Recommendation 8: - Article 365s(5) GewO: tradespersons must pay special attention to ML/FT threats from products or transactions that might favor anonymity and take measures to prevent abuse (examples: non-face-to-face business activities). - For distance transactions, order forms must be sent to the customer’s residence by registered mail; customer must return order form with a readable copy of an official photo identification; tradesperson must verify identity data in the order form (Article 365s(1)). Enhanced due diligence applies in case of on-line auctions (Article 365s(2)). - Recommendation 9: - GewO does not allow designated tradespersons to rely on intermediaries or other third parties to perform CDD requirements (R.9). - Record-keeping and access: - Article 365y(1) GewO requires records regarding verification of identity and supporting evidence be kept at least five years after transaction or ending business relationships; in case of liquidation, records kept for seven years by liquidator. - Records must be available to the MoI or other competent authorities in case of possible ML or FT. Austrian police did not encounter problems of access to data during investigations. - Recommendation 11: - Article 365t GewO: tradespersons must pay special attention to activities they regard as particularly likely to be related to ML or FT, in particular complex or unusually large transactions or unusual patterns with no apparent lawful purpose. - No requirement to set forth findings of examination of these transactions in writing. ### Lawyers and civil law notaries — PEPs and enhanced measures - PEP identification and procedures: - Article 8f(1) RAO and Article 36f(1) NO require lawyers and notaries, in addition to common CDD measures, to verify whether the party is a politically exposed person residing in another EU Member State or a third country. They should apply adequate risk-based procedures to determine PEPs. Definition of a PEP is in Article 8f(2) RAO and Article 36f(2) NO and includes a reference to the beneficial owner. (c.6.1) - Definitions do not include important political party officials and do not mention the case where a PEP is a potential customer. - The Chamber of notaries provides guidance and circulated a sample questionnaire; notaries have free access to a commercial electronic database of PEPs via the Notary Bank. - The Austrian Bar is preparing guidance that will cover the issue of PEPs. - Criteria of residence of the PEP mean a foreign PEP residing in Austria will not be subject to Article 8f(1) RAO and Article 36f(1) NO. (c.6.1) - Senior management approval: - A mandate-relation with a PEP residing in another member state or a third country can only be established upon prior authorization of the lawyer (one of the lawyers authorized to manage the lawyer company), according to Article 8f(3) RAO. - No equivalent senior management approval requirement in Article 36f(3) NO for notaries, as the notarial profession is exercised personally by the notary or an (independent) substitute notary. No requirement regarding an accepted customer or beneficial owner subsequently found to be, or becomes, a PEP. (c. 6.2) - Source of funds/wealth checks: - For foreign PEPs, lawyer or notary required to take appropriate measures to check the origin of the funds used for the business relationship or transaction (Article 8f(3) RAO and Article 36f(3) NO). These articles "do not require establishing the source of wealth and the source of funds of customers," addressing only the framework of a business relationship or transaction. (c.6.3) - Enhanced monitoring: - Lawyers and notaries required to conduct enhanced ongoing monitoring of PEPs pursuant to the same articles. (c.6.4) - CDD requirements do not extend to domestic PEPs who reside in Austria; Articles 8f(1) and 36f(1) are limited to PEPs residing in other EU Member States or third states. (additional c.6.5) *Source: _cr09298 - 830. It is difficult to precisely assess the effective implementation of CDD measures by notaries* ### 867. It is difficult to assess the effective implementation of the CDD requirements related to PEPs ### _cr09298 - 867. It is difficult to assess the effective implementation of the CDD requirements related to PEPs ### Lawyers and Notaries — CDD related to PEPs and identification requirements - Effective implementation of CDD requirements related to PEPs by lawyers and notaries is difficult to assess, though the higher risk profile of this clientele seems recognized by persons met by the assessors. - Recommendations issued by the Austrian Chamber of Civil law notaries include a comprehensive sample questionnaire for self-declaration of PEPs. - Information on CDD requirements related to PEPs has been published in the Austrian lawyers Journal and provided in seminars and training courses. - No general requirements for lawyers or notaries to have policies or measures to prevent misuse of technological developments in ML or FT schemes (c.8.1). - Article 8b(3) RAO and Article 36b(3) NO: where the party is not physically present, lawyers and notaries are required to “take additional appropriate and conclusive measures to establish the identity of the party in a reliable way and to ensure that the first payment of the party in the framework of the operation is realized through an account opened in the name of the party at a credit institution to which Directive 2005/60/EC is applicable.” - Explanatory notes to the amendment to the Professional Regulations 2008, on Article 8a RAO, state each lawyer must find appropriate means for his/her firm, but no specific guidance has been issued on what “additional appropriate and conclusive measures” are for non-face-to-face business (c.8.2). - Lawyers and notaries are not permitted to rely on intermediaries or other third parties to perform any elements of the Customer Due Diligence process (c.9.1 to c.9.5). - Article 8b(5) RAO and Article 36b(5) NO: lawyers and notaries must retain documents submitted to establish identity of client and beneficial owner, as originals if possible; where originals cannot be retained, photocopies must be produced and retained. - Article 12(3) RAO and Article 49(3) NO: requirement to maintain records on all transactions referred to in Article 36a(1) RAO and 8a(1) NO, with limitation that those articles clearly oblige scrutiny only of transactions whose nature suggests relation to ML or FT (c.10.1). - Requirement to maintain identification data records for at least five years following termination of a relationship with a party; same requirement for transactions referred to in Article 36a(1) RAO and 8a(1) NO. No mention of keeping records longer if requested by a competent authority in specific cases (c.10.2). - Article 37(4) RAO and 9(4) NO: lawyer or notary must provide upon request of the MoI (BKA) all information he or she is aware of to the extent required to clear a suspicion of ML or FT directed against a party; obligation waived if party was seeking legal advice or when representing him/her in court or before a subordinate authority or public prosecution office, unless it is evident that the party was seeking legal advice solely for ML or FT (c.10.3). - No specific obligation for notaries and lawyers to pay special attention to all complex, unusual large transactions, or unusual patterns of transactions that have no apparent or visible economic or lawful purpose (c.11.1 to c.11.3). ### Accountants, Chartered Public Accountants and Tax Consultants — PEPs and CDD - Article 37(1)2 WT-ARL and Article 20(2) BiBu-ARL: enhanced due diligence measures must be conducted for transactions or business relationships with PEPs, including risk-based procedures to determine whether the customer is a PEP. - Enhanced CDD is limited by reference to Article 34(1) WT-ARL and the need for presence of a service that specifically suggests connection with ML. - PEP notion defined in Article 37(1)3 WT-ARL and Article 20(3) BiBu-ARL; does not include important political parties’ officials; no mention of the case a PEP is a potential customer (c.6.1). - No requirement in accounting firms to obtain senior management approval for establishing relationships with a PEP (c.6.2). - Article 37(1)2c WT-ARL and Article 20(1)2c BiBu-ARL: accountants required to take adequate measures to establish the source of wealth and funds involved in the business relationship or transaction — limited to source of wealth/funds regarding relationships/transactions the accountant is involved in, not the whole source of wealth/funds of the customer and beneficial owners identified as PEPs (c.6.3). - Accountants required to conduct enhanced ongoing monitoring on relationships with PEPs per Article 37(1)2d WT-ARL and Article 20(1)2d BiBu-ARL (c.6.4). - Effective implementation of CDD requirements with respect to PEPs appears limited due to a general view among SROs and professionals that the profession is not exposed to this type of risks (paragraph 877). - Article 37(2) WT-ARL and Article 20(2) BiBu-ARL: accountants must pay special attention to services and transactions that might foster anonymity (c.8.1) and take measures if needed. - For non-face-to-face identification, risk-oriented measures include: - Written order delivered by registered letter to customer address; customer returns written order with enclosed legible copy of official photo identity card and written confirmation of a reliable warrantor (courts, state authorities, notaries, lawyers, credit institutions unless domiciled in noncooperating state). - First payment effected via account established on behalf of customer with institution subject to Directive 91/308/EWG as amended by 2001/97/EC. - No guidance issued for accountants to assess risks and no requirement to apply these policies during ongoing due diligence (c.8.2). - Article 38 WT-ARL and Article 21 BiBu-ARL: accountants permitted to rely on third parties to perform part of CDD relating to identification and verification of customer’s and beneficial owner’s identity; ultimate responsibility remains with accountant. Accountant must receive necessary information, at least copies of underlying documents (c.9.1, c.9.2 and c.9.5). - Article 38(2)2 WT-ARL and Article 21(2)2 BiBu-ARL: third parties must “meet the requirements set out in the Directive 2005/60/EC,” including Articles 14 to 19 of the Directive. No specific guidance for accountants on how to satisfy themselves that the third party is regulated and supervised and has measures to comply with CDD requirements (c.9.3 and c.9.4). - Article 41 WT-ARL and Article 24 BiBu-ARL: accountants must keep identification documents for a minimum of five years after last business with the customer; documents on “transactions and business relationships, vouchers and records as far as available” also to be kept for minimum five years. Expression “as far as available” undefined; no requirement to keep records longer if requested by a competent authority upon proper authority (c.10.1 and c.10.2). - Article 39(6) WT-ARL and 22(6) BiBu-ARL: accountants must furnish competent authority, at its request, with all information it deems necessary for prevention or prosecution of ML. Authorities consider this information to be provided without a court order, but accountants do not generally share this understanding; obligation covers ML, not FT (c.10.3). - Article 39(2) WT-ARL and Article 22(2) BiBu-ARL: in reporting context, accountants required to pay special attention to activities and transactions particularly likely to be related to ML or FT, in particular complex or unusually large transactions and unusual patterns with no apparent economic or lawful purpose. Unclear whether this requirement is independent from reporting obligation; no clarifying guidance (c.11.1). - No requirements to examine background and purpose of such transactions, to set forth findings in writing, and to keep such findings available for competent authorities and auditors for at least five years (c.11.2 and c.11.3). ### Identified gaps and implementation limitations across DNFBPs - Lawyers and notaries: - Scope of CDD requirements unclear. - Identification and verification of beneficial owner not systematic. - Absence of enhanced due diligence for higher risk categories. - Weaknesses in the simplified CDD framework. - Absence of requirements concerning existing customers. - No requirement to pay special attention to all complex and unusual transactions. - Extent of CDD limited by wide definition of legal privilege. - Effective implementation limited by absence of guidance for lawyers. - Accountants: - Scope of CDD requirements unclear for accountants regulated by the WT-ARL. - General CDD requirements limited by reference to risk. - Identification and verification of beneficial owner not systematic. - Extent of CDD limited by wide definition of legal privilege. - Weaknesses in the simplified CDD framework. - No requirement to keep written findings of examination of complex and unusual transactions. - Lack of effective implementation of CDD requirements. - Casinos, real estate agents, dealers in precious stones and metals, and TCSPs: multiple coverage, guidance, and record-keeping gaps (see recommendations and compliance summary). ### Recommendations and remedial actions (paragraphs 887–886 summary) - All DNFBPs: - Review the requirements concerning PEPs. - Casinos: - Extend legal framework to cover all casinos operating in Austria. - Establish legal requirements of CDD for internet casinos. - Establish rules to determine basis upon which internet casinos are subject to AML/CFT requirements. - Set out legal obligation for casinos to perform CDD for all customers, including non EU/EEA citizens, when they engage in financial transactions equal to or above EUR 3,000. - Require specific review for higher risk categories and enhanced due diligence for higher risk customers, such as non-resident customers. - Require casinos to put in place appropriate management systems to determine whether a potential customer, a customer or the beneficial owner is a PEP. - Set out enforceable requirements for Internet casinos to address risks related to non-face-to-face transactions. - Require casinos to keep record of transactions. - Real estate agents, dealers in precious stones and metals, and TCSPs: - Effectively implement GewO requirements regarding TCSP activities; review Chamber of commerce’s business profiles of management consultant, office work (Büroarbeiten), and office services (Büroservice). - Require verification that any person purporting to act on behalf of the customer is so authorized. - Issue guidelines to determine extent of CDD measures on a risk-sensitive basis. - Require specific review for higher risk categories and enhanced due diligence for higher risk customers, such as nonresident customers. - Review simplified CDD framework in line with the standard. - Require setting forth and keeping findings of examination of complex and unusual transactions. - Effectively implement the CDD requirements. - Lawyers and Notaries: - Clarify scope of CDD requirements. - Eliminate reference to risk in the requirement to identify and verify the beneficial owner. - Require enhanced due diligence for higher-risk categories such as nonresident customers or private banking. - Review simplified CDD framework in line with the standard. - Adopt CDD measures concerning existing customers. - Require lawyers and notaries to pay special attention to all complex and unusual transactions. - Review disposition regarding legal privilege so it does not hamper CDD measures. - Issue guidance for lawyers to facilitate effective implementation. - Accountants: - Clarify scope of the CDD requirements. - Eliminate reference to risk in the general CDD requirement. - Eliminate reference to risk in the requirement to identify and verify the beneficial owner. - Review simplified CDD framework in line with the standard. - Require setting forth and keeping findings of examination of complex and unusual transactions. - Review disposition regarding legal privilege so it does not hamper CDD measures. - Effectively implement the CDD requirements. ### Compliance with Recommendation 12 — summary factors (R.12 rated PC) - All DNFBPs: some shortcomings in requirements concerning PEPs. - Casinos: - Absence of AML/CFT requirements for all casinos operating in Austria. - No legal framework for CDD requirements concerning Internet casinos. - No rules to determine basis upon which internet casinos are subject to AML/CFT requirements. - No legal obligation for casinos to perform CDD for all customers when they engage in financial transactions equal to or above EUR 3,000. - No specific review for higher risk categories and no enhanced due diligence for higher risk categories of customers, such as non-resident customers. - No legal obligation of record keeping of transactions. - No enforceable requirements for Internet casinos to address specific risks related to non-face-to-face transactions. - No appropriate management systems to determine whether a potential customer, a customer or the beneficial owner is a PEP. - Real estate agents, dealers and TCSPs: - Coverage of TCSP activities is not effective. - No requirement to verify that any person purporting to act on behalf of the customer is so authorized. - No guidelines issued to determine extent of CDD measures on a risk-sensitive basis. - No specific review for higher risk categories and no enhanced due diligence for higher risk categories of customers, such as non-resident customers. - Weaknesses of the simplified CDD framework. - No requirement to keep written findings of the examination of complex and unusual transactions. - Lack of effective implementation of CDD requirements. - Lawyers and notaries: - Scope of CDD requirements unclear. - Identification and verification of beneficial owner not systematic. - Absence of enhanced due diligence for higher risk categories. - Weaknesses of the simplified CDD framework. - Absence of requirements concerning existing customers. - No requirement to pay special attention to all complex and unusual transactions. - Extent of CDD limited by wide definition of legal privilege. - Effective implementation limited by absence of guidance for lawyers. - Accountants: - Scope of CDD requirements unclear for accountants regulated by the WT-ARL. - Limitation of general CDD requirements due to a reference to risk. - Identification and verification of beneficial owner not systematic. - Extent of CDD limited by wide definition of legal privilege. - Weaknesses of simplified CDD framework. - No requirement to keep written findings of the examination of complex and unusual transactions. - Lack of effective implementation of CDD requirements. ### Suspicious Transaction Reporting (R.16) — overview of DNFBP reporting obligations - Casinos: - STR requirements included in Article 25 GSpG and additional “Safety measures to prevent ML” approved by the MoF. - No STR requirements for electronic lotteries (internet casino). - Casinos must immediately inform the MoI if there is a suspicion or legitimate reason to assume a transaction of a visitor serves for ML or a visitor is a member of a terrorist association per Article 278b StGB or a visitor’s transaction serves for terrorism financing per Article 278d (c.13.1 and c.13.2). - Reference to TF definition in criminal code could influence casino’s decision to file a report; assessors consider broad definition of an STR will override this concern. - Reporting obligation implicitly refers to transactions suspected to serve ML as defined under Article 165 StGB; self-laundering is not included in reporting requirement. - Transactions should be reported regardless of amount, but no legal requirement to report attempted transactions in Article 25(6) GSpG (c.13.3). - Reporting requirement applies regardless of whether thought to involve tax matters (c.13.4). - Reporting requirements in GSpG implicitly refer to laundering of proceeds of all criminal acts that would constitute predicate offenses for ML in Austria; reporting obligation does not require reporting funds that are proceeds of criminal acts listed in Article 165 if there is no element demonstrating the transaction serves purpose of ML (additional c.13.5). - Real estate agents, dealers and management consultants: - Reporting provisions mainly included in Article 365t to 365x GewO. - Lawyers and Civil Law Notaries: - Professional regulations: notary or lawyer and competent regional Chamber as SRO obliged to report suspicions to the A-FIU (Article 8c RAO; Articles 36c and 154 NO). - Chartered public accountants and tax consultants: - Article 39, paragraph 2 and Article 42, paragraph 1, lit. b WT-ARL apply. - Accountancy professions: - Article 20, paragraph 2 and Article 25, paragraph 1, lit. b BiBu-ARL apply. *Source: _cr09298 - 867. It is difficult to assess the effective implementation of the CDD requirements related to PEPs* ### 897. The licensee applies a risk-based monitoring on the transactions, mostly in order to ensure ### _cr09298 - 897. The licensee applies a risk-based monitoring on the transactions, mostly in order to ensure ### Reporting obligations for designated trades and DNFBPs (Real Estate Agents, Dealers, Management Consultants; Lawyers, Notaries; Accountants, Tax Consultants) - Real Estate Agents, Dealers and Management Consultants: - Article 365u(1) GewO: designated trade persons are required to promptly inform on their own initiative where they know, suspect, or have reasonable grounds to suspect that ML or FT is being or has been committed. - Article 365n(1): money laundering means an offense pursuant to Article 165 StGB; self-laundering is not included in the reporting requirement (c.13.1). - Article 365n(2) GewO: terrorist financing means the provision of a financial contribution to support a terrorist group pursuant to Article 278b StGB, to commit a terrorist offense pursuant to Article 278c StGB or to complete the offense pursuant to Article 278d StGB; reporting covers suspicion that funds support terrorist organizations or those who finance terrorism even when there is no link to a terrorist act (c.13.2, c.IV.1). - Reporting obligations apply irrespective of any threshold and Article 365u(1) GewO covers attempted (“zu begehen versucht”) transactions (c.13.3). - Requirement to report suspicious transactions applies regardless of whether they are thought, among other things, to involve tax matters (c.13.4). - Lawyers and Notaries: - Article 8c(1) RAO and 36c(1) NO: lawyers and notaries must immediately inform the BKA if they know, suspect, or have a well-founded reason to suspect that the transaction serves the purpose of ML (Article 165 StGB); self-laundering is excluded; reporting obligation limited to ML (c.13.1). - Reporting obligation narrower than the standard which mentions funds that are proceeds of a criminal activity (c.13.1). - Reporting obligation does not apply to information received or obtained when providing legal advice or when representing the client before court or before a preceding authority or public prosecution office—unless the client has evidently made use of the legal advice for the purpose of ML or FT (c.13.1). - Same reporting obligation for terrorism financing (Article 278d StGB); cross-reference to criminal code TF definition may create technical shortcomings but assessors note broad STR definition will override this concern (c.13.2). - RAO and NO do not mention thresholds and include attempted transactions (c.13.3). - Requirement to report applies regardless of suspected tax matters (c.13.4). - Chartered Public Accountants, Tax Consultants and Accountancy Professions: - Article 39(2) WT-ARL and Article 22(2) BiBu-ARL: must promptly inform the A-FIU if they know, suspect or have reasonable grounds to suspect that ML or FT within the meaning of the StGB is being or has been committed; self-laundering excluded; reporting limited to ML (c.13.1). - Article 39(1) WT-ARL and Article 22(1): accountants may report to the authority “only after having carefully assessed all circumstances.” - Article 39(6) WT-ARL and Article 22(6) BiBu-ARL: reporting obligation does not apply to information obtained in the course of ascertaining the legal position for their client or defending/representing that client in proceedings, unless the accountant knows the client uses the legal advice intentionally for ML or FT (c.13.1). - Article 39(2) WT-ARL and Article 22(2) BiBu-ARL also oblige to make an STR when accountants know, suspect or have reasonable grounds to suspect FT as defined in the StGB; cross-reference to TF criminal code definition may raise technical concerns but assessors accept broad STR definition mitigates this (c.13.2). - WT-ARL and BiBu-ARL require reporting attempted transactions but do not clearly require reporting occasional transactions amounting to less than EUR 15,000 (c.13.3). - Requirement to report applies regardless of suspected tax matters (c.13.4). ### Implementation, practical impediments, and statistics of STRs by DNFBPs - Low level of reporting by designated trade persons overall; explanations include recent inclusion of professions in AML/CFT framework, need for more training, and structural concerns related to Austrian criminal procedure where reported persons may learn who filed the STR (c.13.1). - Assessors note limitations of flexible A-FIU relations with large numbers of DNFBPs (tens of thousands) or hundreds of single entities for most active or at risk (c.13.1). - Statistical Table 30. STRs filed by DNFBPs (annual counts preserved exactly as presented): - Casinos: 2004 2, 2005 1, 2006 0, 2007 1 - Lawyers: 2004 1, 2005 4, 2006 4, 2007 1 - Notaries: 2004 2, 2005 3, 2006 2, 2007 3 - Accountants: 2004 0, 2005 0, 2006 1, 2007 1 - Real Estate Agents: 2004 0, 2005 1, 2006 0, 2007 1 - Dealers: 2004 3, 2005 1, 2006 3, 2007 4 - TCSPs: 2004 0, 2005 2, 2006 2, 2007 2 - Total: 2004 8, 2005 12, 2006 12, 2007 13 ### Self-regulatory organizations (SROs) and cooperation with the FIU (c.16.2, c.16.3) - Four types of SROs in Austria: the Bar Association, the Chamber of Notaries, the Economic Chamber for Chartered Public Accountants and Tax Consultants, and the Parity Commission for the Accountancy Professions. - None of these SROs are established as bodies to be informed in the first instance in place of the A-FIU. - For lawyers, notaries and accountants, the STR has to be sent to the BKA/A-FIU. - Article 8c(1a) RAO and Article 36c(1a) NO allow the lawyer and the notary to inform their respective SROs. ### Application of R.14, R.15 and R.21 to DNFBPs; Casinos specifics (c.14.1–c.14.3, c.15.1–c.15.4, c.21) - Land-Based Casinos: - Article 25(6) GSpG: Article 41(7) BWG applies to casinos; claims for damages should not be permitted based on a casino or its employees delaying or failing to execute a transaction on negligent lack of knowledge that the suspicion of ML or terrorism financing was wrong (c.14.1). - Article 25(6) GSpG: Article 41(3b) BWG applies to casinos regarding limits to prohibition from disclosing to third parties (c.14.2). - Article 25a GSpG: Article 41(4) BWG applies to casinos concerning Recommendation 15; a compliance officer has been nominated to cover ML/FT purposes for CASAG and ÖLG with responsibilities including internal policies, awareness, access to customer identification data, and transaction records. - Compliance officer activities: visits to casinos to train staff and top management; coordination with internal audit; one four person team of internal audit makes surprise visits; AML/CFT hotline operates 24/7; background checks on hiring; in CASAG compliance officer reports to head of legal and European affairs department (c.14.2–c.14.3). - No specific requirements to give special attention to business relationships and transactions with persons from countries which do not or insufficiently apply the FATF Recommendations; authorities consider it part of the risk-based approach and that FATF International Cooperation Review Group (IRCG) information should be taken into account (c.21). - Internet Casinos: - Legal framework does not establish requirements in relation to R.14, R.15 and R.21. - Licensee has a “fraud and collusion” team trained on ML/FT (R.15). - R.21 application limited to foreign persons residing in Austria due to residence criteria for online play. - Real Estate Agents, Dealers, Management Consultants and Insurance Intermediaries: - Article 365u(2) GewO: reporting of suspicion should not constitute a breach of any restriction on disclosure imposed by contract or legislation and should not lead to liability; no mention of necessity to have reported in good faith to the A-FIU (c.14.1). - Article 365x(1) GewO: prohibition on disclosing to the customer or other third persons that information has been transmitted under Article 365u GewO or that an ML or FT investigation is being or may be carried out; Article 365x(2) GewO excludes disclosure to competent authorities or law enforcement (no definition of competent authority) (c.14.2). - Austrian criminal procedure specifics may result in the STR ultimately being known by the reported person (c.14.3). - Article 365z(1) GewO: designated tradespersons must establish adequate and appropriate policies for CDD, reporting, record keeping, internal control, risk assessment, risk management, compliance management and communication; provisions are recent and not currently implemented across the trade business (c.15.1). - Authorities interpret “adequate and appropriate” as proportional to ML/FT risk and size of business; no general mandatory requirement to develop compliance management arrangements, audit function, or ongoing employee training given small size of enterprises (c.15.1–c.15.3). - Article 265z(2) GewO: designated tradespersons must take measures so relevant employees are aware of provisions on prevention of ML and FT, including participation in ongoing training programs; MoI must inform WKO on money launderer and terrorist financer practices; some regional meetings with A-FIU organized (c.15.3). - No specific screening procedures in GewO for hiring employees to ensure high standards for ML/FT prevention; general GewO Article 13(1) excludes persons sentenced to imprisonment of more than three months or a fine of more than 180 daily rates if sentence not removed from criminal record (c.15.4). - Article 365t GewO: tradespersons must pay special attention to activities they regard as particularly likely related to ML or FT, but no regulation requires special attention to business relationships with persons from or in countries which do not or insufficiently apply the FATF Recommendations (c.21.1 and c.21.2). - Lawyers and Civil Law Notaries: - Article 9(5) RAO and 37(5) NO: reporting of suspicion by a lawyer or notary in good faith should not constitute breach of disclosure restrictions or lead to liability (c.14.1). - Article 36b NO and 8b RAO: notary or lawyer may inform authorities responsible for the fight against ML and FT, the SRO and public prosecution authorities of reported suspicions or notifications to MoI; Article 36c(1a) NO and 8c(1a) RAO permit passing information within the office or partnership; permitted cross-border disclosure to lawyers/notaries in EU Member States or third countries with similar requirements if involved in the transaction (c.14.2). - STR can ultimately be known by the reported person due to criminal procedure specifics (c.14.3). - Article 36a(2) RAO and 8a(2) NO: lawyers and notaries required to establish and maintain internal procedures, policies and controls to prevent ML and FT and communicate them inside firms; designation of an AML/CFT compliance officer is not mandatory (c.15.1). - Firms are not required to maintain an adequately resourced and independent audit function to test compliance (c.15.2). - Article 21b(2) RAO and Article 117(1) NO: lawyers and notaries required to establish training for employees on provisions to prevent or fight ML or FT (c.15.3). - No specific screening procedures for hiring employees in AML/CFT provisions; registration and appointment rules include suitability and “good character” provisions for lawyers (Article 5(2) RAO) and notaries (Article 6(1) and Article 7(2) NO) (c.15.4). ### Key legal and procedural cross-cutting points - Self-laundering is consistently excluded from the reporting obligations under definitions referencing Article 165 StGB across several professions (c.13.1). - Reporting obligations frequently narrow the AML/CFT standard by limiting reporting to ML as defined in the StGB rather than to funds that are proceeds of a criminal activity (c.13.1). - Cross-references to criminal code definitions of TF (Articles 278b–278d StGB) introduce potential technical shortcomings that assessors consider largely theoretical due to broad STR definitions applied in practice (c.13.2). - Attempts/attempted transactions are generally covered by reporting obligations (explicitly noted in multiple statutes) (c.13.3). - Confidentiality and non-liability protections for reporting are present for several professions, but specifics and definitions (e.g., “competent authority”) may be lacking (c.14.1–c.14.2). - Implementation gaps noted: many provisions are recent and not yet implemented across the affected trade businesses; training, structured risk assessments, compliance arrangements, and screening practices are unevenly applied or absent (c.15.1–c.15.4). *Source: _cr09298 - 897. The licensee applies a risk-based monitoring on the transactions, mostly in order to ensure* ### 928. Lawyers or notaries are not specifically required to give special attention to business ### _cr09298 - 928. Lawyers or notaries are not specifically required to give special attention to business ### Lawyers and Notaries: reporting and professional secrecy - Lawyers or notaries are not specifically required to give special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations (c.21.1 and c.21.2). - Scope of legal privilege: - The scope of the legal privilege for lawyers and notaries "severely limiting the requirement to report STRs" is identified as a shortcoming under R.16. - Monitoring and supervision: - For lawyers, AML/CFT compliance is primarily governed by the RAO, the Disciplinary Statute for lawyers and lawyer-candidates (Disziplinarstatut – DSt, Federal Law Gazette Nr. 474/1990), and Directives of the Austrian Bar Association (RL-BA 1977). - For civil law notaries, the MoJ has ultimate supervisory authority; presidents of courts of first- and second-instance supervise practice. Regional Chambers of Civil Law Notaries (SRO) monitor professional conduct (Article 153 NO). ### Chartered Public Accountants, Tax Consultants, and Accountancy Professions: duties, secrecy, and controls - Reporting protection and secrecy: - Reporting of suspicion by an accountant in good faith should not constitute any breach of any restriction on disclosure imposed by contract, or by any legislative, regulatory or administrative provision, and should not lead to liability for accountants, their managerial staff or their employees (Article 39(8) WT-ARL and Article 22(8) BiBu-ARL) (c.14.1). - Accountants, managerial staff and employees are prohibited from disclosing to the customer or third persons that an STR or related information has been transmitted to the A-FIU or that a ML or FT investigation is being or may be carried out (Article 4,(1) WT-ARL and Article 23(1) BiBu-ARL). Exceptions and conditions: - Prohibition does not apply to non-national accountants who perform professional activities within the same company or network; "Network" refers to the larger structure sharing common ownership, management or compliance control (Article 40(2) WT-ARL and Article 23(2) BiBu-ARL). - Information may be disclosed exclusively for preventing ML and FT to other persons entitled to practice said professions if it concerns the same customer and the same transaction; disclosure to non-national persons is only permitted if they are subject to equivalent requirements and obligations on professional secrecy and personal data protection (Article 40(3) WT-ARL and Article 23(3) BiBu-ARL). - Seeking to dissuade a customer from engaging in illegal activity is not considered a disclosure to the customer (Article 40(3) WT-ARL and Article 23(3) BiBu-ARL) (c.14.2). - Due to the specificity of the Austrian criminal procedure, the STR can ultimately be known from the reported person (additional element–c.14.3). - Internal controls and AML/CFT obligations: - Accountants must establish adequate and appropriate policies and procedures to prevent ML and FT covering CDD, record keeping, reporting of suspicions, risk assessment and risk management, and suitable control and information systems at their offices (Article 42(1) WT-ARL and Article 25(1) BiBu-ARL) (c.15.1). - There is no requirement to designate an AML/CFT compliance officer at firm level; authorities consider most accountancy services are provided by single professionals or very small offices where such a requirement would be excessive (c.15.1). - Accountants are not required to maintain, at firm level, an adequately resourced and independent audit function to test compliance with AML/CFT procedures, policies and controls (c.15.2). - Accountants are required to familiarize personnel with AML/CFT provisions and ensure participation in special training programs, but there is no specific requirement to keep employees informed of new developments, including current ML and FT techniques, methods and trends (Article 42(2) WT-ARL and Article 25(2) BiBu-ARL) (c.15.3). - No specific screening procedures are required to ensure high standards when hiring employees; Article 8(1) BiBu only mentions examining candidates “for their professional and personal aptitudes” (c.15.4). - Accountants are not required to give special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations (c.21.1 and c.21.2). - Extension of reporting requirement: - Reporting requirement extends to all activities of accountants, including auditing (Article 32(2) WT-ARL and Article 15(2) BiBu-ARL) (additional element – c. 16.5). - Supervisory authorities: - Competent supervisory authority for Chartered Public Accountants and Tax Consultants is the Chamber of Chartered Public Accountants and Tax Consultants. - Competent supervisory authority for the Accountancy Professions is the Parity Commission for the Accountancy Professions. ### Recommendations and identified actions for DNFBPs - All DNFBPs: - Align the grounds for reporting on the standard. - Give special attention to business relationships and transactions with persons from countries insufficiently applying the FATF recommendations. - Casinos: - Require Internet casinos to report STRs and specify AML/CFT internal controls. - Real estate agents, dealers and TCSPs: - Effectively extend the legal obligation to report STRs and have internal control in place to all businesses and professions conducting TCSP activities. - Lawyers and notaries: - Consider reviewing the matters that fall under legal professional secrecy of notaries and lawyers, which currently appear very broad. - Accountants: - Consider reviewing the matters that fall under legal professional secrecy of accountants, which currently appear very broad. ### Compliance with Recommendation 16 (R.16) — summary factors - Overall rating: PC - All DNFBPs: - Scope of STRs too narrow. - Effectiveness questions due to extremely low level of STRs. - No requirements to give special attention to business relationships and transactions with persons from countries insufficiently applying the FATF recommendations. - Casinos: - No requirements for internet casinos. - Real estate agents, dealers and TCSPs: - Absence of effective coverage of TCSPs. - Lawyers and notaries: - Scope of the legal privilege severely limiting the requirement to report STRs. - Accountants: - Scope of the legal privilege severely limiting the requirement to report STRs. ### Regulation, supervision, and monitoring of DNFBPs (R.24-25) — selected points - Casinos: - Licenses for casinos and electronic lotteries are granted by the MoF under Article 14(1) GSpG for lotteries (including electronic lotteries) and Article 21(1) for Casinos covered by the State Monopoly; licensees are supervised by the MoF (Article 19 GSpG for lotteries; Article 31 GSpG for Casinos) (c.24.1). - MoF supervises implementation of AML/CFT requirements in the 12 licensed casinos. - Sanctions: Article 23 and 52 GSpG; administrative offense punishable with fines up to EUR 22,000 for persons responsible who violate duties in Article 25.6 to 8 (Article 52.8 GSpG). Sanctions target directors and senior management; legal persons generally not sanctioned except license withdrawal. - If MoF suspects a transaction serves ML or FT, it must inform the MoI (Article 25.8 GSpG) — introduced in July 2008 amendments. - Supervision is generally done by one inspector covering the 12 casinos; each casino is inspected once a year. An inspection generally lasts for 6 to 10 hours, with 1 to 2 hours dedicated to AML/CFT measures. No sanction has been pronounced in the last ten years for AML/CFT or other breaches. - A specific department of the Local Tax Authority for Fees and Transaction Taxes checks each casino and reports to the MoF quarterly; no report has triggered supervisory measures for breach of AML/CFT compliance. - MoF requires casino licensees to establish a special security department (Interne Systemkontrolle) reporting to the MoF quarterly. - Internet casino: - Supervised by the MoF as part of the licensee overseeing the lottery (Article 19(1) GSpG), but in the absence of legal ML/FT provisions for lotteries, the supervisor has no legal basis to ensure AML/CFT measures are implemented in the Internet Casino. Authorities consider risk of misuse very low; assessors note Recommendation 24 does not allow risk to determine extent of supervision and highlight client identification weaknesses. - Licensing and ownership controls: - Conditions to grant a license listed in Articles 14 (lotteries) and 21 (casinos) GSpG include absence of criminal records of managers and absence of shareholders exercising a dominating influence detrimental to public order. Law does not require specific control on beneficial owners of significant or controlling interest. - All shares of the licensee must be deposited at a licensed credit institution; MoF can block changes in shareholding and must be informed on shareholders’ identity once a year. Appointments to executive board and certain supervisory board positions require MoF approval. Employees of the licensee are not allowed to acquire any shares (Article 27, paragraph 2 GSpG). - Current structure of CASAG ownership appears transparent: Federal State (Austrian Mint) for one third, Austrian banks and insurance companies for one third, remainder mostly historical individual shareholders. - Monitoring systems for other DNFBPs: - Authorities have not performed a comprehensive risk assessment to determine appropriateness of monitoring systems for other DNFBPs; no documented risk analysis for each sector (c.24.2). - Real estate agents, dealers and management consultants: - Local district authorities (120 districts) are responsible for monitoring and ensuring compliance with AML/CFT requirements (Article 365m(4) GewO). In places with federal police offices, police should help local district authorities; no specific cases of cooperation documented (c.24.2.1). - Trade authorities must monitor compliance on a risk-sensitive basis, can compel production of information and perform on-site inspections. Sanctions: - Fine up to EUR 3,600 for infringement of obligation in Article 365u to promptly inform the A-FIU or to furnish necessary information and documents (Article 366 GewO). - Fine up to EUR 2,180 for infringement of provisions Article 365m to 365z GewO (Article 367 GewO). - Permission to trade can be cancelled; fees can be imposed on legal persons or registered companies for infringements (Article 370 GewO) (c.24.2.1.a). - Supervisory authorities for DNFBPs (Statistical Table 31 summary): - Casinos: Supervision/Monitoring — MoF; Regulation — MoF. - Real estate agents: Supervision/Monitoring — Local district authorities (+ Federal Police Article 336); Regulation — MoE. - Dealers in precious metals and stones: Supervision/Monitoring — Local district authorities (+ Federal Police Article 336); Regulation — MoE. - Lawyers: Supervision/Monitoring — Bar Association; Regulation — MoJ. - Notaries: Supervision/Monitoring — Chamber of Civil Law Notaries; Regulation — MoJ. - Accountants: Supervision/Monitoring — MoE/Chamber of Chartered Public Accountants and Tax Consultants/Parity Commission for the MoE; Regulation — MoE. - Accountancy Professions: Supervision/Monitoring — Parity Commission for the Accountancy Professions; Regulation — MoE. - TCSPs: Supervision/Monitoring — Local district authorities (+ Federal Police Article 336); Regulation — MoE. *Source: _cr09298 - 928. Lawyers or notaries are not specifically required to give special attention to business* ### 960. According to the authorities, approximately 100 visits have been performed by the local ### _cr09298 - 960. According to the authorities, approximately 100 visits have been performed by the local ### Trade inspection visits and capacity - Approximately 100 visits have been performed by the local district authorities since 2002, including 91 in Vienna only. - No sanction has ever been pronounced; in one region written warnings on compliance were delivered. - Size of inspection teams varies by district; in Vienna: - Trade inspection staff: 70 - Four person competence group specialized in difficult rules under the Trade act, including AML/CFT requirements - Trade inspectors trained to AML/CFT in January 2008 - Ninety-one inspections have been performed randomly during the last three years. - Current gaps: - No risk-based monitoring and the specific risks of each profession have not been extensively studied. - Problem of resources in staffing and expertise in criminal and financial issues. - Controls depend totally on the priorities of the local district authorities. - Developments: Meeting of heads of trade authorities of the nine Austrian States in Krems in September 2008 identified: - Finalization of a checklist for the execution of controls - An Austrian-wide strategy on the activities of the authorities addressing concrete ML/FT threats based on information from police or trade authorities - Decisions on cooperation between central and non-central units and between police and trade authorities ### Designated competent authorities / SROs — Lawyers - Board of the Bar Association (Ausschuss der Rechtsanwaltskammer) where the lawyer is registered is responsible SRO for monitoring compliance with professional regulations including AML/CFT (Article 1, paragraph 3 DSt, Article 23, paragraph 2 RAO). - Bar Association duties include supporting and representing professional, social and economic interests, protecting honor, image, rights and independence, and monitoring compliance (Article 23(2) RAO). - Governance: - Members of the Board elected for a term of three years (Article 24 RAO). - Disciplinary offenses handled by Disciplinary Council (Disziplinarrat) established by each Bar Association (Article 1, paragraph 2 DSt). - Disciplinary Council members elected for a term of three years (Article 7 DSt). - Bar lawyer (Kammeranwalt) appointed (Article 5 DSt) to investigate disciplinary cases. - Visits conducted on suspicion or randomly; during visits files, copies of correspondence or bank accounts can be requested. - Appeal and enforcement: - Supreme Appeals and Disciplinary Commission (Oberste Berufungs- und Disziplinarkommission, OBDK) is court of appeal and consists of two judges of the Supreme Court and two lawyer judges, with a Courts of Appeal judge as chair. - Decisions executed by the Board; removals must be reported to Ministry of Justice and other courts and published on Austrian Bar Association website and in the Austrian Lawyers’ Journal (Article 70 DSt). - MoJ has supervisory rights over disciplinary proceedings (Article 78 DSt). - Sanctions: - Disciplinary Council may impose sanctions ranging from written warnings, to fines up to EUR 45,000 and debarring from the lawyers’ profession for up to one year, up to deletion from the list of lawyers (Article 16 DSt). - Interim measures may be applied when criminal proceedings are held, or a lawyer has been found guilty, or removal imposed, or insolvency proceedings requested. - Interim measures include supervision of law firm management, exclusion of rights to represent, interdiction to admit trainees, or interdiction of exercise of the profession (Article 19 DSt). - Interaction with criminal proceedings: - Disciplinary Council must report to the public prosecutor if conduct constitutes suspicion of a criminal act (Article 23 DSt). - Public prosecutor and criminal court must inform the bar lawyer of investigations and send final decisions. - Disciplinary sanctions and criminal penalties may both apply; disciplinary sanctions have been pronounced based on AML provisions of the RAO, including deletions from the list of lawyers. ### Civil law notaries — supervision and sanctions - Competent regional Chamber of Civil Law Notaries (SRO) obliged to examine notaries’ files and verify compliance with provisions to prevent or fight ML or FT (Article 154 NO). - Dedicated teams review all notaries, including AML/CFT requirements, on a three year basis; random controls on about 10 percent of notaries every year. - Reporting and discipline: - If facts related to ML or FT detected, suspicion must be reported to the A-FIU/BKA. - Violations in AML/CFT are professional breaches sanctioned as major disciplinary offenses by the higher regional court after a hearing by the senior public prosecutor, or as minor offenses by the regional Chamber (Article 155 NO). - Monitoring outcomes 2005–2008: - 16 cases passed to the higher regional court during the period 2005–2008 - 5 notaries were convicted - One of these cases was ML-related, in 2008 - Scale of sanctions for major offenses: written reprimand or a fine of up to EUR 36,000 to suspension from office for up to one year or debarring from office. - Sanctions for minor offenses: cautioning on professional duties, admonition in writing or admonition in writing with a fine of up to EUR 7,200 (Article 158 NO). ### Chartered public accountants, tax consultants, and accountancy professions - Chamber of Chartered Public Accountants and Tax Consultants: - In charge of monitoring the profession; subordinated to the MoE (Articles 145-162 WTBG). - Detailed duties in Article 146 WTBG. - Official professional representation with magisterial character; registration required and registration requires freedom from former convictions for crimes. - However, the Chamber has no specific powers to monitor and ensure compliance with AML/CFT requirements and no power to apply effective, proportionate and dissuasive sanctions to these professions. - Parity Commission for the Accountancy Professions: - In charge of monitoring the profession; subordinated to the MoE (Articles 91-95 BiBuG). - Has no specific powers to monitor AML/CFT compliance and no power to apply effective, proportionate and dissuasive sanctions. ### Guidance, feedback and DNFBP-specific measures - Casinos: - Guidance contained in “AML/CFT Safety Measures” issued by the licensee in cooperation with the MoF in 2007 and updated on October 8, 2008 to take into account amendments to the GSpG. - Guidance enforceable by the MoF pursuant to Articles 19 and 31 GSpG. - Article 25a GSpG and Article 25(6) reference Article 41, paragraph 2 last two sentences BWG make MoI responsible for guidance to casinos, but no tailored guidance has been issued. - Real estate agents, dealers, management consultants and insurance intermediaries: - Article 365z, paragraph 4 GewO obliges MoI to inform tradespersons via professional chambers about methods of ML and FT and hints on suspicious transactions. - No specific guidelines established by the A-FIU, the MoE, or the WKO; explanatory notes to GewO amendments exist but are not easy tools for tradespersons. - Lawyers: - Guidance currently prepared by the Bar Association in cooperation with the MoJ, but not yet finalized. - Civil law notaries: - Austrian Chamber of Civil Law Notaries compiled a non-binding guidance for Austrian notaries updated in April 2008. - Accountants: - MoE, the Chamber or the Parity commission have not issued guidance for accountants. - Feedback to DNFBPs: - General feedback appears in the A-FIU Annual report but is limited due to limited number of STRs received from DNFBPs. - No evidence of systematic case by case feedback from meetings with business and professions. - For casinos, MoI must, as far as practicable, ensure licensee receives feedback regarding effectiveness of notices of suspicion per Article 25(6) and (7) and measures taken; new Article 25a enacted July 2008 — implementation not assessable at time of assessment. - Past exchanges between A-FIU and casinos were few and without systematic feedback on STRs. - For GewO-regulated professions, two presentations took place (June 2003 and October 2007 in Carinthia); feedback to tradespersons is at an early stage. ### Recommendations and compliance assessment - Recommendation 24 (authorities should): - Give the Ministry of Finance adequate powers to perform AML/CFT supervision of internet casinos; - Empower the Ministry of Finance to perform controls on the beneficial owners of a significant or controlling interest in casinos, and to prevent actions by associates of criminals; - Put in place a system for monitoring and ensuring compliance with AML/CFT requirements to cover accountants and all the companies active in the TCSP sector; - Give trade authorities the necessary technical and budgetary resources to perform effectively their functions; - Review the amount of the fines permissible under the GewO. - Recommendation 25 (authorities should): - Establish guidelines tailored to the specific needs of each DNFBP, as these currently exist only for notaries, and partially for casinos; - Provide information on current techniques, methods and trend tailored to each DNFBP, as well as systematic case by case feedback on STRs. - Compliance ratings and factors: - R.24 PC - Absence of adequate powers to perform supervision of internet casinos. - Absence of power to control beneficial owners of significant or controlling interest in casinos, and to prevent actions by associates of criminals. - Absence of systems for monitoring and ensuring compliance with AML/CFT requirements for accountants and companies active in the TCSP sector. - Lack of effectiveness and resources to implement GewO measures. - Inadequate sanctioning powers. - R.25 LC - Absence of guidelines for all DNFBPs but notaries and casinos. - Limited general feedback tailored to the specific needs of each DNFBP, and absence of systematic case by case feedback on STRs. ### Other DNFBPs and modernization of transactions - Coverage under GewO: - GewO applies to all dealers and auctioneers when doing cash transactions above EUR 15,000 (not limited to dealers in precious stones and metals). - AML/CFT requirements apply to all accountants regardless of business activity (see Chapter 4.2, c. 16.5). - Inclusion of these businesses and professions was not based on a specific risk analysis; authorities consider professions covered by the GewO present a low ML/FT risk. - E-payments and cash usage: - Initiative “e-payments in the public administration” promotes cashless payments in public departments and offices; in 2007 these transactions amounted to approximately EUR 143 million. - Cash payments by Federal authorities to citizens are being reduced systematically. - Cash circulation and high-denomination notes: - Customs statistics indicate declaration by cash couriers estimated to an average of EUR 1 billion each quarter. - Net number of 500 Euros banknotes issued (Banknotes issued–Banknotes withdrawn) increased by more than 250 percent between July 2007 and July 2008. - Authorities noted not all 500 Euros banknotes have been disseminated in Austria; some Austrian banks active in foreign exchange cash clearing for financial institutions in Eastern and South-Eastern Europe. - OeNB involvement noted for initial demand for Euro banknotes in Slovenia and Slovakia; Slovenia introduced the Euro in 2008, which is considered a reason for the increase after July 2007. *Source: _cr09298 - 960. According to the authorities, approximately 100 visits have been performed by the local* ### 990. The authorities have not provided information on the measures they are taking to encourage ### _cr09298 - 990. The authorities have not provided information on the measures they are taking to encourage ### Cash use, currency exchange, and supervision - The authorities have not provided information on the measures they are taking to encourage the development and use of modern and secure techniques for conducting financial transactions that are less vulnerable to ML, except for transactions with the public administration. - No specific measures related to AML/CFT were taken in the context of the currency changeover of neighboring countries: - Slovenia (January 2008) - Slovakia (January 2007) - No comprehensive analysis of the AML/CFT risks related to currency exchange and cash couriers has been conducted. - Supervision of banks active in the currency exchange appears currently limited. ### Recommendations and comments (section 4.4.2) - The authorities should conduct a domestic analysis to determine the risk for dealers, other than dealers in precious metals and stones, of being misused for ML or FT. - The authorities should consider whether other non-financial businesses and professions are at risk of being misused for ML or FT. - The authorities should: - take additional measures to reduce the relative importance of use of cash and large denomination banknotes. ### Compliance with Recommendation 20 (section 4.4.3) - R.20: LC - Summary of factors underlying rating: - Insufficient measures to reduce the relative importance of use of cash and large denomination banknotes. ### Legal persons and access to beneficial ownership and control information (R.33) - Legal persons recognized under Austrian law include: - Limited liability company; - Joint-stock company; - European Society; - Cooperative society; - European cooperative; - Association; and - Private foundation. - Legal persons come into legal existence by registration in the Commercial Register, maintained at the courts of first instance on commercial matters (Firmenbuchgericht). - The Commercial Register is accessible online to the public via special websites authorized by the MoJ with a small fee. - The Commercial Register is administered at Regional Court level; there are a total of 16 courts dealing with matters of the Commercial Register. - Newly formed corporations must record their articles of incorporation and submit the application signed by all founders, members of the supervisory board and the board of management to the court responsible for the Commercial Register. - When the court decides that all statutory requirements have been complied with, it will order the registration and publication in the official gazette (“Amtsblatt zur Wiener Zeitung”) and through the Internet (Ediktsdatei, available via www.edikte.justiz.gv.at). - Associations must register with the relevant “Vereinsbehörde” (local district authority or Federal Police Directorate) and are listed in the Central Register of Associations (ZVR), a public register kept by the MoI and accessible online (http://zvr.bmi.gv.at/Start). - Foreign corporations can establish branch offices in Austria and must be entered in the Commercial Register; disclosure requirements for foreign branches are applied analogically based on the type of mother company in the incorporating jurisdiction. ### Limited Liability Company (Gesellschaft Mit Beschränkter Haftung, Ges.M.B.H.) - Formed under the Austrian Limited Liability Companies Act (GmbHG). - Minority information: - Minimum capital: EUR 35,000. - A supervisory board is obligatory if either the subscribed capital exceeds EUR 70,000 and the number of shareholders exceeds 50 or there are more than 300 employees. - A notarial deed is required for formation. - Registration requirements include authenticated statutes, list of shareholders, list of appointed managers, managers' affidavit on minimum capital retention, specimen signatures, and tax authority confirmation on capital transaction tax. - Identity (name, date of birth) of directors and shareholders (natural or legal persons, name and date of birth respectively registration number) is disclosed and maintained at the Commercial Register. Every change to a shareholder’s identity must be registered. Shareholders not registered are precluded from exercising rights vis-à-vis the company; non-compliance is punishable by fine. - As of December 1, 2007 there were 110,997 limited liability companies listed in the Commercial Register. ### Joint-Stock Company (Aktiengesellschaft, AG) - Regulated under the Stock Corporation Act (Aktiengesetz, AktG). - Minimum capital stock: EUR 70,000. - A supervisory board is obligatory; a general meeting of shareholders (“Hauptversammlung”) must be held annually. - Notarial deed required for formation; registration requirements mirror those for limited liability companies. - Identity (name, date of birth) of directors and members of the supervisory board is maintained in the Commercial Register. - Share issuance: - Can issue nominative or bearer shares (bearer shares up to 100 percent of the capital). - If listed in the Stock exchange, must comply with BörseG. - Authorities informed that in the Stock Exchange shares are only traded in a bearer form and that shares are “de facto” de-materialized. - Shareholder registration: - If there is only one shareholder, his/her name is maintained in the Commercial Register. - If more shareholders, their names are not maintained by the Commercial Register irrespective of share type. - For nominative shares, a shareholders’ register is kept by the company and is open to inspection to any shareholder; transfer of nominative shares must be notified to the company and registered. - As of December 1, 2007 there were 2,057 Joint-stock companies listed in the Commercial Register. ### European Company (Societas Europaea, SE) - Regulated by Council Regulation (EEC) no. 2157/2001 and the Austrian Societas Europaea Act (SEG). - Registration and disclosure requirements same as a joint stock company. - As of December 1, 2007, there were 10 European Companies registered in the Commercial Register. ### Cooperative Society and European Cooperative Society - Cooperative Society (Erwerbs- Und Wirtschaftsgenossenschaft): - Corporation without a fixed number of members; purpose to assist members. - Registered in the Commercial Register; members’ identities not disclosed in the Commercial Register. - Cooperative must keep a register of its members and make it available for inspection. - As of December 1, 2007, there were 1,900 cooperative societies registered in the Commercial Register. - European Cooperative Society (SCE): - Regulated by Council Regulation (EEC) no. 1435/2003 and the Austrian SCEG. - Subscribed capital must not be less than EUR 30,000. - Registration and disclosure requirements are the same as those of a Cooperative Society. - As of December 1, 2007, there was no European Cooperative Society listed in the Commercial Register. ### Association (Verein) - Voluntary, permanent organization of at least two persons; must not be profit-oriented. - Regulated by the Associations Act (Vereinsgesetz, VerG). - Statutes must contain name and seat, purpose, intended activities, means of covering financial needs, membership and organizational information. - Governance: - General meeting convened at least every four years. - Governing body of at least two persons (“two pairs of eyes”/dual control). - Annual financial review by at least two auditors; large associations must appoint a statutory auditor. - Foundation process: - Established through agreement of statutes (Deed of Establishment); legal capacity after four-week period or earlier affirmative decision by association authority. - Association authority can extend the period to six weeks if inspection is needed; may refuse authorization or dissolve an association under certain legal circumstances. - All associations are listed in the public register (ZVR); data retrievable via free online queries unless a non-disclosure right was granted. - As of December 31, 2007, there were 111,282 associations listed in the Central Register of Associations. ### Private Foundation (Privatstiftung) - Regulated by the Law on private foundations (Privatstiftungsgesetz, PStG). - Minimum amount of assets to endow a private foundation: EUR 70,000 (can be cash certified by a bank or in kind). - Can be established inter vivos or mortis causa; may serve personal interests; strict prohibition on engaging in commercial activities except those necessarily connected with trusteeship. - Founding deed must be authenticated by a public notary and filed with the Commercial Register; must indicate founder/grantor, scope, names of board of trustees and supervisory board when required. - Beneficiaries can be nominated in the founding deed (names accessible at the Commercial Register) or in an appendix/supplementary declaration not registered at the Commercial Register and not otherwise accessible. If a beneficiary receives payments, this must be declared to the tax authorities and then the beneficiary’s identity becomes known to tax authorities. - No limitations for non residents to set up private foundations or to be beneficiaries. - Tax incentives historically include a flat rate of 2,5 percent inheritance or donation tax when endowed by its grantor and a flat tax of 12,5 percent on corporate income tax; recent levying of inheritance/donation tax has reduced appeal. - Private foundations may be used to circumvent strict limitations to purchase real estate set forth by the Land Control Act for foreigners who are not EC citizens. - As of December 1, 2007, there were 3,028 private foundations listed in the Commercial Register. ### Measures to prevent unlawful use of legal persons (c. 33.1) - Austria relies mainly on a system of central registration that, but only to a limited extent, allows for transparency concerning the beneficial ownership and control of legal persons. - For all types of legal persons, laws require registration of: - Name and date of birth of the founders; - Original shareholders; - Managers and directors; - Company’s statute or the private foundation deed of establishment. - This information is available to anyone online for a small fee, providing timely access. *Source: IMF staff report content provided in the supplied PDF excerpt.* ### 1034. Any subsequent changes to a shareholder’s identity must be registered in the Commercial ### 1034. Any subsequent changes to a shareholder’s identity must be registered in the Commercial ### Access to beneficial ownership of legal persons (c. 33.2) - Registration requirement: - Any subsequent changes to a shareholder’s identity must be registered in the Commercial Register, under penalty of a fine, but only with respect to limited liability companies (in all instances) and joint stock companies (only for the case of joint stock companies with a single shareholder). - There is no requirement to register changes in the ownership of shareholders for joint stock companies with more than one shareholder (or in the case of owners of bearer shares) nor for European companies. - The only change that would be subject to registration, in these instances, is if the joint stock company (or the European company) from a multi-shareholders proprietorship becomes owned by a single shareholder (which is subject to immediate registration in the Commercial Register). - Law enforcement investigative powers: - Austria relies on the investigative powers of its law enforcement authorities, particularly the power to search places, objects and persons set forth by Article 119 of the StPO. - Article 119 StPO allows the search of places (premises that are not publicly accessible) if, due to ascertained facts, it can be assumed that there are objects that have to be seized or examined. - The search can be conducted by the criminal police at their own discretion (and then reported as soon as possible to the office of the public prosecutor). - Practical limitations: - Investigative powers may be insufficient to ascertain real beneficial ownership in some instances—for example, a holder of bearer shares who does not exercise the right of vote at the general meeting or a private foundation beneficiary whose name is only in the appendix/supplementary declaration of the founding deed. - Authorities indicated that the majority of companies registered in Austria are limited liability companies and almost 25 percent of the joint-stock companies registered in Austria only have one shareholder. - Joint stock companies and shareholder registers: - For joint stock company the capital of which is represented by nominative shares, registration of the change of ownerships in the Commercial Register is only required in the case of a single shareholder. - In the case of multiple shareholders, the change in ownership is only mentioned in the shareholder register that is kept by the company and is open to inspection by any shareholder. - Law enforcement authorities can have access to the shareholders’ register under Article 119 of the StPO. - Bearer shares: - If the shares are issued in bearer form, it is difficult to ascertain beneficial ownership. - The name of the bearer of the shares (who may not be the real beneficial owner) will only be registered if the holder of the bearer shares wants to exercise the right of vote at the general meeting of the company. - According to Article 110 AktG, all shareholders and their representatives who participate in the general meeting have to be registered in a list of participants which has to be added to the minutes of the general meeting and registered at the Commercial Register. This includes the holder of bearer shares. - Private foundations: - When the name of the beneficiary is only in the appendix/supplementary declaration of the founding deed (which is not subject to registration with the Commercial Register), such information may be available only to the tax authorities, but only in the case of payments/receiving of economic benefits subject to tax declaration. - These limited circumstances substantially hinder the access to the information in a timely fashion. - A search of premises or person—which could be undertaken by the Police—would not be conclusive per se. ### Prevention of misuse of bearer shares (c. 33.3) - Scope and practice: - In the case of a joint stock company with multiple shareholders, the capital of the company can be represented up to its entirety by bearer shares. - The law requires that the holder of a bearer share be registered if he/she wants to exercise the right of vote at the company’s general meeting. Other than this circumstance, there is no possibility to ascertain beneficial ownership of the bearer shares, which may pose a risk of ML and FT. - According to Article 10 AktG, the shares (even in bearer form) must be registered if issued before full payment of the issuing price. Before full payment only provisional certificates (Zwischenscheine) can be issued which have to be registered in the shareholders’ register maintained by the company like nominative shares (Article 61, paragraph 6 AktG). - Market practice and tracing: - In the Austrian Stock Exchange, the majority of the shares traded are only in bearer form. Authorities explained that, in practice, the bearer shares traded in the Stock Exchange are “de facto” dematerialized. - No written individual certificates are issued, and the shares can in practice only be held and traded through banks who hold the (virtual) shares in their deposit. - For capital market-orientated joint-stock companies, in practice, a global certificate is handed to the Central Securities Depository (CSD, i.e., the Oesterreichische Kontrollbank). - Opening a securities account at a financial institution means entering a business relationship with the respective financial institution; the account holder has to be identified and his identity to be verified. Investigators can trace the ownership via the chain of book-entries, beginning with the CSD right to the shareholder. - In noncapital market-oriented joint-stock-companies (mostly family companies), practice is not to issue shares but certificates; owners of the certificates have to be entered in a register maintained by the company. - Authorities’ assessment and data: - Authorities reckon that joint stock companies whose capital is in the form of bearer shares are not suitable for being misused as vehicles for criminal activities, as the costs of the establishment, management and the winding up would be too high for these—typically only transient—purposes. - Of the 2,057 joint-stock companies registered in Austria, 426 have only one owner (in which case information on the beneficial owner will be available directly in the Commercial Register), and another 116 companies are listed, which means their shares are de facto dematerialized. - This means that some 1,500 joint stock companies (as of December 2007) may choose or may have chosen to issue shares in bearer form or in a registered form. - Data gaps and risks: - These figures are not conclusive, as they do not indicate the exact percentage and the value of bearer shares that have been issued (which would be useful for the analysis of the ML risk). - It would appear that the volumes of bearer shares may be high, as historically the issuing of bearer shares has been particularly common for companies owned or controlled by large wealthy families, as a way to facilitate transfers of shares among family members. - In the Stock Exchange only shares in bearer forms are traded, and the fact that the de-materialization is only a practice may not exclude situations of risk of ML. - Authorities pointed out that because of the requirement that the bearer shares be forgery-proof (or for practical reasons, for example to prevent that the shares are sold to a non-family member), they are usually accompanied by a certificate that indicate the name of the owner. - Risk assessment: - No risk assessment appears to have been undertaken by the authorities to ascertain the risk of ML/FT in joint stock companies which have issued bearer shares, nor in foundations, where the founding deed does not indicate the name of the beneficiaries. - In these instances these legal persons do not provide for a transparent structure of the beneficial ownership, and can be used as vehicles to launder money or for FT. ### Access to information on beneficial owners by financial institutions (c. 33.4) - Financial institutions can have direct access to beneficial owners’ information only for the information available in the Commercial Register. ### Recommendations and comments (related to R.33) - The authorities should: - Make the regime of private foundations more transparent on beneficial ownership, for example by requiring that the appendix/supplementary declaration be available in the Commercial Register, to reduce the risk that these foundations may be used for ML; - Establish a legal mechanism to trade shares in the Stock exchange in nominative form or adopt legal provisions to make “de-materialization” mandatory; - Conduct an assessment to determine the ML risk potentially associated to the use of bearer shares. ### Compliance with Recommendation 33 - R.33 PC - Summary of factors underlying rating: - Insufficient capacity to ascertain beneficial ownership in the case of companies that issue bearer shares and, in some instances, in the case of private foundations. - Competent authorities not always able to obtain or access to adequate, accurate and current information on the beneficial ownership and control of legal persons in a timely fashion. - No risk assessment undertaken by the authorities to ascertain the risk of ML/FT in the case of joint stock companies which have issued bearer shares, nor in the case of foundations, where the founding deed does not indicate the name of the beneficiaries. ### Legal arrangements and access to beneficial ownership and control information (R.34) - Common law trusts and foreign trusts: - Common law trusts cannot be set up under Austrian law. However, trustees can act from within Austria with respect to trusts established under other countries’ laws. - A foreign trust may therefore have all or part of its administration in Austria—for example records, banking arrangements, assets. - No information was provided as to the number of foreign trusts administered in Austria and the amounts that they represent. - Other legal arrangements: - Austria has other legal arrangements, namely the foundation (Stiftung) and the Treuhand. The fideicomiso however does not exist under Austrian law. - The Austrian foundation is a legal person and is therefore dealt with under Recommendation 33 above. - Treuhand—form, types, and effects: - The Treuhand is a civil contract which is not regulated in law, but is based on the general principle of the autonomy of the contracting parties and delimited by jurisprudence and doctrine. - It is created when a person, the Treuhänder, is authorized to exercise rights over property in his or her own name, on the basis of and in accordance with a binding agreement with another person, the Treugeber. - Two main types of Treuhand: the Fiducia (most rights transferred to the Treuhänder) and the Ermächtigungstreuhand (transfer of certain rights such as the right to manage the assets). - The Treuhand can exist without any written record. It can be concluded between any two persons capable of being party to a contract. - The Treugeber and the Treuhänder may choose to inform third parties of the legal arrangement between them (offene Treuhand or open Treuhand) or not (verdeckte Treuhand or hidden Treuhand). - The Austrian Treuhand entails a form of split ownership: the Treuhänder is the legal owner of the assets but the Treugeber maintains the “economic ownership” and may therefore claim compensation for his or her property in certain circumstances, such as the Treuhänder’s bankruptcy. - The Treuhänder has all the rights linked to the property in relation to third parties, but may be held liable towards the Treugeber in case of breach of the Treuhand agreement. Only the Treuhänder is entitled in rem to the property whereas, in principle, the Treugeber’s rights are restricted to personal claims against the Treuhänder. - Although no precise figures exist, the Austrian Treuhand is a very common feature of the Austrian economy. Lawyers, notaries and other TSP often act as Treuhänder but any member of the general public who can be party to a contract can act as Treuhänder. ### Measures to prevent unlawful use of legal arrangements (c. 34.1) - Transparency gaps for foreign trusts and Treuhand: - As far as foreign trusts are concerned, there are no measures in place to ensure transparency other than the customer due diligence requirements applicable where the trustee is a financial institution or a DNFBP described earlier in this report. - There is no registration of foreign trusts or of trustees; lawyers, notaries, accountants, management consultants and others are able to conduct trust service business and “act or arrange to act as a trustee of an express trust or other similar arrangement”, but there is no register that would list foreign trusts that are operated from Austria. - Partial registration for Austrian Treuhand: - Registration required depending on the profession of the Treuhänder, the nature of the property, and, in the case of funds, their amount: - Lawyers and notaries acting as Treuhänder are subject to the AML/CFT measures described above, as well as those set out in Article 8a ff RAO and Article 9b RL-BA for lawyers, and in Article 36a ff and 109a and in the guideline THR 1999 for notaries; - According to the Bar Associations’ Guidelines, lawyers must register every Treuhand of more than EUR 15,000 or EUR 40,000 (depending on the federal state legislation) at the Register of Escrows of the competent Bar Association (Treuhandbuch); - Pursuant to the THR 1999, notaries should register every Treuhand of more than EUR 10,000 in the digital Register of Escrows maintained by the Austrian Chamber of Civil-Law Notaries. - Both rules above only apply to funds, and not to other types of property, and are only applicable to lawyers and notaries. There are no measures in place for other Treuhänders. - It is therefore impossible to determine how many Treuhand are established, the amount of property that they cover, and who the Treuhänders are. - Practical investigative limitations: - Although police investigation powers in criminal matters are good, because there is neither a central register of Treuhands, nor a register of persons authorized to act as a Treuhänder, a police investigator seeking information would have to check with each and every relevant professional before locating the Treuhänder he/she is looking for. - If the Treuhänder is not a member of the Bar Association or is not a notary, the search is virtually impossible. - Various bodies currently charged with the oversight of the TSPs have little ability to share information between one another or to extend international assistance to foreign counterparts. The only available channel for information sharing is Article 22 B-VG (“Amtshilfe”). - Banking channel and limits: - Pursuant to the BWG, where a fiduciary relationship exists, it must be brought to the attention of the bank when opening an account. - This provision is only partially helpful because it only addresses circumstances where the assets are placed in a bank account. The Treuhand may not need access to an Austrian bank account, or assets can be settled directly into the Treuhand (shares, real estate, high value goods), bypassing bank transaction stages. - The burden placed on the authorities to lift the banking secrecy requirements would also apply in these cases. - Overall effectiveness: - While access to the investigation power is available in a timely fashion, its effectiveness is undermined in the practical difficulty in knowing where to turn enquiries in the absence of registers or consistent TSP sector oversight and the strict conditions for lifting banking secrecy. ### Access to information on beneficial owners of legal arrangements (c. 34.2) - No measures in place to ensure access to beneficial ownership information on foreign trusts that are dealt with in Austria. - For the Austrian Treuhand, access to beneficial ownership information is only available in a limited number of circumstances. ### Access to beneficial ownership information by financial institutions (c. 34.3) - BWG provisions that improve access: - Article 40,(2) of the BWG requires credit or financial institutions to ask the customers whether they intend to conduct the business relationship or transaction on behalf of a third party. - Where customers confirm they do so intend, the law places an obligation on them to disclose the name of the trustor (or Treugeber) to the institution and for trustor’s identity to be established. - Article 41(1)2 applies an obligation on the financial or credit institution to make a suspicious transaction report if the institution suspects that the customer has violated his obligation to disclose a fiduciary relationship. - The law makes it an offense for the person acting as a trustee to fail to disclose this to the credit or financial institution. - Limitations: - These provisions facilitate access to control information required by financial institutions, both in respect of the Austrian Treuhand and for customers acting in a fiduciary capacity for arrangements deriving from other countries. - The importance of effective oversight of the trust and company service providers for the purposes of AML/CFT is emphasized and addressed elsewhere in the report. ### Recommendations and comments (related to R.34) - The authorities should: - Ensure transparency where the property held in Treuhand is composed of assets other than funds (regardless of the Treuhänder), where the Treuhänder is someone other than a lawyer, notary or registered TSP, where funds held under Treuhand by lawyers amount to less than the federal state threshold (i.e., between EUR 15,000 and EUR 40,000); - Ensure transparency over foreign trusts operated from Austria; - Implement AML/CFT oversight to ensure TSPs properly obtain, verify and record details of the Treuhand and its beneficial ownership; - Develop effective means by which bodies charged with the oversight of TSPs for AML/CFT purposes can share information with their national or foreign counterparts. ### Compliance with Recommendation 34 - R.34 PC - Summary of factors underlying rating: - No transparency where the property held in Treuhand is composed of assets other than funds (regardless of the Treuhänder); where the Treuhänder is someone other than a lawyer, notary or registered TSP; where funds held under Treuhand by lawyers amount to less than the federal state threshold (i.e., between EUR 15,000 and EUR 40,000). - No transparency over foreign trusts operated from Austria. - No effective AML/CFT oversight to ensure TSPs properly obtain, verify and record details of the Treuhand and its beneficial ownership. - No effective means by which bodies charged with the oversight of TSPs for AML/CFT purposes can share information with their national or foreign counterparts. *Source: IMF staff report content unit _cr09298 - 1034. Any subsequent changes to a shareholder’s identity must be registered in the Commercial* ### 5.3 Non-Profit Organizations (SR.VIII) ### 5.3 Non-Profit Organizations (SR.VIII) ### Description and analysis — Legal framework and sector features - Any Austrian based, or foreign entity operating in Austria, which claims to be not-for-profit oriented (gemeinnützig) can operate under different legal frameworks: association, cooperative society, limited liability company, private foundation or political party. - It is estimated that 95 percent of Austrian NPOs are organized in form of an association. - Primary sources of information on NPO activities, size and relevant features: public registers, tax records, the Seal of Approval Award (Spendengütesiegel), the Agency for Austrian Non-for-Profit Associations (Interessensvertretung Österreichischer Gemeinnütziger Vereine, IÖGV), academic research, and data on cross-border transactions collected by Statistics Austria for the OeNB pursuant to the DevG (Article 6, paragraph 4). - On December 31, 2007, 111,282 associations were registered in Austria. Experts estimate up to 90 percent of these associations are small ones. - Authorities did not provide information on the size of financial transactions of the NPO sector, repartition by type of activities, or types of NPOs at risk of misuse for FT by virtue of activities or characteristics. - Authorities reported no criminal trials due to terrorist financing in connection with the NPO sector; misuse of NPOs for criminal purposes mainly appears as fraud or illegitimate use of association means and assets. ### Reviews, outreach, and guidance (c. VIII.1 and c. VIII.2) - Major multi-agency review conducted March–May 2004; conclusions recorded in June 2004 “Review of Non-Profit Organizations Sector in Austria”; initial findings re-affirmed October 2006. - The 2004 group concluded disclosure regimes for different NPO structures provided reliable sources for identifying size, activities and other relevant features; provisions originally established to protect members and donations were viewed as appropriate to combat potential FT abuse. - A benchmarking standard (Seal of Approval Award) exists as a voluntary governance award for NPOs. - In January 2008, the MoF convened NPO representatives, auditors, financial institutions, government authorities and private watchdogs for a seminar on protecting the NPO sector from FT abuse. - The FMA is adapting guidance notes for financial institutions and plans to include NPO risks in future versions. ### Information, registers and transparency (c. VIII.3.1 — c. VIII.3.3) - Associations: - Established via statutes that must contain name and seat (exclusively in Austria), purpose, intended activities, means of covering financial needs, membership and organizational information. - Statutes must be submitted to local district authority or Federal Police Directorate (Vereinsbehörde). - All associations are listed in the ZVR administered by the MoI; ZVR records include representation as per statutes and functions and names of association organ representatives; information is accessible online. - Associations must notify the ZVR of any changes regarding their representatives within four weeks (Article 14 VerG). - Associations may apply for data non-disclosure in ZVR (Auskunftsperre) on grounds of outstanding endangerment or legitimate interests (e.g., references to racial or ethical origin, political opinion, union membership, religious or philosophical conviction, health or sexuality). - Private foundations: - Set up by a declaration of establishment and must be filed with the Commercial Register; founding deed authenticated by a public notary and maintained by the Commercial Register. - Beneficiaries may be nominated in the founding deed or in an appendix/supplementary declaration which is not registered at the Commercial Register nor accessible to the public. - Assessors noted private foundations are not required to make information on the identity of persons who own, control or direct their activities publicly available (identified as a deficiency). - Commercial Register: - Contains name and date of birth of founders, original shareholders, managers and directors, company statute or private foundation deed of establishment; administered by the Commercial Courts; information available online. - Subsequent changes in ownership and control must be registered under penalty of a fine, but only with respect to limited liability companies and joint stock companies with a single shareholder. - Companies with bearer shares impede transparency concerning beneficial ownership and control of legal persons. - Tax registration: - Registration with tax authorities is limited to NPOs active in sectors eligible to tax relief on membership fees or that qualify donors for tax relief; records must be kept for 7 years. - Other NPOs are generally taxable and must keep records for 7 years for tax assessment purposes. - Political parties: - Must establish statutes with information on organs and representatives; statutes are published and deposited with the MoI. ### Sanctions, investigative powers and enforcement (c. VIII.3.2 — c. VIII.4) - Associations: VerG Article 31 regulatory offenses and fines: - Offenses include failing to report establishment before commencement of activity; carrying on activities without approval; continuing activities after being asked to close; failing to report changes of statutes, representatives, address, voluntary liquidation, termination of liquidation, or failing to use the registration number as required; failing as liquidator to report termination of winding up. - Penalties: fine of up to EUR 218, or in case of recurrence a fine of up to EUR 726. - These administrative penalties do not preclude criminal sanctions in parallel or as alternatives. - Pursuant to Article 29, paragraph 1 VerG, an association can be liquidated for violating penal laws, infringing its statutes’ sphere of activity, or not fulfilling conditions of legal existence. - Other registered NPOs: - May be fined up to EUR 3,600 by the court for non-compliance with duty to keep records with the Commercial Register up to date (Article 24 of the FBG). - Sanctions according to the StGB can be imposed on natural persons acting on behalf of the NPO or on the NPO as a legal person according to the Statute on the Responsibility of Entities for criminal offenses. - Investigative powers: - Article 119 StPO allows search of places, objects and persons when objects to be seized or examined are reasonably assumed to be present; search can be conducted by criminal police and reported to the public prosecutor. - BVT has investigated FT cases involving NPOs and reported no restrictions to access information. - Domestic cooperation: - No specific enabling powers for domestic cooperation, coordination and information sharing outside the usual criminal investigation framework; authorities may request information pursuant to Article 22 of the Federal Constitutional Law (“administrative assistance”). - Full access to information on the administration and management of a particular NPO can be obtained during the course of an investigation when there is a legal basis for the information to be recorded. - BVT is the point of contact for information on NPOs suspected of terrorist financing or other forms of terrorist support. ### Record-keeping, filing and thresholds (c. VIII.3.4) - There is no standardized set of requirements for NPO record maintenance; NPOs follow separate legislative requirements according to the legal form chosen at formation. - Article 212 Unternehmensgesetzbuch (UGB): every entrepreneur (including limited liability companies and cooperatives) must keep accounting records for seven years. - Article 22 VerG and Article 18 PSG refer to Article 212 UGB; Article 132, paragraph 1 Bundesabgabenordnung (BAO) requires record keeping for 7 years. - Article 125 BAO requires entrepreneurs keep an account of incomes and expenditures from a threshold of a turnover of EUR 400,000 in two consecutive years. - Associations Act (VerG) amendment January 2005: additional audit and disclosure obligations based on finance levels: - Prepare financial statements once a year reviewed by two independent auditors appointed by the association (Article 21 VerG). - When revenues or expenditures exceed EUR 1 million in each of the previous two years, prepare financial statements must include a balance sheet and a profit and loss account, certified by two independent auditors (Article 22, paragraph 1 VerG). - If revenues or expenditures exceed EUR 3 million in each of the previous two years, prepare financial statements must be certified by a statutory auditor. - Registered companies must file annual financial statements which are available to the public. - Private foundations are not required to file their instruments of accounting at the company register once a year; they must disclose information to tax authorities. - Political parties must keep records of the use of funds, are subject to an annual audit by two accountants, and must publish lists of donations. ### Gaps and assessed risks - Authorities did not provide assessors with data on financial transaction sizes, activity repartition, or identification of NPO types at risk of FT. - Private foundations are not required to make information on identity of persons who own, control or direct their activities publicly available. - No standardized record-keeping requirements specifically tailored to the NPO sector; record keeping is tied to legal form and general accounting/tax rules. - No central registration/licensing system for NPOs; the Seal of Approval Award is voluntary and not a licensing mechanism. ### Recommendations (as provided) - Require NPOs operating under the legal form of private foundations to make information on the identity of persons who own, control or direct their activities publicly available. - Strengthen requirements for NPOs to maintain and make available to appropriate authorities records of domestic and international transactions that are sufficiently detailed to verify that funds have been spent in a manner consistent with the purpose and objectives of the organization. - Strengthen outreach to the NPO sector. ### Compliance with Special Recommendation VIII - SR.VIII: PC - NPOs operating under the legal form of private foundations are not required to make information on the identity of persons who own, control or direct their activities publicly available. - NPOs are not adequately required to maintain and make available to appropriate authorities records of domestic and international transactions that are sufficiently detailed. - Insufficient outreach exercise. *Source: IMF staff report section 5.3 “Non-Profit Organizations (SR.VIII)” from _cr09298 - 5.3 Non-Profit Organizations (SR.VIII)_* ### 1097. Pursuant to Article 13 of the FMABG, the Financial Market Committee has competency on ### _cr09298 - 1097. Pursuant to Article 13 of the FMABG, the Financial Market Committee has competency on ### Financial Market Committee — mandate and composition - Pursuant to Article 13 of the FMABG, the Financial Market Committee has competency on financial market’s stability issues, which include AML/CFT matters. - Composition: - Involves senior executive of the MoF, the OeNB and the FMA. - Chaired by the MoF representative. - Meeting frequency and authority: - Meets at least four times a year. - May adopt recommendations on financial market issues which are considered to have strong policy effects on the ministers and the parliament. - Additional coordination: - Senior representatives of the MoF and the FMA meet on a monthly basis to discuss potential legislative or regulatory actions, as well as operational challenges. ### Operational coordination on AML/CFT - Operational meeting types and participants: - Quarterly AML/CFT Task Force Meetings (MoF, MoJ, OeNB, FMA, A-FIU, BVT) to: - review trends and typologies, operational challenges and private sector issues related to AML/CFT. - FATF Coordinating Meetings (MoF, MoJ, MoE, MoFA, OeNB, FMA, A-FIU, BVT) to: - analyse and discuss AML/CFT policies, supervision and enforcement in preparation to FATF Plenary meetings. - Financial sector supervision coordination: - MoF and FMA hold monthly meetings on ongoing issues, operational challenges, or interpretation of legal provisions. - For banking activities: - The FMA and the OeNB maintain a joint database storing all information collected or received from banks, as well as relevant analysis. - Coordination institutionalized via regular meetings (heads of department, managers), “single bank fora”, and “single points of contact” (FMA and OeNB agents responsible for each supervised entity). - Meetings with external auditors are organized regularly to discuss supervisory matters, including AML/CFT. ### A-FIU cooperation, information flows and statistics - Legal basis: - Article 22 B-VG enables bilateral cooperation between the A-FIU and other competent authorities; A-FIU receives and forwards relevant information to competent authorities. - STRs and supervisory authorities: - If STRs contain information relevant to supervisory authorities or A-FIU suspects non-compliance with AML/CFT obligations (or when bank employees are indicted), supervisory authorities are informed. - In 2007, the A-FIU forwarded 12 information to the FMA. - The FMA does not request A-FIU breakdowns of STRs by financial institutions; A-FIU indicated its database would not easily enable provision of such breakdowns to the FMA. - Customs cooperation: - Article 17c (2) ZollR-DG: customs must pass cash-control data to competent authority — ML registration office (A-FIU) for ML and BVT for FT, to the extent necessary to perform statutory tasks. - A-FIU — BVT cooperation: - FT-related STRs: cooperation organized according to a BKA circular allowing immediate transmission of STR to the BVT. - A-FIU and BVT organize working meetings on ongoing cases, involving other investigative authorities, public prosecutors and court representatives when necessary. - Statistical Table 33 — Providers of Information to the A-FIU (preserve original table entries) - Ministry of Finance: 0 27 7 21 - FMA: 5 2 5 5 - Customs: 0 0 0 1 - Total: 5 29 12 27 - Other statistics: - No statistics available up to 2007. - In 2008, the FMA issued one request; answer is pending. ### Mechanisms for consultation between competent authorities and regulated institutions (c. 31.2) - FMA engagement: - FMA has stepped up its company visit program to increase dialogue with employees, managers and board members of financial institutions, focusing notably on AML/CFT questions where relevant. - DNFBP consultation: - Consultation occurred between DNFBP representatives and competent ministries during implementation of the second and third EU Directives. - Regular meetings still organized to issue AML/CFT guidance (e.g., MoJ and the Federal Bar Association). - No formal mechanism exists for regular consultation between the DNFBPs and the competent authorities. ### Ratings and compliance remarks - Recommendation 31: - Rating: R.31 C - 1107: "The recommendation is fully met." - Recommendation 32: - No separate rating text for R.32 provided in the excerpt beyond statistics note. - Recommendation 35 and Special Recommendation I: - R.35: LC - Factors underlying rating: - Self-laundering is not criminalized in Austria. - Strict conditions for obtaining/compelling information subject to secrecy hinder the possibility for law enforcement authorities to locate and trace property. - Criminal provisions not fully in line with the 1999 UN Convention. - SR.I: PC - Factors underlying rating: - Criminalization of organization and direction of others is not fully in line with the 1999 UN convention, nor is the contribution to the commission of FT by a group of persons in those instances where the sole purpose/activity of the group of persons is FT. - Incomplete implementation of UNSCRs 1267 and 1373. ### International conventions, implementation gaps and specific recommendations - Ratification and implementation snapshots: - Vienna Convention: - Signed September 25, 1989; ratified July 11, 1997. - Austria interprets Article 3, paragraph 1 and 2 to allow, "in case of a minor nature," implementation by administrative penal regulations providing adequate sanction. - ML offense does not apply to proceeds laundered by the perpetrator of the predicate offense (absence of criminalization of self-laundering). - Palermo Convention: - Signed December 12, 2000; ratified September 23, 2004. - Legislation covers key AML requirements except criminalization of self-laundering. - Criminal liability applies to legal persons; Article 20b StGB for "property at the disposal of a criminal organization" applied very rarely. - Terrorist Financing Convention (TFC): - Signed September 24, 2001; ratified April 15, 2002. - Article 278d(1)-(7) StGB implements Article 2(1)(a) of the TFC in large part, but: - Exclusion of criminality in Article 278c, paragraph 3 of the StGB creates misalignment with Article 6 of the TFC. - Organization and direction of others, and contribution by a group of persons acting with a common purpose, are not fully covered in all instances (Article 2, paragraphs 5(b) and (c) of the TFC). - FT offense jurisdiction: applies if provision or collection of assets takes place in Austria irrespective of location of the terrorist act; Austria can take jurisdiction over FT committed abroad only under Section 64, paragraph 1(10) conditions (i) or (ii) as stated in the source. - UNSCRs 1267 and 1373: - Mechanisms in place for implementation (see SR.III analysis); freezing obligations regarding assets other than funds are not fully covered. - OeNB regulations pursuant to the Exchange of Control Act (for EU-internal terrorists) do not constitute freezing mechanisms in the terms required by UNSCR 1373 and SR.III. - Other conventions: - 1990 Council of Europe Convention on Laundering, Search, Seizure and Confiscation: signed July 10, 1991; ratified July 7, 1997. - Austria is not a party to the Inter-American Convention. - Recommendations (from 1125): - Criminalize self laundering; - Soften the requirements for law enforcement authorities to obtain access to information subject to secrecy; - Extend the criminalization to the whole range of activities envisaged by Article 2, paragraphs 5(b) and (c) of the 1999 UN Convention; - Set up procedures within Austria that will ensure freezing without delay of assets other than funds (such as immovable goods, companies and businesses and vehicles); - Modify the OeNB regulations adopted pursuant to the Exchange of Control Act (for EU-internal terrorists) in order to make possible freezing of funds and assets held by EU-internals in all instances set forth by UNSCR 1373 and SR.III. ### Mutual Legal Assistance (R.36-38, SR.V) — legal framework and practice - Legal framework: - Main instruments: Federal Law on Extradition and Mutual Assistance in Criminal Matters (Auslieferungs- und Rechtshilfegesetz, ARHG), international conventions to which Austria is party, and other multilateral and bilateral agreements. - Range of mutual assistance available (c. 36.1): - Under Articles 1 and 3, paragraphs 1 and 50 of the ARHG, Austria may provide measures in AML/CFT investigations, prosecutions and related proceedings, including: - the production, search and seizure of information, documents, or evidence (including financial records) from financial institutions, or other natural or legal persons (under conditions described under criterion 36.5); - the taking of evidence or statements from persons; - providing originals or copies of relevant documents and records as well as any other information and evidentiary items; - effecting service of judicial documents; - facilitating the voluntary appearance of persons for the purpose of providing information or testimony to the requesting country; - identification, freezing, seizure, or confiscation of assets laundered or intended to be laundered, the proceeds of ML and assets used for or intended to be used for FT, as well as the instrumentalities of such offenses, and assets of corresponding value. - These measures may be granted on the basis of multilateral or bilateral agreements or, where none exists, on the basis of reciprocity. In cases of doubt concerning reciprocity, the opinion of the MoJ must be sought (Article 3, paragraph 3 ARHG). - Central authorities and case handling: - The Department for International Criminal Cases within the MoJ is the central authority for sending and receiving MLA and extradition requests; it forwards requests immediately to the competent executing authority. - All incoming requests are registered in a countrywide computer system accessible to all prosecutors and courts; the system allows identification, tracing and monitoring of all mutual legal assistance requests. - Incoming requests are often addressed directly to competent prosecutor’s offices or courts under Schengen and EU mutual assistance instruments or bilateral treaties providing for direct contacts. - Timeliness and quality (c. 36.1.1): - Authorities state requests are forwarded without delay and processed in a timely fashion, aligned with StPO Article 9, paragraph 1 requirements for proceedings “within a reasonable timeframe” and “rapidly and without undue delay.” - Information from other FATF members indicates most MLA requests are dealt with within a 2 weeks to a few months timeframe; feedback varied with some members indicating general satisfaction while others found the process somewhat slow. - Authorities did not provide further information establishing that assistance is provided in all cases in a timely manner. - Restrictions on assistance (c. 36.2): - Article 51 ARHG provides that judicial assistance is not admissible to the extent that: - the act underlying the request is either not subject to punishment by a court under Austrian law or does not qualify for extradition; or - extradition would be inadmissible because: 1. the criminal proceedings, punishment or preventive measures in the requesting State will not comply or did not comply with the principles of Articles 3 and 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (Human Rights Convention). *Source: Excerpt from the IMF assessment document (provided content)._ ### 2. the person to be extradited would be subject to persecution in the requesting State ### 2. the person to be extradited would be subject to persecution in the requesting State ### Scope of Extradition Grounds - Extradition may be refused where: - "the person to be extradited would be subject to persecution in the requesting State because of his/her origin, race, religion, affiliation to a specific ethnic or social group, nationality, or political opinions, or would have to expect other serious prejudices for any of these reasons (extradition asylum)." - extradition would result in violation of Article 3 of the Human Rights Convention (prohibition of torture, inhuman or degrading treatment or punishment). - the criminal proceedings in the requesting State do not comply with the principles set forth in Article 6 of the Human Rights Convention (right to a fair trial). - the person is an Austrian national (Article 12, paragraph 1 ARHG). - the offense is a political offense (Article 14, paragraph 1 ARHG) or other politically motivated punishable act unless the criminal nature outweighs its political nature (Article 14, paragraph 2 ARHG). - the acts are exclusively of a military nature (Article 15, no. 1 ARHG). - prosecution or execution is barred by statute of limitation. - the person has been acquitted, convicted and sentence served or enforceability waived in the State of commission or a third country (Article 17 no. 1 and no. 2 ARHG). - the person was without criminal responsibility at the time of the act (Article 21 ARHG). - extradition would expose the person to "hardship" defined by Article 22 ARHG (e.g., obviously disproportionately severe conditions, young age, long period of residence in Austria, or other serious personal circumstances). - execution of the death penalty or other punishments/preventive measures not compliant with Article 3 of the Human Rights Convention (Article 20 ARHG). ### Efficiency of Processes (c. 36.3) - Main gateway for incoming requests: Department of International Criminal Cases of the MoJ, competent for forwarding cases to relevant authorities. - Direct transmission options: - Requesting authorities may address requests directly to Austrian counterparts under several bilateral MLA-treaties and EU instruments (including Framework Decision on the European Arrest Warrant and Federal Law on Judicial Cooperation in Criminal Matters with the Member States of the EU, EU-JZG). - Austria has bilateral treaties with all neighboring States and has signed the European Convention on Mutual Assistance in Criminal Matters of April 20, 1959. - Convention on Mutual Assistance in Criminal Matters between EU Member States of 29 May 2000 also allows direct communication. - In urgent cases, national INTERPOL/SIRENE Bureaux channel may be used. - Timeframe and monitoring: - Proceedings must be conducted "stets zügig und ohne unnötige Verzögerung" pursuant to Article 9, paragraph 1 ARHG (referring to StPO Article 9, paragraph 1). - Public Prosecutor’s Office is responsible for execution of foreign requests; supervised by the Public Prosecutor’s Office at the Court of Appeals. - Public Prosecutor’s Offices must report to the MoJ when assistance is denied; MoJ handles complaints about delays and may give orders to Public Prosecutors Offices. ### Provision of Assistance regardless of Fiscal or Secrecy Constraints (c. 36.4 & c. 36.5) - Fiscal matters: - MLA is not admissible when punishable acts underlying the request are exclusively of a fiscal nature (Article 51, paragraph 1, no. 1 and 15 no. 2 of the ARHG). - Austria may grant MLA for other types of offenses even if they involve fiscal matters (Article 15 no. 2 ARHG). - Banking secrecy and disclosure: - Article 116 of the StPO permits disclosure of information on bank accounts and operations on the basis of a court order "if it seems to be necessary to clarify a criminal offense or misdemeanor under the jurisdiction of the Regional courts". - Article 9, paragraph 1 of the ARHG applies StPO provisions to MLA; foreign requests are addressed to the public prosecutor’s office which seeks a court order. - Article 38 of the BWG provides legal basis for lifting banking secrecy when a court requests information for ongoing criminal proceedings. - The StPO Article 116 conditions require prosecution to establish on the basis of "particular circumstances" that the information sought is linked to a criminal offense; this is described as fairly restrictive and can slow down MLA. - Insurance and securities information: - Access to information held by insurance undertakings and securities firms is granted to the A-FIU based on Article 98f, paragraph 2 of the VAG and Articles 6 and 12, paragraph 4 of the WAG; such requests must be forwarded to the A-FIU. ### Availability of Competent Authorities' Powers (c. 36.6, 36.8) - StPO investigative powers applicable to domestic cases may generally be made available for MLA (Article 9, paragraph 1 ARHG). - Shortcomings in access to secrecy-protected information (banking secrecy, legal privilege) may limit the information Austrian authorities can provide to foreign authorities. ### Avoiding Conflicts of Jurisdiction (c. 36.7) - No general mechanism exists to handle conflicts of jurisdiction. - Austrian prosecutors must investigate and prosecute crimes falling within Austrian jurisdiction under the rule of legality and the accusatory principle ("Legalitätsprinzip, and Offizialprinzip"). - Conflicts are addressed on a case-by-case basis; authorities report this is not frequent. ### Dual Criminality and Extraditable Offenses (c. 37.1, 37.2 & SR.V) - Dual criminality: - Dual criminality applies as a general rule for MLA based on the ARHG (Article 51, paragraph 1 sub-paragraph 1 ARHG). - Exceptions to dual criminality exist (e.g., Article 49a of the Convention implementing the Schengen Agreement, the Convention between Member States of the EU on Mutual Assistance in Criminal Matters, the EU Framework Decisions referenced). - Absence of dual criminality is not an obstacle to service of documents if recipient accepts them (Article 51, paragraph 2 ARHG), except for documents covered by banking secrecy. - Extraditable offenses: - ML as set out in Article 165 StGB is extraditable under Austrian law. - However, Article 165 covers only third-party laundering; extradition may not be granted when the offense prosecuted abroad is self-laundering. - Terrorist financing is an extraditable offense. ### Timeliness and Execution of Provisional Measures including Confiscation (c. 38.1, 38.2, 38.3, V.3) - Execution of foreign criminal court decisions, confiscation orders and provisional measures is governed by Chapter III of the ARHG. - Article 64, paragraph 1 ARHG sets prerequisites for execution or further execution of such foreign decisions; these include: - decision taken in proceedings complying with Article 6 of the Human Rights Convention; - decision taken for an act punishable under Austrian law; - decision not taken for acts listed in § 14 and § 15 (military offenses and offenses exclusively of fiscal nature); - no statute of limitation under Austrian law applies to execution; - the person concerned is not prosecuted, convicted or acquitted with final enforceable effect in Austria. - Austria can identify, seize, freeze and confiscate relevant assets, including laundered property, proceeds of ML/FT, instrumentalities, and property-law orders (Vermögensrechtliche Anordnungen). - Simplified EU procedure: - Article 45 to 51 EU-JZG apply to execution of seizing and freezing orders following the FD of July 22, 2003. - Article 52 EU-JZG provides for execution of confiscation orders per the FD of October 6, 2006. - These EU instruments allow speedy procedures using a certificate; dual criminality not assessed if the crime appears in the FD crime list. - Property of corresponding value (c. 38.2): - Requests relating to property of corresponding value handled under ARHG and EU-JZG when requesting State is an EU member. - Coordination of seizure/confiscation (c. 38.3): - No general agreement for coordination exists; coordination has occurred in practice on a case-by-case basis. - Asset forfeiture fund (c. 38.4): - Forfeited or confiscated assets fall into the Federal budget pursuant to Article 64, paragraph 7 ARHG; no special fund established. - Sharing of confiscated assets (c. 38.5): - Asset sharing between EU Member States possible under Article 53, paragraph 1 EU-JZG when confiscated assets exceed EUR 10,000. - Austria is in the process of concluding an asset sharing agreement with the United States. - For non-EU and non-United States countries, a separate bilateral treaty would be required to enable sharing. - Recognition of foreign non-criminal confiscation orders, civil forfeiture, or orders reversing burden of proof (R.38, c. 38.6): - Austrian legal framework does not provide for enforcement of foreign non-criminal confiscation orders nor reversal of burden of proof. ### Statistics, Effectiveness, and Monitoring (R.32) - No comprehensive statistics available on types of measures and timeframe between receipt and execution. - Every incoming foreign request is registered in the nationwide electronic file register system ("VJ"), accessible by every Austrian judicial authority; authorities report it allows effective monitoring of every foreign MLA request. ### Recommendations and Compliance (6.3.2 and 6.3.3) - Recommendations (as listed by authorities): - Recommendation 36: - Ensure that MLA is granted in a timely manner and ensure that requirements to lift banking secrecy and the scope of legal privilege do not slow down effective cooperation. - Recommendation 38: - Conclude arrangements for coordinating seizure and confiscation actions with other countries. - Consider sharing of confiscated assets with countries other than EU members and the United States. - Ensure that MLA is granted in a timely, constructive and effective manner. - Remove from banking secrecy provisions all requirements which may hinder effective cooperation. - Recommendation 37: - Remove from banking secrecy provisions all requirements which may hinder effective cooperation. - SR.V: - Ensure that requirements to lift banking secrecy and the scope of legal privilege do not slow down effective cooperation. - Compliance ratings and underlying factors: - R.36: PC - Practice indicates MLA may not always be granted in a timely manner. - Deficiencies under Recommendation 1 (absence of criminalization of self-laundering and incomplete list of predicates) narrow scope of MLA Austria may grant. - Strict requirements to lift banking secrecy and extensive scope of legal privilege slow down effective cooperation. - R.37: LC - Effectiveness not established. - R.38: PC - Strict requirements to lift banking secrecy and extensive scope of legal privilege slow down effective cooperation. - Deficiencies under Recommendation 1 narrow scope of MLA Austria may grant. - No arrangements in place for coordinating seizure and confiscation actions with other countries. - No consideration given to sharing of confiscated assets with countries other than EU members and the United States. - Effectiveness not established. - SR.V: PC - Strict requirements to lift banking secrecy and extensive scope of legal privilege slow down effective cooperation. - Effectiveness not established. *Source: _cr09298 - 2. the person to be extradited would be subject to persecution in the requesting State* ### 1170. While the grounds for refusal indicated above seem reasonable, the law includes an additional ### _cr09298 - 1170. While the grounds for refusal indicated above seem reasonable, the law includes an additional ### Extradition grounds and substantive issue - Article 15 no. 2 of the ARHG renders a request for extradition inadmissible “for acts that constitute a violation of stipulations relating to taxes, monopolies or customs duties, or foreign exchange regulations, or of stipulations relating to the control of or foreign trade in goods.” - Consequence: although smuggling is a predicate offense to ML under Austrian law, extradition cannot be granted when the underlying offense is a violation of customs duties. - Anecdotal case: Austria reportedly refused to extradite Riza Altun (Turkish national, member of the PKK, Interpol arrest warrant). Turkey filed a complaint to the UN Counter Terrorism Committee by letter dated July 24, 2007; Austria’s grounds for refusal were not shared with the assessors. ### Statistics on extradition and surrender (applying R.32) - 2006: Austria surrendered 183 persons under a European Arrest Warrant to other EU Member States. - 2006: 20 European Arrest Warrants were refused by Austrian judicial authorities. - Surrender procedure average durations: - 23 days, where the person agreed to the surrender. - 47 days, where the person did not consent to the surrender. - Extradition procedure in relation to other countries: - Average 63 days, where the person was held in custody. - 47 persons have been surrendered to other countries. - Authorities indicated statistics on number of extraditions requested and granted exist, but are not broken down by underlying offense and were not provided to the assessors. ### Extradition of nationals and cooperation for prosecution - Extradition of Austrian nationals is not admissible pursuant to Article 12, paragraph 1 of the ARHG. - Authorities state this provision has the rank of a constitutional provision and requires a 2/3 majority of Parliament to be amended. - As of January 1, 2009, Austria will be in a position to extradite its own nationals to other EU-Member States in accordance with Section 5 EU-JZG. - Where extradition for ML is denied on the sole ground of nationality: - Austrian courts are competent under Article 65, paragraph 1, no. 1 of the StGB and must conduct proceedings as for any other criminal offense under national law. - Austrian courts have explicit jurisdiction over terrorist acts and terrorist financing when the perpetrator is Austrian (Article 64, paragraph 1, nos. 9 and 10 of the StGB). - Cooperation basis: Council of Europe Convention on MLA of 1957 and its Additional Protocol of 1978; EU Convention on Mutual Assistance in Criminal Matters between Member States of the EU of 2000; other international conventions; reciprocity under the ARHG in absence of agreements. ### Efficiency and procedural guarantees - In absence of contrary provision in the ARHG, StPO applies pursuant to Article 9, paragraph 1 ARHG, including Article 9, paragraph 1 StPO: - Defendant right to criminal proceedings “within a reasonable timeframe (“innerhalb angemessener Frist”)”. - Proceedings to be conducted “stets zügig und ohne unnötige Verzögerung”. - No information provided on practical implementation of these requirements in extradition cases. ### Simplified procedures (R.39 & SR V — c. 39.5 & SR v.8) - Article 32 of the ARHG: simplified procedure possible when a person consents to extradition and transfer without formal extradition proceeding. May apply when the crime is ML or FT in absence of contradictory provisions. - European Arrest Warrant (EU Framework Decision 2002) implemented by Austria through Article 30, paragraph 1 of the EU-JZG provides a simplified procedure among EU member States. ### Recommendations and compliance ratings - Recommendation to authorities: - Take steps to improve the overall effectiveness of the extradition framework. - Compliance ratings summary: - R.39: LC — Lack of evidence of the overall effectiveness of the extradition framework. - R.37: PC — Effectiveness not established. - SR.V: PC — Effectiveness of the extradition framework not established. ### Other forms of international cooperation — legal framework - Police Cooperation Act (PolKG) governs cooperation of Austrian police, A-FIU and BVT; Article 3(1) obliges law enforcement authorities to render legal assistance on condition of reciprocity. - EU Council Decision of October 17, 2000 (2000/642/JHA) establishes standards for cooperation between FIUs of Member States. - Interpol Statutes and Europol Convention applicable. ### Supervisory authorities — information exchange rules - FMA may provide information/documents to competent authorities: - in EEA Member States; - in third countries with which the EU has concluded an agreement regarding consolidated supervision; - in other third countries where cooperation is in the interest of Austrian supervision and in compliance with international standards. - Conditions for information provision include necessity for consolidated supervision, application of professional secrecy rules, and express consent by the authority which communicated the information initially. - Article 77, paragraph 1 of the BWG permits provision of official information if public order, essential interests of the Republic, banking secrecy or confidentiality obligations under tax law are not violated; reciprocity is ensured; and the request aligns with BWG objectives. - WAG and VAG provisions allow transmission of supervisory data subject to conditions including professional secrecy, reciprocity, and supervisory-purpose limitations. ### Operational aspects of cooperation - A-FIU: - Considered a “Security police authority” under PolKG and may exchange information with any foreign FIU based on reciprocity. - Needs requests translated into German; average translation time about 15 days, with flexible solutions for urgent requests. - A-FIU is an Egmont Group member and uses Egmont secure web (ESW) frequently. - Under Article 3(2) PolKG, A-FIU and BVT empowered to exchange information spontaneously with other law enforcement organizations. - A-FIU cannot spontaneously exchange information in self-laundering cases because self-laundering is not criminalized in Austria. - Pursuant to Article 5 PolKG, A-FIU authorized to search its databases on behalf of foreign counterparts; if no investigation is open in Austria, foreign FIU must authorize opening an investigation to answer requests beyond database searches. - Supervisory authorities: - FMA has signed many MoUs: 14 bilateral agreements for credit and domestic financial institutions, 6 for insurance activities, 6 for securities business. - CESE and CIS coverage limited; future focus on MoUs with relevant non-EU countries. - Participation in EU supervisory arrangements (CEIOPS, CESR, ECB, CEBS). - Bilateral meetings: 9 meetings in 2007; supervisory colleges: 6 meetings in 2007. - FMA may authorize foreign authorities to conduct or participate in verifications, delegate verifications to OeNB, or instruct external auditors (Article 77, paragraph 6 BWG). - Home supervisors may inspect domestic branches of foreign insurance undertakings once FMA notified (Article 102a, paragraph 3 VAG). - FMA may refuse securities supervisor requests if sovereignty, security or public order of Austria may be adversely affected, or if judicial proceedings exist (Article 99, paragraph 1 WAG). - Making inquiries on behalf of foreign counterparts: - FMA may carry out verifications or allow foreign authority/auditors to do so for securities supervisors in other EU Member States (Article 98, paragraph 1 WAG). - No explicit provisions authorizing Austrian authorities to conduct inquiries on behalf of securities supervisors from third countries beyond Article 91, paragraph 6 WAG. ### Conditions and restrictions on cooperation - A-FIU will only refuse cooperation when request concerns exclusively fiscal matters; cooperation can be granted when fiscal matters are among others. - Authorities state requests for cooperation to the FMA cannot be refused solely because they also involve fiscal matters. - Confidentiality and professional secrecy conditions apply across FMA, BWG, WAG, VAG frameworks; inquiries are assessed case-by-case and, to date, no request has been denied on those grounds. - Extent of the notion of “legal advice” may limit provision of international cooperation concerning lawyers, notaries and accountants. *https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09298.pdf* ### 1210. Insurance undertakings: information and documents given to foreign authorities are subject ### _cr09298 - 1210. Insurance undertakings: information and documents given to foreign authorities are subject ### Confidentiality and safeguards for exchanged information - Insurance undertakings: information and documents given to foreign authorities are subject to confidentiality rules equivalent Austrian’s rules. (Paragraph 1210) - Securities institutions: provision of information to EU Member States’ supervisory authorities is subject to professional secrecy (Article 97, paragraph 1 of the WAG). The legal provisions do not address other counterparts with which the FMA may cooperate and exchange information. (Paragraph 1211) - As soon as the information request from a foreign FIU relates to a suspicion of ML or an underlying predicate offense, an investigation has to be opened pursuant to the Criminal procedure code; exchanged information will be treated as protected by the same provisions as apply to similar information obtained from domestic sources. When preliminary proceedings end or the case is final, the suspect/defendant can be authorized to view all files related to the investigation, including the request from a foreign FIU. (Paragraph 1212) ### Legal basis for exchange and non-counterparts - The EU Council Decision 2000/642/JHA gives a legal basis for the A-FIU to exchange information with FIUs from EU Member States that are not law enforcement agencies, and are consequently not considered as counterparts according to the PolKG. (Paragraph 1214) - There are no provisions allowing the direct exchange of information with non-counterparts; requests from non-counterparts would be processed indirectly through other foreign or domestic authorities. (Paragraph 1215) - Pursuant to the PolKG and the EU Council Decision 2000/642/JHA, the A-FIU can obtain information requested by EU and law enforcement FIUs from other competent authorities or other persons, including from reporting entities. In practice, the A-FIU informed the assessors that any FIU in the world would receive the requested information from the A-FIU provided it gives the permission to make use of the data initially provided. (Paragraph 1216) ### International cooperation and terrorist financing (FT) - The BVT is the sole responsible agency concerning FT. The BVT is not a member of the Egmont Group and there is no specific mention regarding FT-related international cooperation in the letter sent by the BKA to the BVT in June 2003 regarding the procedure to combat FT. Authorities informed assessors that FT-related international cooperation is done by the A-FIU on behalf of the BVT. (Paragraph 1217) - The BVT is a member of several international working groups, including the Police Working Group on Terrorism (PWGT), aimed at exchanging situation reports, rapidly conveying information on special cases, and coordinating operational measures. (Paragraph 1217) - Anecdotal evidence indicates that Austria refused to cooperate with Turkey by extraditing Riza Altun (a Turkish national, member of the PKK, subject of an Interpol arrest warrant), enabling Riza Altun to evade judicial measures. Turkey filed a complaint against Austria to the UN Counter Terrorism Committee by letter dated July 24, 2007, and to other international fora such as the OSCE. Austria’s grounds for refusal were not shared with the assessors. (Paragraph 1218) - Rules and procedures for information exchange, which apply in the context of prudential supervision of operational risk, include FT risk. (Paragraph 1219) - The A-FIU is not competent for FT-related international cooperation. (Paragraph 1220) ### Statistics on information exchange (Egmont Secure Web, ESW) - Statistical Table 34. Information Received or Sent Through the ESW: - Information requested by foreign FIUs: 2005 — 166; 2006 — 159; 2007 — 195 - Requests sent by the A-FIU: 2005 — 43; 2006 — 65; 2007 — 188 - Total: 2005 — 209; 2006 — 224; 2007 — 383 (Paragraph 1221) - Statistical Table 35. Breakdown of Information Requested by Foreign FIUs (selected entries as presented): - Country — 2006 — 2007 - Belgium — 5 — - Belize — — 2 - Bolivia — 4 — - Bulgaria — 14 — - Croatia — 17 — 2 - Cyprus — — 2 - Denmark — 4 — - Germany — 6 — 10 - Hungary — 12 — - Italy — — 4 - Liechtenstein — 7 — - Lithuania — — 2 - Luxembourg — — 2 - Russian Federation — 8 — 3 - Serbia-Montenegro — 4 — - Slovakia — 17 — - Slovenia — — 3 - Switzerland — 11 — 5 - UK — — 5 - Ukraine — — 2 - USA — — 2 - Others — 46 — 21 - Total — 109 — 44 (Paragraph 1221) ### Mutual Legal Assistance (MLA) and MoJ - The MoJ maintains statistics on the number of incoming requests for MLA, but they are not sufficiently comprehensive to establish the type of measures requested and the timeframe within which the Austrian authorities respond to the request. (Paragraph 1222) - No statistics are available up to 2007. In 2008, the FMA issued one request; answer is pending. (Paragraph 1223) - The MoJ Department for International Criminal Cases is the central authority for receiving incoming requests for MLA and extradition; it is composed of one head of Department and four lawyers who are all either judges or prosecutors. The department has a computer system enabling tracing of all MLA and extradition proceedings and access to the electronic register of residents and the register of persons in custody. (Paragraphs 1224–1225) - Staff of the Department take part in trainings and seminars on the fight against ML and FT offered by EU institutions (EUROPOL, EUROJUST, OLAF), the Academy of European law in Trier (Germany), or by domestic authorities. (Paragraph 1225) ### Recommendations and comments - The authorities should: (Paragraph 1226) - FIU: - Grant the A-FIU the sufficient resources in order to respond to foreign FIU requests in a timely way; - Enable the A-FIU to exchange information on FT. - Supervisory authorities: - Establish provisions which allow competent authorities to conduct inquiries on behalf of securities supervisors from third countries. ### Compliance ratings and key factors (Recommendations 40, SR.V, 30, 32) - R.40 — LC - FIU: A-FIU lacking resources may delay the response to some requests depending on the circumstances. - Supervisory authorities: Lack of provisions as regards to conducting inquiries on behalf of securities supervisors from third countries. (Paragraphs 6.5.3 summary) - SR.V — NC - FIU: A-FIU not legally empowered to exchange information on FT. (Paragraphs 6.5.3 summary) - R.30 — LC - Additional resources required in the police and supervisory areas, especially in the DNFBP sector (besides legal professions). - Need for strengthened AML/CFT training for supervisors, especially in the DNFBP sector (besides legal professions). (Paragraph 1227) - R.32 — PC - No statistics available on the number of extraditions. - Insufficient statistics on information exchange between supervisory authorities. - No data about domestic financial institutions’ supervision. - Lack of data on MLA. (Paragraph 1227) *Source: _cr09298 - 1210. Insurance undertakings: information and documents given to foreign authorities are subject* ### 24. DNFBP—regulation, ### 24. DNFBP—regulation, supervision and monitoring ### Key deficiencies (regulation, supervision, monitoring) - Absence of adequate powers to perform supervision of internet casinos. - Absence of power to control the beneficial owners of a significant or controlling interest in casinos, and to prevent actions by associates of criminals. - Absence of systems for monitoring and ensuring compliance with AML/CFT requirements for accountants and all the companies active in the TCSP sector. - Lack of effectiveness and resources to implement the measures envisaged by the GewO. - Inadequate sanctioning powers. ### Guidelines and feedback for reporting entities - No up-to-date guidance on reporting for credit and domestic financial institutions, insurance undertakings, and securities institutions. - Insufficient guidance available to industry on the new legal requirements. - Absence of guidelines for all DNFBPs but notaries and casinos. - Limited general feedback tailored to the specific needs of each DNFBP, and absence of systematic case by case feedback on STRs. ### FIU, law enforcement and supervisory capacities - A-FIU not a national centre for analyzing and disseminating STRs. - A-FIU not a national centre for receiving, analyzing and disseminating information concerning suspected FT activities other than STRs. - Law enforcement authorities: overall rating C (no specific deficiencies listed in this excerpt). - Strict conditions for obtaining/compelling information subject to banking secrecy and scope of legal privilege hinder the possibility for law enforcement authorities to locate and trace property. - Low level of AML/CFT supervision of domestic financial institutions. - No supervisory powers of sanction against a domestic financial institution. - Additional resources required in the police and supervisory areas, notably for the DNFBP sector. - Need for strengthened AML/CFT training for supervisors, especially in the DNFBP sector. ### Statistics, beneficial ownership, and legal arrangements - No statistics available on the number of extraditions. - Insufficient statistics on information exchange between supervisory authorities. - No data about domestic financial institutions’ supervision. - Lack of data on MLA. - Insufficient capacity to ascertain beneficial ownership in the case of companies that issue bearer shares and, in some instances, in the case of private foundations. - Competent authorities not always able to obtain or access to adequate, accurate and current information on the beneficial ownership and control of legal persons in a timely fashion. - No risk assessment undertaken by the authorities to ascertain the risk of ML/FT in the case of joint stock companies which have issued bearer shares, nor in the case of foundations, where the founding deed does not indicate the name of the beneficiaries. - No transparency where the property held in Treuhand is composed of assets other than funds (regardless of the Treuhänder); where the Treuhänder is someone other than a lawyer, notary or registered TSP; where funds held under Treuhand by lawyers amount to less than the federal state threshold (i.e., between EUR 15,000 and EUR 40,000). - No transparency over foreign trusts operated from Austria. - No effective AML/CFT oversight to ensure TSPs properly obtain, verify and record details of the Treuhand and its beneficial ownership. - No effective means by which bodies charged with the oversight of TSPs for AML/CFT purposes can share information with their national or foreign counterparts. ### International cooperation and legal framework shortcomings - Self-laundering is not criminalized in Austria. - Strict conditions for obtaining/compelling information subject to secrecy and extensive scope of legal privilege hinder the possibility for law enforcement authorities to locate and trace property. - Criminal provisions not fully in line with the 1999 UN Convention. - Practice indicates that MLA may not always be granted in a timely manner. - Deficiencies noted under Recommendation 1 (absence of criminalization of self-laundering and incomplete list of predicates) narrow the scope of the MLA that Austria may grant. - No arrangements concluded for seizure and confiscation actions with other countries. - No consideration given to sharing of confiscated assets with countries other than EU members and the United States. - Lack of evidence of the overall effectiveness of the extradition framework. - A-FIU lacking resources may delay the response to some requests depending on the circumstances. - Lack of provisions as regards to conducting inquiries on behalf of securities supervisors from third countries. ### FATF Special Recommendations—selected weaknesses - SR.I Implement UN instruments (PC): Criminalization of organization and direction of others is not fully in line with the 1999 UN convention; incomplete implementation of UNSCRs 1267 and 1373. - SR.II Criminalize terrorist financing (PC): FT offense not fully applicable in all circumstances; penalties too low; criminalization of organization and direction of others not fully in line with the 1999 UN Convention. - SR.III Freeze and confiscate terrorist assets (PC): Lack of effective procedures to allow freezing without delay for assets other than funds; OeNB regulations do not constitute freezing mechanisms in the terms required by UNSCR 1373 and SR.III; insufficient guidance to financial institutions and other persons or entities concerning freezing obligations. - SR.IV Suspicious transaction reporting (LC): Provisions in three of the four different reporting laws raise technical issues that could affect institutions’ decisions on whether they are obliged to file reports in certain situations. - SR.V International cooperation (PC): Strict requirements to lift banking secrecy and extensive scope of legal privilege slow down effective cooperation; A-FIU not legally empowered to exchange information on FT; effectiveness not established. - SR.VI AML/CFT requirements for money/value transfer services (LC): Deficiencies in the framework for preventive measures. - SR.VIII Nonprofit organizations (PC): NPOs operating under the legal form of private foundations are not required to make information on the identity of persons who own, control or direct their activities publicly available; NPOs are not adequately required to maintain and make available to appropriate authorities records of domestic and international transactions that are sufficiently detailed; insufficient outreach exercise. - SR.IX Cross Border Declaration and Disclosure (PC): Exception for Jungholz and Mittelberg not in line with SR.IX; lack of monitoring and checks of cross border transportation of cash into Jungholz and Mittelberg posing a serious risk of ML; implementation not effective. ### Recommended actions (selected from Table 2) - Criminalize self-laundering. - Make counterfeiting and piracy of products predicate offense to ML. - Increase the penalties set forth for natural persons by Article 165 and the minimum sanctions applicable in the case of legal persons. - Extend the criminalization of FT in all instances envisaged in SR.II with reference to the financing of terrorist organizations and the individual terrorist, regardless of whether that financing is for criminal activities, legal activities or general support. - Set up procedures within Austria that will ensure freezing without delay of assets other than funds (such as immovable goods, companies and businesses and vehicles). - Modify the OeNB regulations adopted pursuant to the DevG in order to make possible freezing of funds and assets held by EU-internals in all instances set forth by SR.III. - Provide more guidance to the private sector, especially the non banking financial industry and DNFBPs, on the freezing obligations stemming from the international standard. - Review the legal framework in order to clearly establish a Financial Intelligence Unit that serves as a national center for receiving, analyzing and disseminating disclosures of STRs and other relevant information concerning suspected ML or FT activities. - Empower this FIU to analyze STRs, prior to any police or criminal investigation, with access to the financial, administrative and law enforcement information and authorization to obtain additional information from reporting parties. - Soften the requirements for law enforcement authorities to obtain access to information held by financial institutions and by lawyers and notaries. - Subject to disclosure or declaration obligations the transportation of cash or other bearer negotiable instruments into/out of the municipalities of Jungholz and Mittelberg. - Develop a computerized database for the storage of the information gathered through the declaration/disclosure process and use it to build intelligence to target cash couriers. - Require that holders of savings documents for savings deposit accounts which balance is lower than EUR 15,000 and are not registered in the customer’s name, be considered as beneficial owners and be subject to corresponding identification and verification obligations. - Remove the blanket exemption for fiduciary accounts below EUR 15,000. - Conduct ML/FT risk assessment and require enhanced due diligence measures with respect to business relationships and transactions that are of higher risk. - Issue guidelines on the extent of the CDD measures on a risk sensitive basis. - Extend financial institutions’ requirement to report to the A-FIU in order to cover all situations when there is a suspicion that funds are the proceeds of a criminal activity, and not only when there is a suspicion that a transaction serves the purpose of money laundering. - Apply the obligation to make a STR to funds that are the proceeds of piracy and counterfeiting, and require professions under the GewO to report STRs in case of self-laundering. - Establish the compliance officer function as a management position and give the AML/CFT compliance officer the right to access CDD data and information, transaction records and other relevant information. - Make sanctions sufficiently proportionate and dissuasive and establish a regime of supervisory sanctions for domestic financial institutions. - Provide resources, training and support sufficient to enable supervisory divisions to increase AML/CFT oversight. *Source: _cr09298 - 24. DNFBP—regulation, supervision and monitoring* ### 3.11 Money value transfer services ### 3.11 Money value transfer services (SR.VI) ### Key recommendation - Revise the framework for preventive measures to address all deficiencies. ### Preventive Measures – Nonfinancial Businesses and Professions (selected related measures) - Review the requirements concerning PEPs. Casinos - Extend the legal framework in order to cover all casinos operating in Austria. - Establish legal requirements of CDD for internet casinos. - Establish rules to determine the basis upon which internet casinos are subject to AML/CFT requirements. - Set out a legal obligation for casinos to perform CDD for all customers, including non EU/EEA citizens, when they engage in financial transactions equal to or above EUR 3,000. - Require casinos to perform specific review for higher risk categories and enhanced due diligence for higher risk customers, such as non-resident customers. - Require casinos to put in place appropriate management systems to determine whether a potential customer, a customer or the beneficial owner is a PEP. - Set out enforceable requirements for Internet casinos in order to address the specific risks related to non-face-to-face transactions. - Require casinos to keep record of transactions. Real estate agents, dealers in precious stones and metals, and TCSPs - Effectively implement GewO requirements regarding TCSP activities; review the Chamber of commerce’s business profiles of management consultant, office work (Büroarbeiten), and office services (Büroservice). - Require to verify that any person purporting to act on behalf of the customer is so authorized. - Absence of guidelines issued by competent authorities to determine the extent of the CDD measures on a risk sensitive basis. - Require to perform specific review for higher risk categories and enhanced due diligence for higher risk customers, such as non-resident customers. - Review the framework of simplified CDD measures in line with the standard. - Require to set forth and keep findings of examination of complex and unusual transactions. - Effectively implement the CDD requirements. Lawyers and Notaries - Clarify the scope of the CDD requirements. - Eliminate the reference to risk in the requirement to identify and verify the beneficial owner. - Require enhanced due diligence for higher risk categories such as non-resident customers or private banking. - Review the framework of simplified CDD measures in line with the standard. - Adopt CDD measures concerning existing customers. - Require lawyers and notaries to pay special attention to all complex and unusual transactions. - Review the disposition regarding the legal privilege in order not to hamper CDD measures. - Issue guidance for lawyers in order to facilitate effective implementation. Accountants - Clarify the scope of the CDD requirements. - Eliminate the reference to risk in the general CDD requirement. - Eliminate the reference to risk in the requirement to identify and verify the beneficial owner. - Review the framework of simplified CDD measures in line with the standard. - Require to set forth and keep findings of examination of complex and unusual transactions. - Review the disposition regarding the legal privilege in order not to hamper CDD measures. - Effectively implement the CDD requirements. ### Suspicious transaction reporting (R.16) All DNFBPs - Align the grounds for reporting on the standard. - Give special attention to business relationships and transactions with persons from countries insufficiently applying the FATF recommendations. Casinos - Require Internet casinos to report STRs and specify AML/CFT internal controls. Real estate agents, dealers and TCSPs - Effectively extend the legal obligation to report STRs and have internal control in place to all businesses and professions conducting TCSP activities. Lawyers and notaries - Consider reviewing the matters that fall under legal professional secrecy of notaries and lawyer, that currently appear very broad. Accountants - Consider reviewing the matters that fall under legal professional secrecy of accountants, which currently appear very broad. ### Regulation, supervision, monitoring, and sanctions (R.17, 24, and 25) - Give the Ministry of Finance adequate powers to perform AML/CFT supervision of internet casinos. - Empower the Ministry of Finance to perform controls on the beneficial owners of a significant or controlling interest in casinos, and to prevent actions by associates of criminals. - Put in place a system for monitoring and ensuring compliance with AML/CFT requirements to cover accountants and all the companies active in the TCSP sector. - Give trade authorities the necessary technical and budgetary resources to perform effectively their functions. - Review the amount of the fines permissible under the GewO. - Establish guidelines tailored to the specific needs of each DNFBP, as these currently exist only for notaries, and partially for casinos. - Provide information on current techniques, methods and trend tailored to each DNFBP, as well as systematic case by case feedback on STRs. ### Other designated non-financial businesses and professions (R.20) - Take additional measures to reduce the relative importance of use of cash and large denomination banknotes. ### Legal Persons and Arrangements and Nonprofit Organizations Legal Persons – Access to beneficial ownership and control information (R.33) - Make the regime of private foundations more transparent on beneficial ownership, for example by requiring that the appendix/supplementary declaration be available in the Commercial Register, to reduce the risk that these foundations may be used for ML. - Establish a legal mechanism to trade shares in the Stock exchange in nominative form or adopt legal provisions to make “de-materialization” mandatory. - Conduct an assessment to determine the ML risk potentially associated to the use of bearer shares. Legal Arrangements – Access to beneficial ownership and control information (R.34) - Ensure transparency where the property held in Treuhand is composed of assets other than funds (regardless of the Treuhänder), where the Treuhänder is someone other than a lawyer, notary or registered TSP, where funds held under Treuhand by lawyers amount to less than the federal state threshold (i.e., between EUR 15,000 and EUR 40,000). - Ensure transparency over foreign trusts operated from Austria. - Implement AML/CFT oversight to ensure TSPs properly obtain, verify and record details of the Treuhand and its beneficial ownership. - Develop effective means by which bodies charged with the oversight of TSPs for AML/CFT purposes can share information with their national or foreign counterparts. Nonprofit organizations (SR.VIII) - Require NPOs operating under the legal form of private foundations to make information on the identity of persons who own, control or direct their activities, publicly available. - Strengthen requirements for NPOs to maintain and make available to appropriate authorities records of domestic and international transactions that are sufficiently detailed to verify that funds have been spent in a manner consistent with the purpose and objectives of the organization. - Strengthen outreach to the NPO sector. ### National and international cooperation; legal assistance and other measures The recommendations on national cooperation and coordination (R.31 and 32) are fully observed. Conventions and UN Special Resolutions (R.35 and SR.I) - Criminalize self-laundering. - Soften the requirements for law enforcement authorities to obtain access to information subject to secrecy. - Extend the criminalization to the whole range of activities envisaged by Article 2, paragraphs 5(b) and (c) of the 1999 UN Convention. - Set up procedures within Austria that will ensure freezing without delay of assets other than funds (such as immovable goods, companies and businesses and vehicles). - Modify the OeNB regulations adopted pursuant to the Exchange of Control Act (for EU-internal terrorists) in order to make possible freezing of funds and assets held by EU-internals in all instances set forth by UNSCR 1373 and SR.III. Mutual Legal Assistance (R.36, 37, 38, SR.V and 32) - Ensure that MLA is granted in a timely, constructive and effective manner. - Conclude arrangements for coordinating seizure and confiscation actions with other countries. - Remove from banking secrecy provisions all requirements which may hinder effective cooperation. - Ensure that extensive scope of legal privilege does not slow down effective cooperation. - Consider sharing of confiscated assets with countries other than EU members and the United States. Extradition (R.39, 37, SR.V and R.32) - Take steps to improve the overall effectiveness of the extradition framework. Other Forms of Cooperation (R.40, SR.V and R.32) - Grant the A-FIU the sufficient resources in order to respond to foreign FIU requests in a timely way. - Enable the A-FIU to exchange information on FT. - Establish provisions which allow competent authorities to conduct inquiries on behalf of securities supervisors from third countries. ### Resources, statistics, and other issues Resources and statistics (R.31 and 32) - Improve the statistical apparatus. - Provide for additional resources for the police and supervisory bodies. Other issues - The authorities chose not to respond to the assessment. *IMF staff report — assessment excerpts as provided.* ### 1. has committed crimes (sect. 17) continuously or repeatedly and has obtained economic benefits from, or ### _cr09298 - 1. has committed crimes (sect. 17) continuously or repeatedly and has obtained economic benefits from, or ### Confiscation of profits (Arts. 20–20a, paras. (2)–(6)) - Where a person has committed crimes continuously or repeatedly and has obtained economic benefits from, or received for, their commission, these economic benefits are to be taken into consideration in fixing the amount of money to be confiscated. - If during the same period the person has gained further economic benefits and there is an obvious supposition that these benefits derive from other crimes of the same nature and the legal acquisition cannot be made credible, those further benefits must also be considered for confiscation. - A perpetrator who, during membership in a criminal organization (sect. 278a) or a terrorist group (sect. 278b), has gained economic benefits is to be condemned to payment of an amount of money the court may fix corresponding to the gained profits if there is an obvious supposition that these profits derive from offences and their legal acquisition cannot be made credible. - Whoever profits illegally and directly from an offence committed by another person, or from the economic benefit given for the commission of such an offence, is to be condemned to payment of an amount of money equivalent to these profits; this applies mutatis mutandis to legal persons and partnerships which have gained profits. - If the person who has gained illegal profits has died, or if the legal person or partnership has ceased to exist, the profits are to be confiscated from the legal successor insofar as they were still existent at the moment of transmission of rights. - A majority of persons who have gained illegal profits are to be condemned according to their respective shares; if the share cannot be established, the court has to fix it according to its conviction. - Art. 20a (Abstention from the Confiscation of Profits): - Confiscation is excluded insofar as the person has satisfied civil claims derived from the criminal act, has undergone the contractual and enforceable obligation to do so, has been condemned (or is condemned simultaneously) to do so, or if and insofar as the profits are removed by other legal measures. - Confiscation is to be refrained from insofar as: - the amount of money to be confiscated or the chances to enforce the order is disproportionate to the expenditure for proceeding to such order or for its enforcement, or - the payment of the amount of money would unreasonably endanger the subsistence of the person who has gained the profits or would constitute an inappropriate hardship for him, especially because the profits do not exist any more at the time of the order; other disadvantageous consequences of a conviction are to be taken into consideration. ### Forfeiture (Arts. 20b–20c) - Art. 20b (Forfeiture): - Property at the disposal of a criminal organization (sect. 278a) or a terrorist group (sect. 278b) or property provided or collected as a means for financing terrorism shall be declared forfeited. - Property deriving from an offence where Austrian jurisdiction is not established under sect. 62 to 65 shall be declared forfeited if the offence is punishable under the law of the State where it was committed. - Art. 20c (Abstention from Forfeiture): - Forfeiture is excluded insofar as: - the property concerned is legitimately claimed by a person not having participated in the offence or in the criminal organization or terrorist association, or - its purpose is achieved by other legal measures, especially insofar as the illegal profits are declared confiscated in foreign proceedings and if the foreign decision can be executed in Austria. - Forfeiture is to be refrained from if it would be out of proportion to the importance of the matter, or to the expenditure implied. ### Money laundering (Art. 165) - Art. 165 (Money laundering) offences and penalties: - (1) Concealing or disguising property items deriving from specified offences (sections 168c, 168d, 223, 224, 225, 229, 230, 269, 278, 278d, 288, 289, 293, 295 or 304 to 308, or certain tax or smuggling/evasion offences) is liable to imprisonment for a term not exceeding two years or to a fine not exceeding 360 daily rates. - (2) Knowingly acquiring, holding in custody, investing, administering, converting, realizing, or transferring such property items to a third party is liable in the same way. - (3) Committing the offence involving items worth more than 50,000 Euro or as the member of a criminal group associated for the purpose of continuous money laundering is liable to imprisonment for a term of six months to five years. - (4) A property item is deemed to derive from an offence when the perpetrator has obtained it through that offence or received it for the commission of that offence, or when it represents the value of the originally obtained or received property item. - (5) Knowingly, acting on behalf or in the interest of a criminal organization (sect. 278a) or of a terrorist group (sect. 278b), acquiring, holding, investing, administering, converting, realizing, or transferring property items of that organization or group is liable to imprisonment for a term not exceeding three years; if involving items worth more than 50,000 Euro, imprisonment for a term from six months to five years. ### Criminal association, organization, terrorist association and terrorist offences (Arts. 278–278d) - Art. 278 (Criminal association): - (1) Founding or participating in a criminal association: sentenced to imprisonment up to three years. - (2) Definition: an union planned for a longer time of more than two persons aiming the commitment of one or more crimes by one or more members, other considerable acts of violence against life and limb, not only petty damages to property, thefts or frauds or misdemeanours under listed sections. - (3) Participation: commits an offence within the scope of its criminal orientation or participates by providing information or assets or in another way with awareness that he promotes the association or its criminal acts. - (4) No punishment if association dissolves voluntarily before planned offence or if a person withdraws voluntarily before an offence has been committed or attempted; leading-position participants can avoid punishment only if they remove the danger by informing authorities (sect.151 para. 3) or otherwise. - Art. 278a (Criminal organisation): - Establishing or participating in an association of a considerable number of persons, intended to last a longer period and similar to an enterprise, is liable to imprisonment for a term of six months to five years if the association: 1. is oriented, even if not exclusively, towards the repeated and planned commission of grave offences against life and limb, freedom, or property, or of grave offences relating to sexual exploitation, smuggling of aliens, illegal trafficking in military weapons, nuclear and radioactive material, dangerous waste, counterfeit money or drugs, and 2. aims at profits on a high scale or at considerable influence on politics or economy, and 3. undertakes to corrupt, or intimidate, others, or to particularly screen itself against prosecution measures. - Section 278, para. 4, applies mutatis mutandis. - Art. 278b (Terrorist association): - (1) Leading a terrorist association: imprisonment from five to fifteen years. Leading a terrorist association which confines itself to threaten with terrorist offences (sect. 278c para. 1): imprisonment from one year to ten years. - (2) Participating as member: imprisonment from one year to ten years. - (3) Definition: an union planned for a longer time of more than two persons aiming the commitment of one or more terrorist criminal offences (sect. 278c). - Art. 278c (Terrorist criminal offences): - (1) Lists offences considered terrorist criminal offences including murder (sect.75), bodily injuries (sects. 84–87), extortionate kidnapping (sect. 102), gross intimidation (sect. 106), dangerous threat (sect. 107 para.2), gross damage to property (sect. 126) and damaging of data (sect. 126a) where large danger results, intentional offences endangering public safety (sects. 169, 171, 173, 175, 176, 177a, 177b, 178), hijacking (sect. 185), intentional danger to the safety of aviation (sect. 186), specified weapons/war material offences causing severe interference with public life or economic life to intimidate people or coerce authorities or international organizations. - (2) Penalty: punished pursuant to the law applicable to the offence with the maximum penalty increased by half of the penalty prescribed respectively, but not exceeding twenty years. - (3) Exclusion: not regarded as terrorist criminal offence if directed to establishment or re-establishment of a democratic and constitutional situation or the exercise or observance of human rights. - Art. 278d (Financing of terrorism): - (1) Providing or collecting assets with intent that they be used for committing specified offences (including hijacking, intentional danger to aviation, extortionate kidnapping, attacks on persons protected by international law, intentional endangering by nuclear energy or ionized radiation, attacks on airports, offences against vessels or fixed platforms, transportation of blasting compositions to public places or institutions, or offences aimed at causing death or grievous bodily injury of civilians to threaten a population or coerce governments/international organizations) is to be sentenced to imprisonment from six months to five years. The nature and extent of the sentence must not be severer than the penalty provided for the financed offence. - (2) The offender shall not be punished under para. 1 if the offence is subject to a severer penalty under another provision. ### StPO: Seizure, sequestration and information on bank accounts (Sections 109–113) - Definitions (Section 109): - “seizure”: temporary constitution of the authority to dispose over objects and the temporary prohibition to hand over objects or other assets to third persons and the temporary prohibition to alienate or pledge such objects and assets (third party prohibition). - “sequestration”: a court decision to constitute or continue a seizure and the prohibition by a court to alienate, encumber or pledge real estates or rights listed in a public register. - “information on bank accounts and bank operations”: disclosure of name and other identity information of the holder of a business relation, address, whether an accused person maintains business relations with the institution, is entitled to economic advantages from this relation or authorised by such relation, and presentation of all documents regarding identity and authorisation, access to documents and other papers regarding the nature and extent of a business relation and other business operations for a determined past or future period of time. - Seizure (Section 110): - (1) A seizure can be admitted if necessary: 1. due to reasons of evidence, 2. for securing rights based in civil law (section 367), or 3. for securing the confiscation of proceeds of crime (section 20 StGB), the forfeiture (section 20b StGB), the confiscation (section 26 StGB) or another order relating to property rights provided for in the law. - (2) The seizure is to be ordered by the office of public prosecution and executed by the criminal police. - (3) Criminal police may seize objects at their own discretion (section 109 n° 1 lit. a) in specified cases including unclaimed objects, objects found on crime scenes, objects of low value or easily substituted, prohibited possessions (section 445a para. 1), objects in possession of a person arrested under section 170 para. 1 n° 1, or in cases of section 110 para. 3 n° 5 relating to Council Regulation (EC) No 1383/2003. - (4) Seizure for reasons of evidence is not admitted and must be terminated if the affected person requests it once evidence can be met with pictures, recordings or copies and there is no reason to assume the originals must be inspected during court proceedings. - Obligations and procedural safeguards (Sections 111–113): - Section 111: - (1) Persons possessing objects or assets to be seized are obliged to hand them over or ensure the seizure; force and searches (sections 119–122) may be used. - (2) For information stored on data carriers, anyone must grant access, hand over or produce an electronic data storage medium in a file format commonly used, and abide creation of a backup copy. - (3) Non-accused persons are entitled to refund of appropriate and common costs necessarily incurred by separation of documents or handing over copies upon application. - (4) The affected person must be given or served a confirmation of the seizure immediately or at the latest within 24 hours informing them about their right to object (section 106). In case of seizure to secure civil rights claims (section 110 para. 1 n° 2) the victim must be informed if possible. - Section 112: - If seized written documents or data carriers relate to a legally recognised secrecy obligation, they must be secured against inspection or alteration and presented to the court; they must not be inspected before the court decides whether and to what extent they are to be seized or returned. A complaint against the court decision has suspensory effect. - Section 113: - (1) Seizure terminates if criminal police sets it aside, if the office of public prosecution orders cancellation, or if the court orders sequestration. - (2) Criminal police must report to the office of public prosecution immediately but at the latest within 14 days of any seizure (section 100 para. 2 n° 2), unless seizure is set aside earlier for lack of prerequisites. Reporting may be combined with subsequent reports if not detrimental to the case and if seized objects are of low value or otherwise specified. - (3) The office of public prosecution must immediately request the court to sequestrate the objects or order cancellation if prerequisites are not or no longer fulfilled. *Source: IMF content unit _cr09298 - Extracts from Austrian Criminal Code (StGB) and Code of Criminal Procedure (StPO) as provided in the supplied PDF content.* ### Section 114. ### Section 114. ### Custody of seized objects - The criminal police is responsible for the custody of the seized objects until the courts decides about the sequestration (section 115 para. 2), after that the office of public prosecution is responsible. (Section 114 para. 1) - If the reason for continuing the custody of seized objects no longer exists, the objects immediately have to be handed over to the persons in whose disposition they were at the time of the seizure, unless these persons are apparently not entitled to that. - If those persons are not entitled, the objects have to be handed over to the entitled person or, if such a person has not been found or can only be found with disproportional effort, they have to be deposited according to section 1425 of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch–ABGB). The persons affected by this have to be notified. (Section 114 para. 2) ### Sequestration (Section 115) - Sequestration is admitted if the objects seized presumably: - 1. are required as evidence in the following proceeding, - 2. are subject to civil law claims (section 367) or - 3. will be needed to ensure a judicial decision on the confiscation of proceeds of crime (section 20 StGB), on forfeiture (section 20b StGB), on confiscation (section 26 StGB) or another legally provided measure relating to property rights, whose execution would otherwise be endangered or considerably more difficult. (Section 115 para. 1) - On request of the office of public prosecution the court has to decide immediately about the sequestration. (Section 115 para. 2) - Section 110 para. 4 is to be applied analogously; if necessary sequestration may be limited to recordings and copies mentioned there. (Section 115 para. 3) - For sequestration via “third party prohibition” and a prohibition to alienate or encumber (section 109 n° 2 lit. b) the provisions of the Austrian Code of Enforcement (Exekutionsordnung-EO) on the preliminary injunction are applicable analogously unless this law provides otherwise. (Section 115 para. 4) - If sequestration is permitted to secure a judicial decision on confiscation of proceeds of crime (section 20 StGB) or forfeiture (section 20b StGB), an amount of money that will cover the presumable confiscation of proceeds of crime or the presumable forfeiture has to be determined. (Section 115 para. 5) - If and as soon as the prerequisites for the sequestration do not or no longer exist or an amount of money mentioned in para. 5 is deposited, the office of public prosecution, after bringing the writ of accusation the court, has to terminate the sequestration. (Section 115 para. 6) ### Information on bank accounts and bank operations (Section 116) - Disclosure of information on bank accounts and bank operations is admitted if it seems to be necessary to clarify a criminal offence or misdemeanour under the jurisdiction of the Regional Courts (section 31 para. 2 to 4). (Section 116 para. 1) - Disclosure according to section 109 n° 3 lit. b is moreover only admitted if due to ascertained facts it can be assumed that: - 1. the business relation of a person with the credit or financial institution is connected to committing a criminal act and either the holder of the account himself/herself is suspected of having committed the act or if it is presumed that a person suspected of having committed the act will operate or has operated a transaction via the account, or - 2. the business relation will be used for the transaction of a financial benefit that was gained through criminal acts or gained for them (section 20 StGB) or is subject to the disposition of a criminal organisation or terrorist organisation or is provided or collected as a means of financing terrorism (section 20b StGB). (Section 116 para. 2) - Disclosure has to be ordered by the office of public prosecution on the basis of a judicial admission. (Section 116 para. 3) - Order and admission must contain: - 1. the denomination of the court case and the criminal act it is based on as well as its legal denomination, - 2. the credit or financial institution, - 3. the designation of the documents to be handed over and the information to be disclosed, - 4. the facts that constitute the grounds for the necessity and proportionality (section 5) of the order, - 5. in the case of an order according to para. 2 the time frame concerning which the operations are to be disclosed, - 6. in the case of an order according to para. 2 the facts that constitute the grounds for the connection between the business relation and the subject of the proceeding. (Section 116 para. 4) - The order together with the judicial admission has to be served to the credit or financial institution, the accused and the persons entitled by the business relation, as soon as they are known to the office of public prosecution. Service to the accused and to the entitled persons can be postponed as long as otherwise the aim of the proceeding would be endangered. The credit or financial institution has to be informed of this and has to keep the order and all facts and operations in connection with it secret against clients and third parties. (Section 116 para. 5) - Credit and financial institutions and their employees are obliged to disclose the information, to let the documents and papers be inspected and hand them over. For this an electronic data carrier in a common file format has to be used if automation-aided data processing is used. If the credit or financial institution complains against the judicial admission and does not disclose information or hand over documents, it is to proceed according to section 93 para. 2 and 112 with the difference that the documents have to be presented to the Superior Court (Oberlandesgericht). A search of credit or financial institutions always requires an order of the office of public prosecution on the basis of a judicial admission. If more information or documents beyond the order and admission (para. 4) are needed, a procedure according to section 112 is to be initialised if the credit or financial institution requests it. Sections 110 para. 4 and 111 para. 3 are to be applied. (Section 116 para. 6) ### Definitions: establishing identity, searches, physical and molecular inspections (Section 117) - Definitions for the law: - 1. “establishing the identity” means the investigation and determination of data (section 4 n° 1 of the Data Protection Act 2000 [Datenschutzgesetz 2000]) that distinctively characterize a certain person, - 2. “search of places and objects” means the searching of premises, rooms, vehicles or containers that are not publicly accessible, domiciles or other places protected by the principle of sanctity of the home, and the objects contained within, - 3. “search of a person” means the searching of the clothing of a person and of the objects he/she carries with him/her, the inspection of the naked body of a person, - 4. “physical examination” means the searching of body orifices, the taking of blood samples and any other interference with the physical integrity of a person, - 5. “molecular genetic inspection” means the determination of those parts of the DNA of a person that serve for the purpose of recognition. (Section 117) ### Establishing the identity (Section 118) - Establishing the identity is admissible if, based on ascertained facts, it can be assumed that a person participates in a criminal act, can provide information on the circumstances of committing the act or has left traces that can help to clarify the case. (Section 118 para. 1) - The criminal police is authorized to investigate the name, sex, date of birth, place of birth, profession and the address of a person; to establish the size of a person; to take photographs; to record his/her voice; and to take the imprints of his/her friction ridges as far as this is necessary to establish the identity. (Section 118 para. 2) - Everyone is obliged to cooperate in the establishment of his/her identity in a way appropriate according to the circumstances. If a person requests it, the criminal police has to inform him/her about the reason for establishing his/her identity. (Section 118 para. 3) - If the person does not cooperate or identity cannot be established immediately, the criminal police is entitled to search the person at their own discretion in accordance with section 117 n° 3 lit. a in order to establish the identity. (Section 118 para. 4) ### Search of places, objects and persons (Sections 119–122) - Search of places and objects (section 117 n° 2) is admissible if, due to ascertained facts, it can be assumed that a person who is a suspect is hiding there or if there are objects or traces that have to be seized or examined. (Section 119 para. 1) - Search of a person (section 117 n° 3) is admissible if the person: - 1. has been arrested or caught in the act, - 2. is suspected of committing a criminal act and due to ascertained facts it can be assumed that he/she carries objects that are subject to seizure with him/her or has traces on him/her, - 3. has been injured in the criminal act or has been subjected to other physical changes the determination of which is important for the aims of the criminal proceeding. (Section 119 para. 2) - Searches of places and objects (section 117 n° 2 lit. b) and of persons (section 117 n° 3 lit. b) must be ordered by the office of public prosecution on the basis of a judicial admission. In cases of imminent danger the criminal police may conduct these searches provisionally without the order or admission. The same applies in the cases of section 170 para. 1 n° 1 to the search of persons. Victims may not be forced to be examined against their will (sections 119 para. 2 n° 3 and 121 para. 1 last sentence). (Section 120 para. 1) - Searches under section 117 n° 2 lit. a and section 117 n° 3 lit. a can be conducted by the criminal police at their own discretion. (Section 120 para. 2) - Prior to any search the affected person has to be requested, stating the relevant reasons, to admit the search or to voluntarily hand over the searched objects; this request can only be abandoned in cases of imminent danger and in the case of section 119 para. 2 n° 1. The application of force (section 93) is not permitted in the case of the search of a person according to section 119 para. 2 n° 3. (Section 121 para. 1) - The affected person has the right to be present in a search according to section 117 n° 2 and to be accompanied by a confidant(e) in this case and in the case of a search according to section 117 n° 2. For the confidant(e) section 160 para. 2 applies analogously. If the owner is not present, an adult cohabitant may exercise rights; if not possible, two adult persons not affected must be present. This can only be abandoned in cases of imminent danger. For searches of rooms used to exercise the profession of certain persons, a representative of the relevant legal representation organisation or the media owner or a representative named by him/her has to be called in. (Section 121 para. 2) - Searches must limit public attention, annoyances and disturbances to the unavoidable amount; owner’s rights and personality rights must be respected as far as possible. A search of persons under section 117 n° 3 lit. b must be conducted by a person of the same sex or by a doctor respecting dignity. (Section 121 para. 3) - The criminal police has to report as soon as possible to the office of public prosecution about every provisional search conducted without prior judicial admission; the office of public prosecution must apply for a judicial decision on admissibility. If the search is not admitted the legal situation must be restored. (Section 122 para. 1) - If during a search objects are found suggesting a different criminal act, they must be seized, a separate protocol written, and the incident immediately reported to the office of public prosecution. (Section 122 para. 2) - A confirmation of the search and its result and, if applicable, the order of the office of public prosecution and the judicial decision must be handed over or served to the affected person immediately or at the latest within 24 hours. (Section 122 para. 3) ### Observation, undercover investigation, fictitious purchase — definitions and joint provisions (Sections 129–133) - Definitions: - 1. “observation” is the secret surveillance of the conduct of a person, - 2. “undercover investigation” is the use of officers of the criminal police or other persons on order of the criminal police, who do not disclose nor show their official position or their task, - 3. “fictitious purchase” is the attempt or the feigned committing of a criminal act insofar as this consists in the acquirement, purchase, possession, export, import or transport of objects or assets that have been alienated, originate from a crime or are dedicated to committing a crime or the possession of which is absolutely prohibited. (Section 129) - Observation is admissible if it appears necessary to clarify a criminal act or to investigate the whereabouts of the accused. (Section 130 para. 1) - Use of technical means to establish an area via transmission of signals and opening vehicles/containers for inserting such means is admitted as support if observation would otherwise be futile or significantly hindered. (Section 130 para. 2) - Observation supported by technical means, continued over more than 48 hours, or conducted/supposed to be conducted outside Austria is only admitted if there is suspicion of an intentional criminal act punished with a prison sentence exceeding one year and other specified conditions are met. (Section 130 para. 3) - Undercover investigation is admitted if necessary to clarify a criminal act. Systematic long-term undercover investigation is only admitted if clarifying an intentional criminal act punished with a prison sentence exceeding one year or prevention of a planned criminal act within a criminal or terrorist association or criminal organisation would otherwise be significantly hindered. Production and use of fake identity documents under section 54a of the Austrian Police Act is admitted as far as necessary. (Section 131 paras. 1–2) - The undercover agent must be controlled and checked regularly; operations and significant information must be recorded in a report or official annotation (section 95). (Section 131 para. 3) - Domiciles and other rooms protected by sanctity of the home may only be entered by the undercover agent with the owner’s permission; obtaining permission by faking access authorization is prohibited. (Section 131 para. 4) - Fictitious purchase is admitted if clarification of a crime (section 17 para. 1 StGB) or seizure of objects/assets that originate from a crime or are subject to forfeiture (section 20b StGB) or confiscation (section 26 StGB) would otherwise be significantly hindered; participation in fictitious purchase of third persons is also admitted under section 12 3rd case StGB when prerequisites satisfied. (Section 132) - Joint provisions: - 1. Observation (section 130 para. 1) and undercover investigation (section 131 para. 1) can be realized by the criminal police at their own discretion. Observations under section 130 para. 3, undercover investigations under section 131 para. 2, and fictitious purchase under section 132 must be ordered by the office of public prosecution. (Section 133 para. 1) - 2. Orders under section 130 para. 3 and section 131 para. 2 may be for the time necessary, at the longest one month; undercover investigations for a maximum of three months. A new order is admitted while prerequisites continue. Observations and undercover investigations must be terminated when prerequisites cease, purpose is achieved or cannot be achieved, or the office of public prosecution orders termination. (Section 133 para. 2) - 3. These measures must be realized by the criminal police. Use of technical means for optic or acoustic surveillance within these methods is only admitted upon fulfilling prerequisites in section 136. (Section 133 para. 3) - 4. After termination of observation under section 130 para. 3, undercover investigation under section 131 para. 2, and after finalizing fictitious purchase, the orders and judicial admissions must be served to the accused and affected persons if identity is known or can be established without inappropriate efforts; service can be postponed if it would endanger the purpose of the investigation. (Section 133 para. 4) *Source: _cr09298 - Section 114.* ### Part V: Sequestration of letters, information on data of a transmission of communication and ### Part V: Sequestration of letters, information on data of a transmission of communication and surveillance of communication and persons ### Definitions (Section 134) - “sequestration of letters” means opening and retaining telegrams, letters or other mail sent by or destined for the accused. - “information on data of a transmission of communication” means the disclosure of traffic data (section 92 para. 3 n° 4 of the Telecommunications Act [Telekommunikationsgesetz – TKG]), access data (section 92 para. 3 n° 4a TKG) and location data (section 92 para. 3 n° 6 TKG) of a communications service or an information society service (section 1 para. 1 n° 2 of the Notification Act [Notifikationsgesetz]). - “Surveillance of communication” means the investigation of the content of communication (section 92 para. 3 n° 7 TKG), that is exchanged or conveyed via a communications network (section 3 n° 11 TKG) or a service of the information society (section 1 para. 1 n° 2 Notification Act). - “optical and acoustic surveillance of persons” means the surveillance of the conduct of persons infringing their right to privacy and of the statements of persons that are not meant for the direct knowledge of third persons using technical means for transmitting and recording picture and sound without the knowledge of the affected persons. - “result” (of the sequestration, information or surveillance mentioned in n° 1 to 4) means: - the content of letters (n° 1), - the data of a communication surveillance or the content of transmitted communications (n° 2 and 3), - and the picture and sound recordings of a surveillance (n° 4). ### Sequestration of letters; disclosure of transmission data; surveillance of communications (Section 135) - Sequestration of letters: - Admitted if necessary for clarifying an intentional criminal act punished with a prison sentence exceeding one year and if the accused is imprisoned for such an act or if his production or arrest has been ordered regarding that act. - Disclosure of information on the data for a communication transmission (para. 2) is admitted: 1. if and as long as there is the urgent suspicion that a person affected by the information has abducted another person or otherwise taken this person into his/her power and if the information is limited to data of such communication which presumably has been transmitted, received or sent by the accused at the time of the deprivation of liberty, 2. if it can be expected that it contributes to clarifying an intentional criminal act punished with a prison sentence exceeding six months and if the holder of the technical device that was or will be origin or destination of the transmission of communications explicitly agrees, or 3. if it can be expected that it contributes to clarifying an intentional criminal act that is punished with a prison sentence exceeding one year and if due to ascertained facts it can be assumed that in this way data of the accused can be established. - Surveillance of communications (para. 3) is admitted: 1. in the cases of para. 2 n° 1, 2. in the cases of para. 2 n° 2 if the holder of the technical device that was or will be origin or destination of the transmission of communications agrees to the surveillance, 3. if it appears to be necessary to clarify an intentional criminal act punished with a prison sentence exceeding one year or if otherwise clarifying or preventing criminal acts planned or committed in connection with a criminal or terrorist association or a criminal organisation (sections 278 to 278b StGB) would be significantly hindered and the holder of the technical device that was or will be the origin or destination of the transmission of communications is urgently suspected of committing the intentional criminal act punished with a prison sentence exceeding one year or a criminal act according to sections 278 to 278b StGB, or if due to ascertained facts is can be assumed that a person suspected of committing the act (lit. a) will use the technical device or will establish a connection with it; 4. if due to ascertained facts is can be expected that the whereabouts of a fugitive or absent accused who is urgently suspected of having committed an intentional criminal act punished with a prison sentence exceeding one year can be established through it. ### ARHG (Law on Extradition and Mutual Assistance) — Key Provisions (selected excerpts) - Title I: General Provisions - Reciprocity (§ 3): - (1) A foreign request may only be complied if it is ensured that the requesting State would also comply with a similar request by Austria. - (2) A request under this federal law may not be filed by an Austrian authority if it were not possible to comply with a similar request by another State, unless a request appears to be needed urgently for specific reasons. In this case, the requested State shall be notified of the absence of reciprocity. - (3) In the event of doubts concerning compliance with reciprocity, the opinion of the Federal Minister of Justice shall be obtained. - (4) Another State may be assured of reciprocity in connection with a request made under this federal law, provided that there are no intergovernmental agreement and that it would be admissible under this federal law to comply with a similar request of this State. - Conditions (§ 4): - There shall be compliance with the conditions that another State imposes on the occasion of granting an extradition, transit or surrender, when providing judicial assistance, or in connection with taking over a case for criminal prosecution, surveillance, or execution, and which were not rejected. - Application of the Code of Criminal Procedure (§ 9): - (1) Unless the provisions of this federal law stipulate otherwise, the 1975 Code of Criminal Procedure, Federal Law Gazette No. 631/1975, shall be applied in analogy. - (2) § 64, § 71 to § 73 and § 381 to § 392 of the Code of Criminal Procedure shall not be applied to proceedings for the extradition of persons; § 51 to § 53 and § 59 (2) of the Code of Criminal Procedure, however, shall only apply with the proviso that the date of the examination of the person concerned on the application for extradition (§ 31 (1)) shall replace the filing of the bill of indictment. - (3) The public prosecutor may refrain from prosecuting a punishable act and discontinue the investigating procedure accordingly, provided that the Austrian criminal jurisdiction is only based on § 65 (1) item 2 of the Criminal Law Code and that public interests do not oppose such refraining from prosecution, in particular, if punishment is not required in order to deter others from committing punishable acts. - (4) If surveillance of a person convicted by a foreign court is be to taken over, or if the decision of a foreign court is to be enforced, the public prosecutor may refrain from prosecuting the criminal act underlying the foreign conviction and discontinue the investigative proceedings accordingly, if it can be assumed that the Austrian court would not impose a considerably more severe punishment or preventive measure than the one imposed by the foreign court. - Title II: Extradition from Austria — Admissibility (selected §§) - General Principle (§ 10): Extradition to another State for prosecution or execution of custodial sentence or preventive measure shall be admissible at the request of another State according to this federal law. - Punishable Acts Qualifying for Extradition (§ 11): - (1) Extradition admissible for prosecution of intentionally committed acts punishable under requesting State by a custodial sentence of more than one year or by a preventive measure of the same duration and that are subject to a custodial sentence of more than one year under Austrian law. - (2) Extradition for execution admissible when remaining period of at least four months still needs to be executed. Several custodial sentences or the remaining parts thereof shall be aggregated. - (3) If admissible under (1) or (2), a person may also be extradited for prosecution of other punishable acts or for execution of other custodial sentences or preventive measures where extradition would otherwise not be admissible on account of the term of the stipulated sanction or duration of the punishment. - Prohibition to Extradite Austrian Citizens (§ 12): - (1) The extradition of Austrian citizens shall not be admissible. - (2) Paragraph (1) shall not prevent temporary surrender for specific procedural steps or judicial assistance. - Primacy, Political, Military, and Other Bars (§ 13–§ 16): - § 13: If extradition proceedings are pending against a foreign citizen, it shall not be admissible to remove him/her from Austria on other legal grounds. - § 14: Extradition not admissible for political offences or acts based on political motives unless criminal nature outweighs political nature. - § 15: Extradition not admissible for acts exclusively of a military nature or fiscal/foreign-exchange/trade control violations. - § 16: Extradition prohibited for acts subject to Austrian jurisdiction, with narrow exceptions in § 16 (2) and (3). - Jurisdiction of a Third Country; Limitation; Rule of Law and Asylum (§ 17–§ 19): - § 17: Extradition inadmissible if acquitted or convicted with final and enforceable effect in the State of commission or a third country and punishment served or waived. - § 18: Extradition inadmissible if prosecution or execution comes under statute of limitations in requesting State or Austrian law. - § 19: Extradition inadmissible if there is reason to suspect proceedings will not comply with Articles 3 and 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (Federal Law Gazette No. 210/1958), or if punishment would be enforced in a manner not consistent with Article 3 or would expose person to persecution or other serious prejudices (extradition asylum). - Inadmissible Punishments (§ 20): - (1) Extradition for prosecution of capital punishment only admissible if ensured death penalty will not be imposed. - (2) Extradition for execution of the death penalty shall be inadmissible. - (3) Paragraphs (1) and (2) apply analogously to punishments or preventive measures incompatible with Article 3 of the Convention. - Special Prohibitions (§ 21–§ 22): - § 21: Inadmissible to extradite persons who were without criminal responsibility under Austrian law or the law of the requesting State at the time of the punishable act. - § 22: Inadmissible to extradite persons who would be exposed to obviously disproportionately severe conditions considering severity of the act, young age, long residence in Austria, or other serious personal circumstances. - Processing of Requests and Proceedings (selected §§ 30–32) - § 30: Federal Ministry of Justice forwards extradition requests to competent public prosecutor’s office and may reject requests directly for reasons listed in § 2 and § 3 (1) or if unsuited for lawful processing. - § 31 (Proceedings on Admissibility): - (1) Court shall examine person concerned; decide on admissibility by court decision in accordance with § 33. - (2) Decision on basis of a public oral hearing if person concerned or public prosecutor so move or court deems necessary; hearing rules when person detained pending extradition. - (3) Person must be represented by defense counsel at hearing (§ 61 (1) Code of Criminal Procedure); production in court if detained unless waived. - (4) Public may be excluded from hearing except cases listed in § 229 Code of Criminal Procedure; hearing procedure described including summary, statements, and right to final statement. - (5) Single judge proclaims decision and issues written decision indicating decisive facts. - (6) Complaint procedure: complaint within three days has suspensive effect; further details within fourteen days; higher regional court decides in public oral hearing; decision submitted to Federal Ministry of Justice. - (7) If no complaint, court submits case file directly to Federal Ministry of Justice. - § 32 (Simplified Extradition Procedure): - (1) Person concerned may consent to extradition and transfer without formal extradition proceedings; consent must cover all requests if several submitted; consent by detained person may be given at detention hearing and only valid if put on record by the court. - (2) Court must inform person that, upon simplified extradition, protection afforded by § 23 (1) and (2) or corresponding intergovernmental provisions is not available and consent may not be revoked. - (3) Simplified extradition of a juvenile only admissible if legal representative consents or if represented by defense counsel. - (4) If consented, court submits case file directly to the Federal Ministry of Justice. ### Title IV: Judicial Assistance to Foreign Countries (selected) - § 50 (General Principle): - (1) Judicial assistance may be granted in criminal matters upon request by a foreign authority, including proceedings to order preventive measures and to issue a property-law order, as well as matters of extinction and the register of criminal records, proceedings to obtain compensation for confinement and conviction by a criminal court, clemency petition matters and matters concerning the execution of sentences and measures. With the proviso of § 59a, the transfer of data to a foreign authority shall be admissible without such a request. - (2) An authority within the meaning of paragraph (1) shall be a court, a public prosecutor's office, or an agency acting in matters concerning the execution of sentences or measures. - (3) Judicial assistance includes any support provided in connection with foreign proceedings in a criminal-law matter and consenting to activities as part of cross-border observations on the basis of intergovernmental agreements. - § 51 (Inadmissible Judicial Assistance): - (1) Providing judicial assistance shall not be admissible to the extent that (text truncated in source). *Source: _cr09298 - Part V: Sequestration of letters, information on data of a transmission of communication and* ### 1. the act underlying the request is either not subject to punishment by a court under Austrian law or ### _cr09298 - 1. the act underlying the request is either not subject to punishment by a court under Austrian law or ### Grounds for non-execution or inadmissibility (service and confidentiality) - Conditions under which assistance or extradition may be refused or is inadmissible: 1. the act underlying the request is either not subject to punishment by a court under Austrian law or does not qualify for extradition pursuant to § 14 und § 15, 2. extradition would be inadmissible pursuant to § 19 items 1 and 2 for the proceedings underlying the request, or 3. either the practical requirements to perform specific investigative measures, as defined in Title 8 of the Code of Criminal Procedure, do not prevail, or providing judicial assistance would result in a violation of the obligation to confidentiality, to be also observed vis-à-vis criminal courts under Austrian law (§ 76 (2) of the Code of Criminal Procedure). - Service of documents: - The absence of criminal liability under Austrian law shall not oppose the service of documents if the recipient is prepared to accept them. ### CHAPTER THREE: Execution of Foreign Criminal-Court Decisions — General prerequisites (§ 64) - Execution or further execution of a foreign court decision imposing a fine, custodial sentence, preventive measure or property-law order (final and enforceable) is admissible upon request if: 1. the decision of the foreign court was taken in proceedings complying with the principles set forth in Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms, Federal Law Gazette No. 210/1958, 2. the decision was taken for an act that is sanctioned by a court punishment under Austrian law, 3. the decision was not taken for one of the punishable acts listed in § 14 and § 15, 4. under Austrian law no statute of limitation applies to the execution, 5. the person concerned by the decision of the foreign court is not prosecuted for an act in Austria, has not been convicted or acquitted with final an enforceable effect or otherwise been exempted from prosecution. - Additional conditions: - (2) Custodial sentence or preventive measure execution admissible only if convicted person is an Austrian citizen, has domicile or residence in Austria and has agreed to execution in Austria. - (3) Execution of preventive measures only admissible if Austrian law provides for a similar measure. - (4) Execution of foreign property-law orders admissible only if decision complies with prerequisites for fines, skimming off enrichment, forfeiture or seizure under Austrian law and a comparable domestic order has not yet been issued in Austria. - (5) Execution of fines or skimming off enrichment admissible only if its collection in Austria may be expected and the person concerned has been heard, to the extent that he/she can be contacted. - (6) Execution of forfeiture or seizure only admissible if objects/property items are located in Austria and the person concerned has been heard, to the extent that he/she can be contacted. - (7) Fines, skimmed off amounts of money, forfeited property items and seized objects shall accrue to the Federal State. ### Austrian determinations when taking over execution (§ 65) - (1) Punishment, preventive measure or property-law order to be executed shall be determined according to Austrian law, taking account of the measure imposed in the foreign decision. A foreign forfeiture may be executed as an act of forfeiture in Austria if an enrichment would have to be skimmed off under Austrian law. - (2) The person concerned may not be put into a more adverse position because the execution is taken over than if the execution took place in the other State. - (3) § 38 and § 66 of the Criminal Law Code shall apply in analogy. ### Processing of incoming requests and competences (§ 66–§ 67) - Forwarding and refusal: - The Federal Ministry of Justice shall forward requests to the competent regional court (§ 67 (1)). - The Federal Minister of Justice shall immediately refuse a request if circumstances at receipt render it inadmissible for reasons listed in § 2 and § 3 (1) or if the request is not suited for lawful processing. - At any stage the Federal Minister of Justice may demand additional documents from the requesting State. - Competences and procedures (§ 67): - (1) Regional court in district of domicile or residence of the person concerned is responsible for requests to execute or adapt punishment, preventive measure or skimming off enrichment. If no specific competence results, the Regional Court for Criminal Matters in Vienna shall have jurisdiction. The regional court in whose district the property item or object is located is responsible for forfeiture or seizure. - (2) The Federal Minister of Justice shall inform the requesting State of decisions and actual execution by established channels. - (3) After a punishment or preventive measure has been taken over for execution, criminal proceedings may no longer be lodged for the act underlying the court decision. - (4) Austrian law provisions apply to execution, release on probation, and clemency acts. - (5) Execution shall be discontinued if enforceability of the punishment or preventive measure expires under the law of the requesting State. ### EU-JZG: Execution of Decisions on Seizure by Member States — Freezing orders (Part Two §§ 45–51) - Prerequisites for freezing evidence or property (§ 45): - (1) Freezing may be taken or executed for criminal offences that carry a court punishment pursuant to the law of the deciding State and, with proviso in paragraph (3), pursuant to the law of the executing State. - (2) Freezing of property that might become subject to collection, skimming off enrichment or forfeiture may be issued or executed if law of deciding State and executing State allow freezing. - (3) Double criminality need not be verified if the offence underlying the freezing order was assigned to one of the categories listed in Annex I and carries a maximum custodial sentence of at least three years according to the law of the issuing State. - (4) Freezing order will only be executed if accompanied by a certificate in the form shown in Annex II; issuing authority may set a time limit to complete or correct certificate if incomplete or inconsistent. - Competences and procedure (§ 46): - (1) Regional court with jurisdiction for location of property or evidence shall decide on execution of freezing order; issuing judicial authority shall be informed of complaint filing and outcome. - (2) Requests requiring procedures deviating from Austrian criminal procedural law shall be satisfied if reconcilable with criminal proceedings and principles pursuant to Chapter 1 of the Code of Criminal Procedure. - (3) Court shall decide as expeditiously as possible on the freezing order, if possible within 24 hours after receiving the request, and shall inform the issuing State of its decision. - Refusal to execute (§ 47): - Execution inadmissible if: 1. prerequisites according to § 45 do not prevail, 2. privileges and immunities under Austrian law make execution impossible, or 3. the certificate (§ 45 (4)) indicates that executing a decision on collection or forfeiture would violate the principle listed in § 7 (1). - (2) In matters relating to charges, taxes, customs and foreign exchange transactions execution cannot be refused on ground that Austrian law lacks equivalent provisions. - Postponement (§ 48): - (1) Execution postponed if property or evidence already confiscated in proceedings pending in Austria or seized. - (2) If domestic confiscation or seizure is lifted, decision shall be taken immediately on execution of freezing order. - (3) Execution may be postponed as long as it would jeopardize the purpose of pending investigations. - Duration and obligation to inform (§ 49–§ 50): - § 49: If no request for delivery or execution decision is enclosed with freezing order, confiscation or freezing maintained until decision reached on judicial assistance request, provided prerequisites continue to apply; procedure must comply with third sentence of § 58 of the ARHG. - § 50: If execution proves inadmissible, impossible or requires postponing, the court shall forward this information immediately to issuing authority; same for appeals and performed execution. - Exchanges and translations (§ 51): - (1) § 14 applies in analogy to exchanges between authorities on execution of a freezing order. - (2) Certificate according to Annex III relating to freezing orders by Austrian courts shall be translated into official language of Member State where freezing order is to be executed; unless that State will accept a translation into German or another language. ### EU-JZG: Execution of Orders Relating to Property Rights (Part Three §§ 52–52e) - Scope and definitions (§ 52): - (1) Order relating to property rights issued with final and enforceable effect by a court of another Member State shall be executed per Part Three. - (2) Order relating to property rights defined as decision after criminal-law proceedings requiring withdrawal of sums of money or objects (forfeiture, dispossession; § 20b and § 26 of the Criminal Law Code) or of a sum of money taking their place (absorption of the enrichment; § 20 of the Criminal Law Code). Financial penalties, victim compensations and costs of proceedings shall not constitute orders relating to property rights. - Inadmissible executions (§ 52a): - Execution inadmissible if any of the following apply: 1. offence underlying the order was committed in Austria or on board of an Austria vessel or aircraft, or outside the deciding State’s national territory but would not fall within scope of Austrian criminal law; 2. a final and enforceable order relating to property rights was already imposed in Austria for the offence underlying the order, or a final order by another State has already been executed; 3. offence underlying the order is not punishable by a court according to Austrian law, unless it can be assigned to one of the categories listed in Annex 1, Part A; classification by deciding State is binding with proviso of § 52c (2) item 3; 4. enforceability has lapsed according to Austrian law for the order which is based on an offence that falls within scope of Austrian criminal laws; 5. person concerned has been granted amnesty or pardon in Austria or the deciding State; 6. execution would violate provisions on immunity; 7. rights of innocent third parties oppose execution; 8. hearing leading to the order was conducted in absence of the person concerned and that person was not represented by legal counsel, unless properly informed and stated he/she will not challenge the order; 9. order comprises an expanded collection which could not be imposed according to § 20 (2) or (3) of § 20b of the Criminal Law Code; 10. objective indications decision was taken in violation of fundamental rights or essential legal principles in accordance with Article 6 of Treaty on European Union, especially if decision was issued for purpose of punishing person for sex, race, religion, ethnic origin, nationality, language, political conviction or sexual orientation and person had no possibility to claim this circumstance before the European Court of Human Rights or the European Court of Justice. - (2) In matters relating to levies, taxes, customs duties and currency issues execution must not be refused because Austrian law lacks equivalent provisions. - Competences (§ 52b): - (1) Regional courts have subject-matter jurisdiction for decisions on execution of orders relating to property rights. - (2) Court venue guided by place where sum of money or object is located, or where person makes dispositions concerning property; if not identifiable, place of domicile or residence; for associations also place of office/operation/branch. If competences cannot be ascertained, the Regional Court for Criminal Matters in Vienna shall have jurisdiction. - (3) If seized court lacks jurisdiction, it shall transfer matter to competent court. - Procedure (§ 52c): - (1) Execution requires decision to be executed and certificate (Annex V) signed by competent authority and translations into German, unless deciding State submitted statement accepting certificates in German (§ 52k (2)). - (2) Execution may be refused or requesting State asked to forward/complement certificate within a time period if: 1. certificate not forwarded, incomplete in major parts or in obvious contradiction to order, 2. indications that reasons in § 52a (1) items 1, 2, and 7 to 10 apply, 3. legal classification as an offence according to Annex I, Part A, is obviously erroneous, or person raised justified objections, 4. person documents that sum or object has already been collected, partly executed, or he/she already paid a sum on basis of such a decision. - (3) § 14 (1) to (5) applies to exchanges between authorities. - (4) If person concerned can be summoned in Austria, he/she shall be heard concerning prerequisites for execution, prior collections, and amount to be executed. - Decision and contestation (§ 52d): - (1) Decision on execution shall indicate authority name, file number, brief presentation of facts including time and place of offence and measures in order, name of punishable offence, and legal provisions applied by deciding State. - (2) If execution accepted for sum of money, sum to be executed in Austria shall be fixed as amount indicated in the decision to be executed. If amount is not euros, it shall be converted at the exchange rate applicable on the day decision on execution is taken. Previously made payments and contributed amounts shall be taken into account. - (3) Public prosecutor and person concerned have right to file a complaint to the higher regional court within 14 days. A complaint filed in time shall have suspensive effect. - (4) Procedure described in § 408 of the Code of Criminal Procedure applies once decision has become final and enforceable. - (5) If execution is refused for reasons in § 52a (1), public prosecutor shall report this to the Federal Ministry of Justice, enclosing a copy of the decision. - Postponing execution (§ 52e): - Execution shall be postponed: 1. for as long as no final and enforceable decision has been taken on an admissible complaint (§ 52d (3)); 2. if deciding State also seized other Member States with execution and total executed amount might exceed the sum of money fixed in the order. *Source: _cr09298 - 1. the act underlying the request is either not subject to punishment by a court under Austrian law or* ### 3. for as long as the sum of money or the object is the basis of proceedings in Austria that may result in ### _cr09298 - 3. for as long as the sum of money or the object is the basis of proceedings in Austria that may result in ### Grounds for deferral and temporary measures - Execution may be deferred: - for as long as the sum of money or the object is the basis of proceedings in Austria that may result in an order relating to property rights; - for as long as the purpose of ongoing investigations may be jeopardized; - for the time considered necessary by the court for obtaining a translation, at its expense, of the order relating to property rights; - until the additional information requested from the competent authority of the deciding State has been received. - If there is concern that the sum of money or the object will no longer be available for executing the order relating to property rights, once the reason for a deferral no longer applies, the court shall take all admissible measures, including issuing a temporary injunction according to § 144a of the Code of Criminal Procedure, during the period of the deferral. ### Orders relating to property rights issued by several Member States (§ 52f) - If two or several Member States forward orders relating to property rights: - concerning the same object, or - a sum of money attributable to the same person concerned, without that person having the means in Austria that suffice for execution of all decisions, - A decision shall be taken as to which order(s) shall be executed, considering: - whether the sum of money or the object has already been frozen according to Part II of Chapter III of the present federal law; - the seriousness of the punishable offences underlying the orders; - the place of the offence; - the dates at which the orders were issued and the time sequence of their communication. ### Proceeds from execution (§ 52g) - Sums of money obtained by executing the order: - amounts not in excess of EUR 10,000 or the equivalent accrue to the Federal State; - if in excess of EUR 10,000, 50% of the amount shall be transferred to the deciding State. - Objects obtained by executing an order: - shall be sold in keeping with § 377 of the Code of Criminal Procedure; Paragraph (1) applies to proceeds arrangements; - if such procedure cannot be followed and the deciding State does not consent to transfer, they accrue to the Federal State. - Paragraphs (1) and (2) apply only if no other agreements have been reached with the deciding State. - Objects that are part of Austria’s cultural heritage shall accrue to the Federal State in any event. ### Discontinuing execution and informing the deciding State (§ 52h, § 52i) - Execution shall be discontinued if the competent authority of the deciding State communicates that the order relating to property rights or its enforceability have been revoked, or that execution is no longer requested for some other reason. - The court shall inform the competent authority of the deciding State without delay if: 1. it transfers the case to the competent court (§ 52b (3)); 2. the sum to be executed has been fixed at an amount lower than the amount for which the order was issued (§ 52d (2)); 3. execution has been postponed, indicating the reasons and, if possible, the presumed duration of the deferral; 4. the decision has been enforced; 5. execution is refused in full or in part, indicating the reasons; 6. the order cannot be executed because the sum or object have disappeared, were destroyed, cannot be collected in Austria or cannot be found at the location indicated in the certificate, because the location has not been identified with sufficient precision, or because another order has already been executed concerning the sum or object (§ 52f), always indicating the reasons. ### Costs (§ 52j) - Costs incurred by executing a foreign order relating to property rights shall be borne by the Federal State, irrespective of whether they can be collected from the person concerned. - If considerable or extraordinary costs have been incurred on account of the collection, a sharing of the costs shall be proposed to the authority of the deciding State, attaching a detailed break-down of the costs. ### Obtaining execution in another Member State (§ 52k–§ 52n) - Seizing another Member State (§ 52k): - The court that has taken the first-instance decision must allow the public prosecutor time to comment and hear the person concerned, if summonable in Austria. - The court shall forward to the competent authority of the executing State: 1. the decision to be executed, complete with a translation if already made for the foreign person concerned in Austrian proceedings; 2. a completed and signed certificate (Annex 5) and, if the executing State did not indicate acceptance of certificates in German, a translation into one of the executing State’s official languages or another accepted language. - The Federal Minister of Justice shall proclaim by ordinance which Member States accept which official languages. - § 14 (1) to (5) shall apply in analogy to exchanges between authorities; upon request, a specimen or certified copy of the decision and the original certificate shall be sent by mail if not communicated by mail. - Forwarding an order to several executing States (§ 52l): - An order must always be sent to only one executing State in every case, subject to exceptions. - An order concerning specific objects may be sent to several executing States simultaneously if: 1. there is reason to assume objects are located in several executing States; 2. execution requires measures in several executing States; 3. there is reason to assume an object is located in one or several known executing States. - An order issued for an amount of money may be communicated to several executing States simultaneously if required for its collection, especially if the amount was not secured pursuant to Part Two of Chapter III, or if execution by one State will probably not suffice to collect the entire amount. - Execution in Austria (§ 52m): - Execution proceedings in Austria may be continued even though the order was communicated to one or several executing States, but total amount obtained must not exceed the amount indicated in the decision. - Informing the executing State (§ 52n): - The court shall inform without delay if: 1. risk of execution in excess of the order for an amount of money has ceased; 2. the decision was executed in full or in part in Austria or another executing State, possibly indicating amount not yet collected; 3. the person concerned already paid an amount as a result of the order; 4. the order or its enforceability was subsequently lifted or modified, or execution is no longer requested for other reasons. ### Execution of pecuniary sanctions — prerequisites and scope (§ 53) - A final and enforceable decision by a court of another Member State imposing a pecuniary sanction shall be executed in accordance with Part Four. - Decisions considered under this provision include: 1. decisions of another judicial authority (e.g., public prosecutor) if the person had opportunity to bring the matter before a court with criminal-law competences; 2. decisions of a court with criminal-law competences seized with an appeal against a decision taken by a non-judicial authority for a punishable act, administrative trespass or breach of an administrative regulation. - A pecuniary sanction includes: 1. financial penalties; 2. an obligation to pay compensation to the victim if the victim could not submit civil-law claims during proceedings and the court exercised criminal-law competences; 3. the obligation to refund the costs of the proceedings leading to the decision; 4. an obligation to pay an amount into a public account or to an organization supporting victims. - Orders relating to property rights are not considered pecuniary sanctions if classified as skimming off an enrichment, forfeiture or confiscation under Austrian law, or as court decisions on private-law claims. ### Inadmissible executions (§ 53a) Execution of a pecuniary sanction imposed by another Member State is inadmissible if: - 1. the pecuniary sanction is less than the amount of EUR 70 or its equivalent; - 2. the offence underlying the decision: a) was committed in Austria or on board an Austrian vessel or aircraft; or b) was committed outside the national territory of the deciding State, whenever, according to Austrian law, offences of that type committed outside the national territory would not come under the scope of Austrian criminal laws; - 3. a final and enforceable decision in Austria or a final and already enforced decision in another State was issued against the person concerned for the underlying offence; - 4. the offence is punishable neither by a court nor as an administrative offence pursuant to Austrian law, unless it can be assigned to one of the categories listed in Annex 1, Part A or Part B; the classification by the deciding State is binding with the proviso of § 53c (3) item 3; - 5. the offence was committed by a person below the age of criminal responsibility under Austrian law at the time of the offence; - 6. enforcement of the offence has become time-barred pursuant to Austrian law; - 7. the person concerned has been granted amnesty or pardoned in Austria or the deciding State; - 8. enforcement would violate provisions on immunity; - 9. the decision was issued in written proceedings and the person concerned was not informed in person or through a representative authorized under the law of the deciding State of the possible and existing legal remedies and deadlines; - 10. the decision was taken in the absence of the person concerned, unless he/she was informed in person or through a representative authorized under the law of the deciding State of the proceedings or stated that he/she will not challenge the decision; - 11. there are objective indications that fundamental rights or essential legal principles defined in Article 6 of the Treaty on European Union were violated, especially pecuniary sanctions imposed for reasons of sex, race, religion, ethnic origin, nationality, language, political conviction or sexual orientation, and if the person had no possibility to claim these circumstances before the European Court of Human Rights or the European Court of Justice. ### Competences and procedure (§ 53b–§ 53c) - Competent authority (§ 53b): - The regional court with subject-matter competences is competent to decide on execution of a pecuniary sanction. - Venue determined by domicile or residence of the person; for associations by registered office, place of operation, or residence. If undeterminable, the place where the assets are located is decisive. - If competences cannot be determined, the Regional Court for Criminal Matters Vienna has jurisdiction. - If the seized court is not competent, it shall transfer the matter to the competent court. - If the decision imposing a pecuniary sanction is not a decision pursuant to § 53 (1) or (2), the matter shall be transferred to the competent district administrative authority or federal police directorate. - Procedure (§ 53c): - Execution requires communication to the Austrian court of: 1. the decision to be executed; and 2. the certificate (Annex VI) signed by the competent authority, and – if the deciding State did not state acceptance of certificates in German (§ 53k (2)) – its translation into German. - If the deciding State classified the underlying offence as in Annex I, Part B, item 7, the certificate must contain detailed circumstances, applied domestic legal provisions and the provision of the legal act issued on the basis of the Treaty establishing the European Communities or the Treaty on European Union, transposed by domestic legal stipulations. - If: 1. the certificate was not communicated, is incomplete in essential sections, or contradicts the decision; 2. there are indications that reasons listed in § 53a items 6, 9, 10 and 11 apply; 3. the legal classification as an offence pursuant to Annex I, Part A or B is obviously erroneous, or the person raised justified objections; or 4. the person documents that the pecuniary sanction has been paid or collected in full or in part; - then the authority of the deciding State shall be requested to submit, complete or supplement the certificate within a reasonable period, with indication that execution will be refused in full or in part if no response is received. - § 14 (1) to (5) apply in analogy to exchanges between authorities. - The person concerned shall be heard on requirements for execution (§ 53, § 53a), on the amount to be executed (§ 53d (2)), and on daily rates applicable to imprisonment in lieu of payment, if summonable in Austria. ### Decision on execution (§ 53d) - The decision shall indicate: - name of the authority whose decision is to be executed, its file number, a short statement of facts including time and place of the offence, name of the punishable offence, and the legal provisions of the deciding State applied. - If execution is accepted: - the amount to be executed in Austria shall be fixed as the amount imposed by the decision; - if the amount is not in euros, it shall be converted using the exchange rate applicable on the day the decision on execution is taken; - the amount shall be reduced to the maximum admissible under Austrian law if the underlying offence was committed outside the national territory of the deciding State and comes under Austrian criminal law; - previously made payments and collected amounts shall be taken into account. - If imprisonment in lieu of payment was not fixed in the original decision but admissible under the deciding State’s law, a prison term in lieu of payment shall be fixed in the decision on execution corresponding to the number of daily rates (§ 19 (3) of the Austrian Criminal Law Code) which would apply under Austrian law, not to exceed any maximum period indicated in the certificate. - The public prosecutor and the person concerned have the right to file a complaint to the higher regional court within 14 days. A timely complaint by the person concerned has suspensive effect. - § 409 of the Code of Criminal Procedure applies once the decision is final and enforceable. - If execution was refused on account of the reason in § 53a item 11, the competent public prosecutor shall report this to the Federal Ministry of Justice, attaching a copy of the decision. ### Postponing execution (§ 53e) - Execution shall be postponed: 1. as long as no final and enforceable decision has been taken on an admissible complaint (§ 53d (4)); 2. for the period necessary to produce a translation of the decision at the court’s costs; 3. until supplementary information requested from the authority of the deciding State has been received. - During the period of the deferral, all admissible measures shall be taken to prevent that the amount to be collected is no longer available for execution once the reason for the deferral no longer applies. ### Proceeds, imprisonment in lieu, discontinuing and informing (§ 53f–§ 53i) - Proceeds from execution (§ 53f): - The proceeds shall accrue to the Federal State, unless a different arrangement has been reached with the deciding State. - Imprisonment in lieu of a pecuniary sanction (§ 53g): - If a financial penalty cannot be collected, enforcement of the imprisonment in lieu of payment fixed in the decision to be executed or in the decision on execution (§ 53d (3)) shall be ordered. - Discontinuing execution (§ 53h): - If the competent authority of the deciding State communicates that the decision imposing a pecuniary sanction or its enforceability have been lifted, or that execution is no longer requested for some other reason, execution shall be discontinued. - Informing the deciding State (§ 53i): - The court shall immediately bring to the attention of the competent authority of the deciding State relevant developments (text truncated in source). *Source: _cr09298 - 3. for as long as the sum of money or the object is the basis of proceedings in Austria that may result in — IMF PDF chapter excerpt* ### 1. it transfers the matter to the competent court or the competent territorial administrative authority or ### _cr09298 - 1. it transfers the matter to the competent court or the competent territorial administrative authority or ### Execution of foreign decisions and pecuniary sanctions - Grounds and procedural outcomes: - Execution may be affected if: - it transfers the matter to the competent court or the competent territorial administrative authority or police directorate (§ 53b (3) and (4)), - the amount to be executed is lower than the amount fixed in the decision (§ 53d (2)), - a prison term in lieu of payment of the fine is fixed and its enforcement is ordered (§ 53g), - a decision has been executed, - execution is denied in full or in part, indicating the reasons, - the decision cannot be executed in Austria due to reasons of uncollectability. - Costs: - § 53j: The costs accruing when executing a foreign decision imposing a pecuniary sanction shall be borne by the Federal State, irrespective of whether they can be collected from the person concerned or not. - Obtaining execution in another Member State: - § 53k(1): If reasons exist to seize another Member State with execution of a court decision imposing a pecuniary sanction (§ 53 (2)), the regional court shall first afford the public prosecutor opportunity to comment and hear the person concerned, if summonable in Austria. - § 53k(2): The court shall communicate to the competent authority of the executing State: - the decision to be executed, complete with a translation if already made for the foreign person in the Austrian proceedings, and a completed and signed certificate (Annex VI), - unless the executing State accepts German certificates, a translation of the certificate into one of the official languages of the executing State or another language accepted by it. - The Federal Minister of Justice shall proclaim by ordinance which Member States accept which official languages. - § 53k(3): § 14 (1) to (5) apply analogously to exchanges between authorities; if decision and certificate were not communicated by mail, upon request the competent authority of the executing State shall subsequently be sent by mail a specimen or a certified copy of the decision and the original of the certificate. - § 53k(4): It is inadmissible to seize one further Member State with execution at the same time. - Revoking seizure: - § 53l: The court shall immediately inform the competent authority of the executing State if: - the person concerned already paid an amount of money as a result of the decision imposing the pecuniary sanction, - the decision imposing the pecuniary sanction or its enforceability are subsequently lifted, modified, or the amount of the pecuniary sanction is reduced, - execution is no longer requested for other reasons. - Execution in Austria after another Member State was seized: - § 53m(1): If a Member State was seized with execution, it shall be inadmissible to conduct an execution in Austria. - § 53m(2): The execution procedure may be continued: 1. after the competent authority of the executing State has been informed that execution is no longer requested, 2. if a pardon or amnesty in the executing State has resulted in discontinuation of execution, 3. if execution in the executing State is not possible in the absence of collectability, 4. if the executing State refuses execution, unless the refusal was supported by the reason listed in § 53a, item 3. - Execution of foreign fines: - § 53(1): § 64 to § 67 of the ARHG shall apply to the execution of fines imposed with final and enforceable effect by another Member State. - § 53(2): A request by a Member State for execution of such a fine may only be executed if it is ensured that the requesting Member State would comply with a similar Austrian request, or if conventions under international law require the execution of such fines. Moreover, § 3 of the ARHG shall apply in analogy. ### Police Cooperation Act (PolK) — scope, tasks, and assistance - Scope of application (Section 1): - International cooperation serves the purposes of: 1. law enforcement (police), 2. CID (Criminal Investigation Division), 3. passport authorities, Aliens Police, and border control. - International Police Cooperation comprises: 1. international mutual assistance in police matters, 2. intervention by law enforcement authorities and their officers abroad, and law enforcement authorities of other countries and their officers in Austria, especially in form of hot pursuit and cross-border surveillance. - Section 1(3): Requests for and execution of Letters Rogatory pursuant to the Extradition and Legal Assistance Act, Federal Law Gazette No. 529/1979 or bilateral agreements remain unaffected. - Tasks (Section 3): - Law enforcement authorities are obliged to render legal assistance upon request: 1. pursuant to international law, 2. if it serves to fulfil duties stipulated under s.1, para.1, of a foreign law enforcement authority on condition of reciprocity, 3. if required by a law enforcement organisation for task fulfilment as outlined under s.1, p.1. - Obliged to render assistance without request: 1. by using data that have – owing to their nature – to be transmitted under international law, 2. if required by a foreign law enforcement authority for the purpose of fulfilling its duties pursuant to s.1, p.1, on condition of reciprocity, 3. if required for criminal investigation activities by Interpol. - Fulfilment of tasks (Section 5): - Authorities empowered to provide legal assistance: 1. in form of any measure that does not interfere with the rights of a human being, or 2. by using person-related data in conformity with the following paragraphs and Section 3. - Interference with rights permissible where binding international law does not otherwise indicate, to the extent such interference would be legal in a comparable case within Austrian jurisdiction and compliant with national procedural standards. - Establishing data for legal assistance admissible by: 1. using data established by the authority itself in enforcing a federal or provincial law, 2. requesting information from other law enforcement authorities, 3. requesting information from services of territorial or local authorities or corporations under public law, institutions operated by them and operators of public telecommunication services, in conformity with s. 53, para. 3a, of the Austrian Code of Police Practice, 4. interviewing persons who volunteer information when aware of the official nature ('overt interview'), 5. surveillance, if vital to effectively render legal assistance. - Presence of foreign law enforcement officers for overt interview and surveillance: - Permitted with consent of the Federal Ministry of the Interior, if required to fulfil tasks under s.1, para.1, and upon reciprocity; interviewee must be made aware of presence of foreign officers. - Federal Ministry of the Interior authorized to instruct other law enforcement authorities to establish data as outlined; transmission to another law enforcement organisation or foreign authority admissible only if nature of data established with certainty. - Request for legal assistance (Section 6): - Authorities empowered to request legal assistance for fulfilling tasks under s.1, para.1. - They may only request measures they themselves are authorized to take in fulfilling the underlying task. - Foreign law enforcement authorities charged only with making risk assessments may not be asked for legal assistance in criminal investigations. ### Security Police Act (SPG) — organisation and danger definitions - Federal Minister of the Interior (Article 6): - Organisational units managing matters of security administration shall form the General Headquarters for Public Security [Generaldirektion für die öffentliche Sicherheit]. - Establishment and organisational set-up of the Federal Office of Criminal Investigation [Bundeskriminalamt] as an organisational unit shall be governed by a special federal act. - Public security service officers assigned to the General Headquarters shall provide police services for the Federal Minister of the Interior. - The Federal Minister of the Interior may form special units from among officers to fight criminal associations or where special training is required; exception for special units existing prior to 1 July 1997. - Definition of terms (Article 16): - “General danger“ shall be imminent: 1. in a dangerous attack (paras (2) and (3)) or 2. as soon as three or more people collaborate with intent to continue to commit punishable acts (criminal association). - “Dangerous attack“: - Threat posed to a legal interest by illegal realisation of elements of a judicially punishable act committed intentionally and prosecuted not only at the request of a person involved if it is a criminal offence: 1. under the Criminal Code (CC - StGB), FLG No. 60/1974, except for offences under art. 278, 278a and 278b StGB, 2. under the Act Banning the NSDAP and Forbidding Nazi Activity (Verbotsgesetz), StGBl. No. 13/1945, 3. under the 2005 Aliens' Police Act (Fremdenpolizeigesetz 2005 - FPG), FLG I No. 100, 4. under the Addictive Drugs Act (Suchtmittelgesetz - SMG), FLG I No. 112/1997, except acquisition or possession of narcotic drugs for personal use. - Also includes conduct aimed at preparing such threat if exhibited in close relationship as to time with intended realisation of the offence. - “Potential danger identification“: isolation of the source of danger and the facts otherwise relevant to danger aversion. ### Banking Act (BWG) — due diligence, ICAAP, and AML obligations - General due diligence obligations (Article 39): - Article 39(1): Managers of a credit institution must exercise the diligence of a prudent and conscientious manager as defined in Article 84 para. 1 of the Stock Corporation Act, obtain information on and control, monitor and limit risks using appropriate strategies and mechanisms, and have in place plans and procedures pursuant to Article 39a; must consider overall earnings situation. - Article 39(2): Credit institutions must have administrative, accounting and control mechanisms appropriate to the type, scope and complexity of banking transactions; adequacy reviewed by internal audit at least once per year. - Article 39(2a): Credit institutions may use joint risk classification organisations as service providers if reported to the FMA in advance; participating credit institutions may convey necessary information for development and maintenance of rating methods; such organisations and persons working for them subject to banking secrecy pursuant to Article 38; FMA has information, presentation and auditing powers set forth in Article 70 para. 1; Article 71 applicable. - Article 39(2b): Procedures pursuant to para. 2 must include the following specific risks: 1. credit risk (Article 2 no. 57), 2. concentration risk (Article 2 no. 57b), 3. risk types in the trading book (Article 22o para. 2), 4. commodities risk and foreign exchange risk, including risk arising from gold positions, where not covered by no. 3, 5. operational risk (Article 2 no. 57d), 6. securitisation risk (Article 2 no. 57c), 7. liquidity risk (Article 25), 8. interest rate risk arising from any transactions not already covered by no. 3, 9. the residual risk from credit risk mitigation techniques (Article 2 no. 57a), 10. risks arising from the macroeconomic environment. - Article 39(2c): For new transactions with which the credit institution has no experience, due consideration must be given to security of third-party funds and preservation of the institution's own funds; procedures must ensure risks from new transactions and concentration risks are captured and assessed fully. - Article 39(4): Credit institutions applying Article 22o must ensure risk positions in the trading book can be calculated at any time; internal model documentation must be transparent and enable tests; bank auditor and auditors pursuant to Article 70 para. 1 no. 3 can review calculations at any time. - Internal Capital Adequacy Assessment Process (Article 39a): - Article 39a(1): Credit institutions must have effective plans and procedures to determine regularly the amount, composition and distribution of capital available for quantitative and qualitative coverage of all material risks and to hold necessary capital; based on nature, scope and complexity of transactions. - Article 39a(2): Review suitability and enforcement of strategies and procedures at regular intervals, in any case on an annual basis, and adapt as necessary. - Article 39a(3): Superordinate credit institution to fulfil obligations under para. 1 on a consolidated basis; where a financial holding company established in Austria is superordinate, consolidated financial situation of the holding company is to be used. - Article 39a(4–5): Subordinate credit institutions as defined in Article 30 paras. 1 and 2 whose superordinate institution complies on a consolidated basis are not required to comply individually; derogation applies for subordinate institutions with subsidiaries in third countries as defined in Article 2 (5) of Directive 2002/87/EC—these must comply on a subconsolidated basis. - Due diligence for suppression of money laundering and terrorist financing (Article 40): - Article 40(1): Credit institutions and financial institutions must ascertain and verify the identity of a customer: 1. before initiating a permanent business relationship; savings deposit transactions pursuant to Article 31 para. 1 and transactions pursuant to Article 12 of the Depository Act (Depotgesetz – DepotG) are always considered permanent business relationships; 2. before executing any transactions not conducted in connection with a permanent business relationship and which involve an amount of at least EUR 15,000 or an equivalent value, regardless of single or multiple operations with an obvious connection; if amount unknown at beginning, identity must be ascertained as soon as amount is known and determined it will come to at least EUR 15,000 or an equivalent value; 3. if the institution suspects or has reasonable grounds to suspect the customer belongs to a terrorist organisation (Article 278b StGB) or objectively participates in transactions serving the purpose of money laundering (Article 165 StGB) or terrorist financing (Article 278d StGB). 4. after 31 October 2000 for each deposit into savings deposits, and after 30 June 2002 also for each withdrawal of savings deposits if the amount deposited or withdrawn comes to at least EUR 15,000 or an equivalent value; 5. when there are doubts as to the veracity or adequacy of previously obtained customer identification data. - Identity verification: - By personal presentation of an official photo identification document containing photograph, name, date of birth and signature and issuing authority; foreign passports need not contain complete date of birth if compliant with issuing country law. - For legal persons and natural persons not legally competent, verify identity of natural person authorised to represent by presentation of that person's official photo identification document and verify power of representation by suitable documents; identity of legal person by meaningful supporting documentation available under usual legal standards of country of incorporation. - Exceptions to these provisions only in cases pursuant to para. 8 and Article 40a. - Individual criteria regarding photo identification may be waived where technical advances (e.g., biometric data) provide at least equivalent identification effects; identification must always be issued by a government authority. - Article 40(2): Institutions must ask customer whether transactions are for own account or on behalf of a third party; customer must comply. If for third party, trustee must provide evidence of trustor's identity in trustee's physical presence; trustee must submit written declaration that identity of trustor was ascertained personally or through reliable sources (courts, government authorities, notaries, attorneys, and specified third parties). For special fiduciary accounts of authorised real estate administrators acting on behalf of joint ownership associations, an excerpt from the property register is valid evidence of trustors' identity for joint owners who are natural persons. *Italic: Source: _cr09298 - 1. it transfers the matter to the competent court or the competent territorial administrative authority or* ### 1. call upon the customer to reveal the identity of the customer's beneficial owner; the customer must ### _cr09298 - 1. call upon the customer to reveal the identity of the customer's beneficial owner; the customer must ### Customer identification, beneficial ownership, and verification (Article 40 paras. 1, 2, 2a, 2e) - Credit institutions and financial institutions must: - call upon the customer to reveal the identity of the customer's beneficial owner; the customer must comply with this request; - take risk based and appropriate measures to verify the beneficial owner's identity so that the credit institution or financial institution is satisfied that it knows who the beneficial owner is; - in the case of legal persons or trusts, take risk-based and appropriate measures in order to understand the ownership and control structure of the customer. - Take risk-based and appropriate measures to obtain information on the purpose and nature of the intended business relationship. - Take risk-based and appropriate measures to conduct ongoing monitoring of the business relationship, including scrutiny of transactions undertaken throughout the course of that relationship, to ensure that the transactions conducted are consistent with the institutions' knowledge of the customer, the customer's business and risk profile, including, where necessary, the source of funds, and to ensure that the documents, data or information held are kept up to date. - Credit institutions and financial institutions must subject their business to risk analysis using suitable criteria (in particular products, customers, the complexity of transactions, customer business and geography) with regard to the risk of misuse for the purposes of money laundering and terrorist financing. - Credit institutions and financial institutions must be able to demonstrate to the FMA that the extent of the measures taken on the basis of the analysis is appropriate in view of the risks of money laundering and terrorist financing. - By way of derogation from paras. 1, 2 and 2a: - the opening of a bank account is permissible provided that there are adequate safeguards in place to ensure that transactions are not carried out by the customer or on the customer's behalf until full compliance with paras. 1, 2 and 2a regarding customer identification and the other required information on the business relationship has been attained. - In cases where credit institutions and financial institutions are not in a position to comply with paras. 1, 2 and 2a regarding customer identification and the other required information on the business relationship: - they must not carry out any transaction or establish a business relationship, or they must terminate the business relationship; - moreover, the credit institution or financial institution must consider reporting the customer to the relevant authorities (Article 6 Security Police Act) in accordance with Article 41 para. 1. - Due diligence obligations regarding the ascertainment and verification of the customer's identity pursuant to Articles 40 et seq. apply not only to all new customers, but also to existing customers on a risk-sensitive basis at the appropriate times. ### Record retention and transaction documentation (Article 40 para. 3) - Credit institutions and financial institutions must retain the following: - documents serving the purpose of identification pursuant to paras. 1, 2, 2a and 2e for at least five years after the termination of the business relationship with that customer; - documentation and records of all transactions for a period of at least five years after their execution. ### Branches and subsidiaries in third countries; FMA obligations (Article 40 para. 4) - Credit institutions and financial institutions must: - ensure that the measures applied at their branches and subsidiaries located in third countries are at least equivalent to those set forth in this federal act with regard to customer due diligence and record-keeping; - inform the FMA in cases where the legislation of the third country does not permit application of the measures required under no. 1, and take additional measures to handle the risk of money laundering or terrorist financing effectively. - The FMA must inform the competent authorities of the other Member States and the European Commission of cases where the legislation of a third country does not permit application of the measures required under no. 1 and coordinated action could be taken to pursue a solution. ### Account opening, securities acceptance, and savings accounts (Article 40 paras. 5–7) - Acceptance and acquisition of securities for: - securities accounts (Article 11 Depository Act) and - business relationships pursuant to Article 12 Depository Act which were initiated or entered into before 1 August 1996, - are only permissible if the identity of the customer has first been ascertained and the requirements of para. 2 and 2a have been fulfilled. - The sale of securities and the withdrawal of balances and income from securities accounts (Article 11 Depository Act) and from business relationships pursuant to Article 12 Depository Act may only be carried out after 30 June 2002 if the identity of the customer has first been ascertained and the requirements of para. 2 and 2a have been fulfilled. - Deposits into existing savings accounts pursuant to Article 31 may not be effected or accepted if the customer's identity has not been ascertained in accordance with para. 1. Likewise, funds transfers must not be credited to such savings accounts if the customer's identity has not been ascertained in accordance with para. 1. - After 30 June 2002, savings accounts for which the customer's identity has not been ascertained pursuant to para. 1 must be maintained as specially labelled accounts. Deposits into and withdrawals from those accounts may not be made, and funds transfers may not be credited to those accounts until the customer's identity has been ascertained pursuant to para. 1. ### Reliance on third parties (Article 40 para. 8) - Credit institutions and financial institutions may rely on third parties in order to fulfil the obligations set forth in Article 40 paras. 1, 2 and 2a nos. 1 and 2; however, the ultimate responsibility remains with the relying institution. - For the purposes of this paragraph, third parties are considered to be the following unless they are authorised exclusively to carry out exchange bureau business (Article 1 para. 1 no. 22) or remittance services business (Article 1 para. 1 no. 23): - the credit institutions and financial institutions indicated in Article 3 (1) and (2) of Directive 2005/60/EC; - the credit institutions and financial institutions indicated in Article 3 (1) and (2) of Directive 2005/60/EC and located in a third country; - the persons indicated in Article 2 (1) (3) (a) and (b) of Directive 2005/60/EC, subject to the requirement that they are subject to mandatory professional registration recognised by law and must apply customer due diligence requirements and record-keeping requirements as set forth in or equivalent to those set forth in Articles 40 et seq. or Directive 2005/60/EC, and their compliance with those requirements is supervised in accordance with Section 2 of Chapter V of that Directive, or they are situated in a third country which imposes equivalent requirements to those laid down in that Directive. - The FMA must inform the competent authorities of the other Member States and the European Commission of cases in which the FMA considers that a third country fulfils the conditions set forth above. - Where the European Commission adopts a decision pursuant to Article 40 (4) of Directive 2005/60/EC, the Austrian federal government will, in agreement with the Main Committee of the National Council, issue a regulation prohibiting credit institutions and financial institutions from relying on third parties from the third country in question for the purpose of fulfilling the obligations set forth in paras. 1, 2 and 2a nos. 1 and 2. - Credit institutions and financial institutions must ensure that the third parties make the information required to fulfil the obligations set forth in paras. 1, 2, para. 2a nos. 1 and 2, and in Article 8 (1) (a) to (c) of Directive 2005/60/EC available to them without delay, and must ensure that relevant copies of identification and verification data and other relevant documentation on the identity of the customer or the beneficial owner is forwarded immediately at the credit institution's or financial institution's request. - This paragraph does not apply to outsourcing or agency relationships where, on the basis of a contractual arrangement, the outsourcing service provider or agent is to be regarded as part of the credit institution or financial institution obliged to fulfil the obligations set forth in paras. 1, 2 and 2a nos. 1 and 2. ### Simplified Customer Due Diligence Obligations (Article 40a) - By way of derogation from Article 40 para. 1 nos. 1, 2 and 5, and paras. 2 and 2a, the obligations indicated in those provisions do not apply in cases where the customer is: - a credit institution or financial institution pursuant to Article 1 paras. 1 and 2 or pursuant to Article 3 of Directive 2005/60/EC, or - a credit institution or financial institution situated in a third country which imposes obligations equivalent to those set forth in Directive 2005/60/EC and supervised for compliance with such obligations. - The obligations do not apply provided that the risk of money laundering and terrorist financing is considered low in accordance with para. 4 if the customer(s) is (are): - exchange-listed companies whose securities are admitted to listing on a regulated market in one or more Member States, or exchange-listed companies from third countries which are subject to disclosure obligations pursuant to a regulation to be issued by the FMA on the basis of its power to issue regulations pursuant to Article 85 para. 10 Stock Exchange Act and such disclosure obligations are equivalent or comparable to those set forth in Community legislation; - domestic authorities; or - authorities or public bodies that: - are entrusted with public functions pursuant to the Treaty on European Union, the Treaties on the Communities or Community secondary legislation; - the identity of which is publicly available, transparent and certain; - the activities and accounting practices of which are transparent; and - if they are accountable either to a Community institution or to the authorities of a Member State, or appropriate check and balance procedures exist ensuring control of the customer’s activity. - Para. 2 also applies to: - customers with regard to electronic money (Article 2 no. 58) where, if the device cannot be recharged, the amount stored in the device is no more than EUR 150, or where, if the data medium can be recharged – a limit of EUR 2,500 is imposed on the total amount transacted in a calendar year, except when an amount of EUR 1,000 or more is redeemed in the same calendar year by the bearer pursuant to Article 6 E-Money Act or pursuant to Article 3 of Directive 2000/46/EC; - savings activities for classes of school pupils, subject to conditions regarding identification by teachers or use of school identification cards and subject to whether Article 40 para. 1, 2 or 2a is applied in its entirety. - Requirements for fiduciary accounts held by attorneys at law or notaries (para. 5) where individual verification of each trustor need not be provided to the credit institution or financial institution if the following requirements are fulfilled: - individual verification is infeasible due to the representation of large co-ownership communities of changing composition; - the trustee submits a written declaration to the credit institution stating that he/she has identified his/her clients in accordance with Article 40 paras. 1, 2 and para. 2a nos. 1 and 2 or the requirements of Directive 2005/60/EC, that he/she has stored the corresponding documents and will present them to the credit institution upon request; this does not apply to clients for whom the respective individual transaction conducted or whose share of the claim on the respective trustee arising from fiduciary accounts does not amount to a total of EUR 15,000; - the trustee provides the credit institution with complete lists of the clients assigned to each fiduciary account within two months after the end of each calendar quarter; this does not apply to clients for whom the respective individual transaction conducted or whose share of the claim on the respective trustee arising from fiduciary accounts does not amount to a total of EUR 15,000; - the trustor does not have his/her place of incorporation or place of residence in a noncooperative country or territory; and - no suspicion pursuant to Article 40 para. 1 no. 3 exists. - Credit institutions and financial institutions must retain sufficient information in order to demonstrate that the customer is eligible for exemption in accordance with paras. 1 to 5. - In agreement with the Main Committee of the Austrian National Council, the Austrian federal government must issue a regulation stating that the exemptions pursuant to para. 1, 2 or 5 are not longer applicable if the European Commission adopts a decision pursuant to Article 40 (4) of Directive 2005/60/EC. - The FMA must inform the competent authorities of the other Member States and the European Commission of cases where the FMA considers that a third country fulfils the conditions set forth in para. 1, 2 or 5. ### Enhanced Customer Due Diligence Obligations (Article 40b) - In situations which by their nature can present a higher risk of money laundering or terrorist financing, credit institutions and financial institutions must apply additional due diligence measures in addition to the obligations pursuant to Article 40 paras. 1, 2, 2a and 2e on a risk-sensitive basis. - In any event, credit institutions and financial institutions must take the following additional measures: 1. Where the customer or the natural person authorised to represent the person pursuant to Article 40 para. 1 is not physically present for identification purposes: - take specific and adequate measures to compensate for the increased risk; - except in cases of suspicion or reasonable grounds for suspicion pursuant to Article 40 para. 1 no. 3 (in which case business relations must be avoided), ensure at least that: - either the contractual declaration of the customer is submitted electronically using a secure electronic signature pursuant to Article 2 no. 3 Signatures Act (Signaturgesetz – SigG; Federal Law Gazette I No. 190/1999); or, if not, the contractual declaration of the credit institution or financial institution is delivered in writing by registered mail to the customer address indicated as the customer's place of residence or place of incorporation; - the customer's name, date of birth and address in the case of natural persons, or the company name and place of incorporation in the case of legal persons, are known to the credit institution or financial institution; in the case of legal persons, the place of incorporation must also be the seat of the undertaking's central administration, which must be confirmed by the customer in a written declaration; a copy of the official photo identification document of the customer or of the customer's legal representative, or of the authorised representative in the case of legal persons, is also submitted before the time of conclusion of the agreement, unless the legal transaction is concluded electronically using a secure electronic signature; - if the customer's place of incorporation or place of residence is outside the EEA, then a written declaration is required from another credit institution with which the customer has a permanent business relationship, stating that the customer has been identified in accordance with Article 40 paras. 1, 2 and 2a nos. 1 and 2, or Article 8 (1) (a) to (c) of Directive 2005/60/EC, and that the permanent business relationship is still maintained. If the confirming credit institution is incorporated in a third country, then this third country must impose requirements equivalent to those indicated in Articles 16 to 18 of Directive 2005/60/EC. In lieu of identification and confirmation by a credit institution, identification and written confirmation by the Austrian representation in the third country or by a recognised certification authority is permissible; - or the first payment of the operations is carried out through an account opened in the customer's name with a credit institution as specified in Article 40 para. 8; in such cases, the customer's name, date of birth and address (natural persons) or company name and place of incorporation (legal persons) must be known, and the credit institution or financial institution must have copies of customer documents to verify the information; alternatively, a written declaration from the credit institution through which the first payment is to be carried out stating identification in accordance with Article 40 paras. 1, 2, 2a and 2e, or Article 8 (1) (a) to (c) of Directive 2005/60/EC, is sufficient. 2. With regard to cross-border correspondent banking relationships with correspondent banks from third countries, credit institutions and financial institutions must: - gather sufficient information about a correspondent bank to understand fully the nature of its business and be able to ascertain the reputation of the institution and the quality of supervision on the basis of publicly available information; - satisfy themselves of the correspondent bank's anti-money laundering and anti-terrorist financing controls; - obtain approval from senior management before establishing new correspondent banking relationships; - document the respective responsibilities of each institution; - with respect to payable-through accounts, be satisfied that the correspondent bank has verified the identity of and performed ongoing due diligence on the customers having direct access to accounts of the correspondent, and that it is able to provide relevant customer due diligence data to the correspondent bank upon request. _Italic: Extract from the provided IMF content unit._ ### 3. with regard to transactions or business relationships to politically exposed persons from other ### 3. with regard to transactions or business relationships to politically exposed persons from other ### Requirements for transactions or business relationships to politically exposed persons (PEPs) - Credit institutions and financial institutions must have appropriate risk-based procedures to determine whether the customer is a politically exposed person. - Credit institutions and financial institutions must obtain senior management approval before establishing business relationships with such customers. - Credit institutions and financial institutions must take adequate measures to establish the source of wealth and source of funds that are involved in the business relationship or transaction. - Credit institutions and financial institutions must conduct enhanced ongoing monitoring of the business relationship. - Credit institutions and financial institutions must review with particular care each transaction which they regard as particularly likely, by its nature, to be related to money laundering (Article 165 StGB – including asset components which stem from a criminal act on the part of the perpetrator himself/herself) or terrorist financing (Article 278d StGB) and take measures, if needed, to prevent their use for money laundering or terrorist financing purposes. ### Relief for Certain Transfers of Funds (Article 40c) - Regulation (EC) No. 1781/2006 on information on the payer accompanying transfers of funds does not apply to domestic transfers of funds to a payee account permitting payments for the provision of goods or services if: - 1. the payment service provider of the payee is subject to the obligations set forth in Directive 2005/60/EC; - 2. the payment service provider of the payee is able by means of a unique reference number to trace back, through the payee, the transfer of funds from the natural or legal person who has an agreement with the payee for the provision of goods and services; - 3. the amount transacted is EUR 1,000 or less. - Article 5 of Regulation (EC) No. 1781/2006 on information on the payer accompanying transfers of funds does not apply to transfers of funds indicated in Article 18 of Regulation (EC) No. 1781/2006 which are transmitted within Austria by payment service providers established in Austria to organisations carrying out activities for non-profit charitable, religious, cultural, educational, social, scientific or fraternal purposes, provided those transfers of funds are limited to a maximum amount of EUR 150 per transfer. - Payees may only be organisations which publish annual accounts due to legal requirements or on a voluntary basis, whose last annual financial statements were granted an unqualified auditor's certificate by an external auditor, and which possess a certification from the Chamber of Professional Accountants and Tax Advisors confirming the fulfilment of these requirements. - The FMA must publish on a quarterly basis a list of those payees to which funds transfers pursuant to para. 2 are exempt from the application of Article 5 of Regulation (EC) No. 1781/2006 on information on the payer accompanying transfers of funds. - The list is to be compiled and updated on the basis of the corresponding quarterly notification from the Chamber of Professional Accountants and Tax Advisors to the FMA on the organisations which fulfil the requirements pursuant to para. 2 (second sentence). - The notification must include the names of the organisations, the names of the natural persons who ultimately control the organisations and associations as well as explanatory notes on updates. - The FMA must also inform the European Commission in accordance with Article 18 (2) of Regulation (EC) No. 1781/2006. ### Inadmissible Business Relationships (Article 40d) - Credit institutions must not enter into or continue a correspondent banking relationship with a shell bank pursuant to Article 2 no. 74 and must take appropriate measures to ensure that they do not engage in or continue correspondent banking relationships with a credit institution which is known to permit its accounts to be used by a shell bank. - Credit institutions and financial institutions are prohibited from maintaining anonymous accounts and from accepting anonymous savings deposits; Article 40 paras. 5 to 7 are applicable in this context. ### Reporting Requirements (Article 41) - Credit institutions or financial institutions must report without delay to the relevant authority (Article 6 Security Police Act [Sicherheitspolizeigesetz – SPG]) and refrain from further execution of the transaction until the matter is resolved, in cases where they suspect or have reasonable grounds to suspect: - 1. that a previously conducted, ongoing or upcoming transaction serves the purpose of money laundering (Article 165 StGB – including asset components which stem directly from a criminal act on the part of the perpetrator); or - 2. that a customer has violated the obligation to disclose fiduciary relationships pursuant to Article 40 para. 2; or - 3. that a customer belongs to a terrorist organisation pursuant to Article 278b StGB or that the transaction serves the purpose of terrorist financing pursuant to Article 278d StGB. - In cases of doubt, orders involving incoming funds may be executed, while orders involving outgoing funds are not to be executed. - Credit institutions and financial institutions are entitled to request that the authority decide whether concerns exist about the immediate execution of a transaction; if the authority (Article 6 Security Police Act) fails to respond by the end of the ensuing banking day, then the transaction may be executed immediately. - Credit institutions and financial institutions must pay special attention to any activity which they regard as particularly likely, by its nature, to be related to money laundering or terrorist financing, in particular complex or unusually large transactions and all unusual patterns of transactions which have no apparent economic or visible lawful purpose. - Credit institutions and financial institutions must keep suitable records on such activities. - Additional reporting and procedural provisions: - (1a) Credit institutions must immediately inform the authority (para. 1) of all requests to withdraw savings deposits if: - 1. the requests are submitted after 30 June 2002, and - 2. the customer's identity has not been ascertained pursuant to Article 40 para. 1 for the savings deposit and - 3. the payment is from a savings deposit which shows a balance of at least EUR 15,000 or an equivalent value. - Such savings deposits may not be paid out until seven calendar days after the date of the request unless the authority (para. 1) orders a longer period pursuant to para. 3. - (2) Upon request, credit institutions and financial institutions must provide the authority (para. 1) with all information which the authority deems necessary in order to prevent or pursue cases of money laundering or terrorist financing. - (3) The authority (para. 1) is empowered to order that an ongoing or upcoming transaction with respect to which there is suspicion or reason to suspect that the transaction serves the purpose of money laundering (Article 165 StGB – including asset components which stem directly from a criminal act on the part of the perpetrator) or terrorist financing (Article 278d StGB) be omitted or delayed temporarily and that customer instructions involving outgoing funds only be executed with the consent of the authority. - The authority must inform the customer and the public prosecutor's office of this instruction without unnecessary delay. - The notification to the customer must include an indication that the customer or another party concerned is entitled to lodge a complaint with the Independent Administrative Tribunal regarding violations of his/her rights; the notification must also refer to the provisions regarding such complaints contained in Article 67c of the General Law on Administrative Procedure (Allgemeines Verwaltungsverfahrensgesetz – AVG). - (3a) The authority must reverse the instruction pursuant to para. 3 as soon as the conditions for its issue are no longer fulfilled or the public prosecutor declares that the conditions for confiscation pursuant to Article 109 no. 2 and Article 115 para. 1 no. 3 Criminal Procedure Code are not fulfilled. - Otherwise, the instruction is to be abrogated: - 1. once six months have elapsed since it was issued; - 2. as soon as the court has issued a legally effective decision on a request for confiscation pursuant to Article 109 no. 2 and Article 115 para. 1 no. 3 Criminal Procedure Code. - (3b) Credit institutions and financial institutions must maintain confidentiality of all operations serving compliance with paras. 1 to 3 vis-à-vis customers and third parties. - As soon as an instruction pursuant to para. 3 has been issued, institutions are empowered to refer the customer to the authority (Article 6 Security Police Act); with the consent of the authority, those institutions are also empowered to inform the customer of the instruction themselves. - The prohibition pursuant to this paragraph: - 1. does not refer to disclosures to the FMA or the Oesterreichische Nationalbank, or to disclosures for law enforcement purposes; - 2. is not to prevent disclosures between institutions from Member States, or from third countries provided that they fulfil the requirements set forth in Article 40a para. 1, belonging to the same group as defined in Article 2 (12) of Directive 2002/87/EC; - 3. is not, in cases related to the same customer and the same transaction involving two or more institutions, to prevent disclosures between the relevant institutions provided that they are situated in a Member State, or in a third country which imposes requirements equivalent to those laid down in Directive 2005/60/EC, and that they are from the same professional category and are subject to equivalent obligations as regards professional secrecy and personal data protection. - The information exchanged is to be used exclusively for the purposes of the prevention of money laundering and terrorist financing. - The FMA must inform the competent authorities of the other Member States and the European Commission of cases where the FMA considers that a third country fulfils the conditions set forth in no. 1 or 2. - If the European Commission adopts a decision pursuant to Article 40 (4) of Directive 2005/60/EC, the Austrian federal government must, in agreement with the Main Committee of the National Council, issue a regulation prohibiting disclosures between credit/financial institutions and institutions/persons from the third country in question. - (4) Credit institutions and financial institutions must: - 1. establish adequate and appropriate policies and procedures of customer due diligence, reporting, record keeping, internal control, risk assessment, risk management, compliance management and communication in order to forestall and prevent operations related to money laundering or terrorist financing. - 2. communicate the relevant policies and procedures to their branches and subsidiaries in third countries; - 3. take suitable measures to familiarise the staff responsible for the execution of transactions with the provisions intended to prevent or suppress money laundering or terrorist financing; these measures must also include the participation of the responsible employees in special training programmes in order to train the employees to recognise transactions which may be connected to money laundering or terrorist financing and to behave correctly in such cases; - 4. establish systems which enable them to respond fully and rapidly to enquiries from the authority (Article 6 Security Police Act) or from the FMA as to whether they maintain or have maintained during the previous five years a business relationship with specified natural or legal persons and on the nature of that relationship where those authorities consider such enquiries necessary in order to prevent or pursue cases of money laundering or terrorist financing; - 5. allow the FMA to review the effectiveness of systems for the suppression of money laundering or terrorist financing at any time; - 6. nominate within the undertaking a special officer to ensure compliance with Articles 40 et seq. for the suppression of money laundering and terrorist financing. - The authority (Article 6 Security Police Act) must provide credit institutions and financial institutions with access to up-to-date information on the practices of money launderers and terrorist financers and on indications leading to the recognition of suspicious transactions, and must ensure timely feedback on the effectiveness of and follow-up to reports of suspected money laundering or terrorist financing, wherever practicable. - (5) Should the FMA or the Oesterreichische Nationalbank, in performing their duties of banking supervision, find reason to suspect that a transaction serves the purpose of money laundering or terrorist financing, they must report this to the relevant authority (para. 1) without delay. - (6) The following must not be used to the detriment of the accused or suspected accessories, otherwise they shall be rendered null and void: - 1. data collected by the authority pursuant to para. 1, 2 or 5 in proceedings carried out exclusively due to fiscal offences, with the exception of the fiscal offences of smuggling or evasion of import or export duties, which are subject to the competence of the courts; - 2. data collected by the authority pursuant to para. 1a in proceedings carried out exclusively due to fiscal offences pursuant to no. 1 or due to another criminal act punishable with no more than one year of imprisonment. - If the authority (para. 1) finds reason only to suspect a criminal act pursuant to no. 1 or 2, then it must refrain from reporting the act in accordance with Article 78 Criminal Procedure Code or Article 81 Fiscal Penalties Act (Finanzstrafgesetz – FinStrG). - (7) Damage claims may not be asserted due to the fact that a credit institution or financial institution or one of its employees has delayed or omitted the execution of a transaction in negligent ignorance of the fact that the suspicion of money laundering or terrorist financing or of violations pursuant to Article 40 para. 2 was incorrect. - (8) removed (Federal Law Gazette I No. 108/2007) ### Savings Deposits (BWG Banking Act, VII. Savings Deposits) - Savings documents and identity: - (1) Savings deposits refer to funds which are deposited with credit institutions and are not intended for payment transactions, but for investment, and as such can only be accepted against the delivery of certain documents (savings documents). - Savings documents can be issued with a certain designation, in particular in the name of the customer identified pursuant to Article 40 para. 1; the use of names other than that of the customer identified pursuant to Article 40 para. 1 is not permitted under any circumstances. - (2) Savings documents may only be issued by credit institutions which are authorised to conduct savings deposit business. The designations Sparbuch (savings passbook), Sparbrief (savings certificate) or any other combination of words containing the fragment spar (savings) may be used only for these documents. - (3) Savings deposits which amount to less than EUR 15,000 or an equivalent value and which are not registered in the name of the customer identified pursuant to Article 40 para. 1 must be subject to the restriction that the customer may only access the savings deposit upon provision of a password defined by the customer. This restriction must be recorded in the savings document and in the credit institution's records. - Savings deposits acquired by way of succession upon the death of a customer may be accessed without the provision of the password; the same applies to cases where a savings document is presented in the course of judicial or administrative enforcement proceedings. - (4) A credit institution which receives a report on the loss of a savings document along with an indication of the name, address and birth date of the party incurring the loss must enter the alleged loss in the records for the savings deposit in question and must not pay out any funds from the savings deposit within four weeks of receiving such a report. - (5) After 30 June 2002, savings documents for which the customer's identity has not been ascertained pursuant to Article 40 para. 1 must not be transferred or acquired in legal transactions. - Deposits, withdrawals and interest (Article 32): - (1) Every deposit credited to a savings deposit and every withdrawal from a savings deposit must be recorded in the savings document. - (2) Withdrawals from a savings deposit may only be made upon presentation of the savings document itself. Deposits into a savings deposit may also be accepted in cases where the savings document is not presented simultaneously. Such deposits are to be recorded in the savings document upon the next presentation of the savings document. - (3) Savings deposits must not be accessed by means of funds transfers, except in cases where the person entitled to the savings deposit is deceased, is a minor or otherwise under tutelage, and the competent court for probate, guardianship or tutelage matters orders such a transfer, nor by means of cheques. Funds transfers to a savings deposit are permissible. - (4) Notwithstanding a restriction on the right of disposal pursuant to Article 31 para. 3 and notwithstanding Article 40 para. 1 no. 4, the credit institution is entitled to pay out funds against presentation of the savings document and subject to the requirements indicated under nos. 1 to 3 as follows: - 1. In the case of savings deposits which amount to less than EUR 15,000 or an equivalent value and which are not registered in the name of a customer identified pursuant to Article 40 para. 1, withdrawals may be paid out upon provision of the password; - 2. In the case of savings deposits which amount to at least EUR 15,000 or an equivalent value or which are registered in the name of the customer identified pursuant to Article 40 para. 1, withdrawals may only be paid out to the customer identified pursuant to Article 40 para. 1; - 3. In the case of savings deposits which are not registered in the name of the customer identified pursuant to Article 40 para. 1 and whose balance has reached or exceeded EUR 15,000 or an equivalent value since the last presentation of the savings document exclusively as a result of interest credits, withdrawals may be paid out upon provision of the password at the first presentation of the savings document after the limit is reached or exceeded; the limit is considered to be reached or exceeded exclusively due to interest credits in cases where no credits from funds transfers have been recorded since the last presentation which, in total, cause the above-mentioned limit to be reached or exceeded. - Withdrawals may be made subject to the provisions indicated above unless the savings document has been reported lost, withdrawal has been officially prohibited or the accounts have been frozen. - (5) Unless a savings deposit is paid out in full within a calendar year, savings deposits must be balanced at the end of each calendar year (closing date). This does not apply to savings certificates. - (6) The annual interest rate applicable to a savings deposit and any fees charged for services in connection with savings deposits must be indicated in a conspicuous place in the savings document. Each change in the annual interest rate must be recorded in the savings document upon the next presentation of the savings document along with an indication of the date on which the interest rate takes effect. The amended annual interest rate applies from the date on which it goes into effect without requiring cancellation by the credit institution. - (7) Interest on deposits into savings deposits is to begin accruing as of the value date (Article 37), with a month counted as 30 days and a year counted as 360 days. Amounts which are withdrawn within 14 days after being deposited are not to accrue interest; withdrawals from savings deposits must always be debited against the amounts most recently deposited. - (8) Savings deposits may be committed for a certain term. Payments made prior to the end of the term are to be treated as advances, and interest is to be calculated accordingly. For these advances, 0.1% is to be charged for each full month by which the commitment period is not observed. However, interest on advances must not exceed the total credit interest accrued on the amount accepted; to the extent necessary, charges may be applied retroactively to credit interest paid out in the preceding year in cases where the credit interest for the current year is not sufficient. - After 30 June 2002, term commitments may only be agreed upon in cases where the customer's identity has been ascertained pursuant to Article 40 para. 1. - (9) The general provisions of the statute of limitations apply to limitations on claims arising from savings deposits. Interest on savings deposits is subject to the same limitations as deposits. Limitation periods are interrupted by every interest credit recorded in the savings document and by every deposit or withdrawal. ### Banking Secrecy (BWG Banking Act, IX. Banking Secrecy) - (1) Credit institutions, their members, members of their governing bodies, their employees as well as any other persons acting on behalf of credit institutions must not divulge or exploit secrets which are revealed or made accessible to them exclusively on the basis of business relations with customers, or on the basis of Article 75 para. 3 (banking secrecy). - If the functionaries of authorities as well as the Oesterreichische Nationalbank acquire knowledge subject to banking secrecy requirements in the course of performing their duties, then they must maintain banking secrecy as official secrecy; these functionaries may only be relieved of this obligation in the cases indicated under para. 2. - The obligation to maintain secrecy applies for an indefinite period of time. - (2) The obligation to maintain banking secrecy does not apply *Source: _cr09298 - 3. with regard to transactions or business relationships to politically exposed persons from other (PDF)._* ### 1. vis-à-vis public prosecutors and criminal courts in connection with criminal court proceedings on the ### _cr09298 - 1. vis-à-vis public prosecutors and criminal courts in connection with criminal court proceedings on the ### Exceptions to banking secrecy - Banking secrecy may be waived or does not apply: - vis-à-vis public prosecutors and criminal courts in connection with criminal court proceedings on the basis of a court approval (Article 116 Criminal Procedure Code; Strafprozeßordnung – StPO), and vis-à-vis the fiscal authorities in connection with initiated criminal proceedings due to wilful fiscal offences, except in the case of financial misdemeanours; - in the case of obligations to provide information pursuant to Article 41 paras. 1 and 2, Article 61 para. 1, Article 93 and Article 93a; - vis-à-vis the probate court and the court commissioner in the event of the death of a customer; - vis-à-vis the competent court for guardianship or tutelage matters if the customer is a minor or otherwise under tutelage; - if the customer grants his/her express written consent to the disclosure of secrets; - for general information commonly provided in the banking business on the economic situation of an undertaking, unless the undertaking expressly objects to the provision of such information; - where disclosure is necessary in order to resolve legal matters arising from the relationship between the credit institution and customer; - with regard to the reporting requirements pursuant to Article 25 para. 1 of the Inheritance and Gift Tax Act (Erbschafts- und Schenkungssteuergesetz); - in the case of obligations to provide information to the FMA pursuant to the Securities Supervision Act and the Stock Exchange Act. - A credit institution may not invoke banking secrecy where disclosure is necessary to determine the credit institution's own tax liabilities. - Paras. 1 to 3 apply also to financial institutions and contract insurance undertakings with regard to Article 75 para. 3 and to protection schemes, except for cooperation with other protection schemes, deposit guarantee schemes and investor compensation schemes as required by Articles 93 to 93b. - (constitutional law provision) Paras. 1 to 4 may only be amended by the National Council with at least one-half of the representatives present and with a two-thirds majority of the votes cast. ### FMA supervisory powers (Article 70) - The FMA, in its role as banking supervisory authority, may at any time for the purpose of supervising credit institutions and groups of credit institutions: - demand that credit institutions and superordinate credit institutions present interim financial statements, reports in specified forms and using specified layouts, and audit reports; require information on all business matters; inspect bookkeeping records, documents and data media; Article 60 para. 3 is applicable to the scope of the FMA's information, presentation and inspection rights as well as the obligation to make documents available in Austria; - obtain audit reports and information from bank auditors and competent auditing associations; obtain and provide necessary information to protection schemes and the government commissioner appointed pursuant to para. 2 no. 2; - have bank auditors, other external auditors and external auditing companies, competent auditing associations and other experts conduct necessary audits; Article 62 exclusion reasons are applicable; the FMA may provide information to engaged auditors where this serves the audit engagement; - instruct the Oesterreichische Nationalbank to conduct audits of credit institutions, their branches and representative offices outside of Austria, of credit institutions subject to supplementary supervision pursuant to Article 5 para. 1 Financial Conglomerates Act and of undertakings within the group of credit institutions. The Oesterreichische Nationalbank's competence covers all lines of business and all risk types; the FMA may have its own employees participate in these audits; - request that competent authorities in host Member States conduct audits of group undertakings and branches where this simplifies or expedites the process; under these circumstances the Oesterreichische Nationalbank and FMA employees may be obliged/authorized to participate. ### Audit planning, on-site inspections, and related procedures - Joint audit planning and escalation: - The FMA and the Oesterreichische Nationalbank must jointly define an audit plan for each upcoming calendar year which must take into account: - audits of system-relevant credit institutions; - an appropriate frequency of audits of non-system-relevant institutions; - resources for ad-hoc audits; - thematic focuses of audits; - the review of measures taken to remedy defects identified. - The audit plan must define audit focuses and start dates for each institution. - If the Oesterreichische Nationalbank determines an on-site inspection is necessary and not in the joint plan, it must request an additional audit engagement from the FMA; the FMA must either extend/issue the audit engagement or reject the request with reasons without delay, at the latest, however, within one week. - Macroeconomic inspections: - The Oesterreichische Nationalbank may carry out on-site inspections for macroeconomic reasons without an FMA audit engagement if audits in the audit plan or other FMA engagements are not affected; it must inform the FMA and state reasons by the time inspections begin. - The Oesterreichische Nationalbank must define the intended scope in writing and deliver a copy to the credit institution at inspection start. - If a credit institution refuses access or necessary cooperation, the FMA must ensure enforcement of the written scope in accordance with Article 22 Financial Market Authority Act at the Oesterreichische Nationalbank's request. - Inspection sufficiency and extensions: - If the Oesterreichische Nationalbank determines that an on-site inspection engagement is insufficient, it must request necessary extensions from the FMA. The FMA must either extend the audit engagement or reject the extension with reasons without delay, at the latest, however, within one week. ### Supervisory measures, reorganisation, and government commissioners - In cases of danger to fulfilment of obligations to creditors or security of entrusted assets, the FMA may issue administrative rulings (Bescheide) ordering time-limited measures to avert danger; such measures must be abrogated at the latest 18 months after going into effect. - Measures the FMA may issue include: - completely or partly prohibit withdrawals of capital and earnings as well as distributions of capital and earnings; - appoint an expert supervisor (government commissioner) who is an attorney at law or external auditor; in credit cooperatives auditors from cooperative auditing associations may be appointed; the supervisor has the rights pursuant to para. 1 nos. 1 and 2 and may: - prohibit the credit institution from transactions exacerbating the danger, and/or - where continuing business is completely or partly prohibited, allow individual transactions which do not exacerbate the danger; - completely or partly prohibit directors from managing the credit institution, with notification of the appointing body which must re-appoint directors within one month; such appointments require FMA consent, which must be refused if newly appointed directors are unsuitable for averting the danger; - completely or partly prohibit the continuation of business operations. - Supplementary provisions: - At request of the supervisor/government commissioner, the FMA may appoint a deputy where necessary for important reasons; provisions applicable to the supervisor apply to the deputy. - The supervisor, with FMA approval, may employ persons with suitable professional qualifications; the FMA's approval must name these persons specifically and be delivered to the credit institution. - The procedure pursuant to para. 2 is a reorganisation measure as defined in Article 2 of Directive 2001/24/EC; Articles 81 to 81m apply. Receivership is considered a procedure pursuant to para. 2 and the FMA must issue a decree of appointment to the government commissioner. Article 83 paras. 4 to 9 are applicable and the FMA is to act in lieu of the court in this context. - Appointment process for government commissioners: - The FMA must obtain reports on suitable government commissioners from the Austrian Bar Association, the Chamber of Professional Accountants and Tax Advisors, and from cooperative auditing associations. - If appointment is not possible on the basis of those reports, the FMA must notify the relevant organisation to name an attorney or external auditor with suitable qualifications. - In imminent danger, the FMA may appoint temporarily (1) an attorney or (2) an external auditor; this appointment is abrogated once a qualified appointee is named in accordance with the primary process. - Certain measures (paras. 2 and 2a) are suspended for the duration of a receivership procedure (Section XVII). - Remuneration: - The government commissioner is to be remunerated by the FMA with a fee (function fee) commensurate to the work and expenses; entitled to submit invoices for each previous quarter and after termination of activities. The FMA must effect remuneration immediately after reviewing the invoice. - Publication: - The FMA is entitled to inform the public of measures taken pursuant to paras. 2, 3 and 4 by placing announcements in the Official Gazette of the Wiener Zeitung, in a nationwide newspaper, on the Internet, or by posting a bulletin at the credit institution's premises. Measures pursuant to para. 4 no. 1 are only to be published where necessary given the nature and severity of the violation. Publication measures may be taken in full or in part. - Notification and registry: - Credit institutions must inform the chairperson of the supervisory body immediately of all administrative rulings (Bescheide) issued by the FMA on the basis of Article 69 provisions. - The FMA must convey administrative rulings with which directors are completely or partly prohibited from managing the credit institution (para. 2 no. 3 and para. 4 no. 2) and any reversals to the Commercial Register Court for entry in the Commercial Register. ### Measures for representative offices and third-country institutions - For representative offices of credit institutions incorporated in a Member State or third country, the FMA may obtain information and conduct audit activities to monitor compliance with Article 1 para. 1 and Article 73; para. 7 (publication) applies. - In cases where these provisions are violated, and Article 98 para. 1 notwithstanding, the FMA must: - take the measures indicated in Article 15 in the case of credit institutions pursuant to Article 9; - take the measures indicated in Article 70 para. 4 nos. 1 and 2 in the case of credit institutions from third countries and inform the competent authority in the credit institution's country of incorporation accordingly. ### Mixed-activity holding company supervision (Article 70a) - Where the parent undertaking of a credit institution is a mixed-activity holding company: - The FMA may request from the credit institution all information necessary for supervision on the mixed-activity holding company and its subsidiaries at any time for ongoing supervision. Those undertakings must make all documents available to the credit institution and provide necessary information for the credit institution to fulfil its obligation to the FMA. - The FMA may instruct the Oesterreichische Nationalbank to obtain and review on site all information provided by the credit institution pursuant to para. 1; Article 70 para. 1 no. 3 (third sentence) and Article 71 are applicable. Bank auditors, competent auditing associations, external auditors or other experts independent of the mixed-activity holding company may be instructed to conduct the audit. - In cases where the mixed-activity holding company or one of its subsidiaries is incorporated in another Member State, the FMA must request the competent authorities in that Member State to conduct the audit pursuant to para. 2. - The FMA is entitled to supervise transactions between the credit institution, the mixed-activity holding company and its subsidiaries. The credit institution must have adequate risk management processes and internal control mechanisms, including sound reporting and accounting procedures, to identify, measure, monitor and control transactions with the parent and subsidiaries. - Beyond reports to the Major Loans Register pursuant to Article 75, the credit institution must report material intra-group transactions (especially loans, guarantees, off-balance-sheet transactions, cost-sharing agreements, reinsurance transactions, capital investment transactions and transactions concerning own funds) to the FMA on at least a quarterly basis. - Where intra-group transactions pose a threat to a credit institution's financial position, the FMA will take appropriate measures. ### Administrative enforcement and interest on shortfalls (Articles 96–97) - Article 96: - In enforcement of administrative rulings pursuant to this federal act, the amount of EUR 30,000 replaces the amount of ATS 10,000 provided for in Article 5 para. 3 Act on Administrative Enforcement (Verwaltungsvollstreckungsgesetz – VVG). - Enforcement by way of monetary fines as coercive penalties is also permissible against public authorities. - Article 97 (interest rates the FMA must charge credit institutions): - 2% on the amount by which the credit institution falls below the capital requirement pursuant to Article 22 para. 1 in conjunction with Article 103, calculated on an annual basis, for 30 days, except in the case of supervisory measures pursuant to Article 70 para. 2 or in cases where the credit institution is over indebted; - 5% over the applicable bank rate on the amount by which the credit institutions falls below Liquidity 1 funds pursuant to Article 25 para. 7, calculated on an annual basis, for 30 days; the amounts by which the credit institution falls short of its minimum reserve requirement (Article 5 of Regulation (EC) No. 2818/98 of the European Central Bank of 1 December 1998 on the application of minimum reserves, OJ L 356 of 30 December 1998) are to be deducted from the Liquidity 1 shortfall; - 2% on the amount by which the credit institutions falls below Liquidity 2 funds pursuant to Article 25 para. 12, calculated on an annual basis, for 30 days. *Source: Excerpt from the BWG Banking Act and related provisions as provided in the content unit.* ### 4. removed; This English translation of the authentic German text serves merely information purposes. The ### _cr09298 - 4. removed; This English translation of the authentic German text serves merely information purposes. The ### Article 98 — Administrative offences and fines for unauthorised banking and notification/reporting failures - Conducting banking transactions without required authorisation: - Guilty of an administrative offence; punishable by the FMA with a fine of up to EUR 50,000 unless the act is a criminal offence. - Persons responsible (Article 9 VStG) for a credit institution — failures listed in para. (2) (notification, reporting, consolidation, governance, disclosure, supervisory reporting, advertising, presentation and reporting requirements): - Guilty of an administrative offence; punishable by the FMA with a fine of up to EUR 30,000 unless the act is a criminal offence. - Persons responsible (Article 9 VStG) for a credit institution — failures listed in para. (3) (savings deposit interest display, consumer credit/current account written-form and disclosure requirements, announcements of interest rate changes, annual account statements, quarterly balance information, lobby postings, advertising interest rates, price display, due diligence obligations): - Guilty of an administrative offence; punishable by the FMA with a fine of up to EUR 3,000 unless the act is a criminal offence. - Violation of regulation prohibiting disposals over accounts pursuant to Article 78 para. 7 (even through mere negligence): - Guilty of an administrative offence; punishable by the FMA with a term of imprisonment of up to six weeks and a fine of up to EUR 50,000 unless the act is a criminal offence. ### Articles 99, 99a, 99b — Administrative offences for financial institutions, qualifying participations, consolidation and limitation period - Parties who, as persons responsible for financial institutions, commit failures including but not limited to: - failures to provide information under Articles 12 para. 3, 14 para. 3; - failures to notify intended qualifying participations (Article 20 paras. 1, 2, 4) including increases reaching 20%, 33% or 50% limits; - failure to provide consolidation information to superordinate credit institutions (Article 30 para. 7); - misuse of protected designations (Article 94) such as "Sparbuch", "Bank", "Sparkasse", "Raiffeisen", etc.; - violations of cover reserve provisions (Article 230a General Civil Code, Articles 66 to 68); - disposals over accounts or financial services in violation of directly applicable EU law; - violations of Regulation (EC) No. 1781/2006 obligations on payer information accompanying transfers of funds; - and other specified obligations, - are guilty of an administrative offence and are to be punished by the FMA with a fine of up to EUR 30,000, in the case of no. 10 up to EUR 50,000, unless the act constitutes a criminal offence. - Article 99a — Enforcement measure for failure to provide consolidation information: - If a financial holding company, as superordinate institution, fails to provide required consolidation information pursuant to Article 30 paras. 7 and 8 despite measures pursuant to Article 99 no. 6 in conjunction with Article 96, and the objective cannot be attained through other measures, the FMA may request suspension of voting rights for shares held by group institutions in subordinate institutions from competent first-instance commercial courts at the subordinate institutions' place of incorporation. - If a court orders suspension of voting rights, the court must appoint a trustee who fulfils Article 5 para. 1 no. 3; voting rights suspended until court establishes para. 1 conditions no longer fulfilled; trustee appointment communicated to the FMA. - Trustee entitled to reimbursement of expenses and remuneration determined by the court; financial holding company and subordinate institution bear joint and several liability; appeals on remuneration decisions beyond provincial superior court rulings not permitted. - Article 99b — Limitation period: - In the case of administrative offences pursuant to Articles 98 and 99, a limitation period of 18 months applies instead of the six months set forth in Article 31 para. 2 of the Act on Administrative Penalty. ### Article 100 — Effects of unauthorised banking transactions on remuneration and legal validity - Parties conducting banking transactions without required authorisation: - Not entitled to any remuneration, especially interest and commissions, associated with those transactions. - Legal invalidity of agreements associated with those transactions does not render the overall banking transaction legally invalid. - Agreements to the contrary as well as suretyships and guarantees associated with those transactions are legally invalid. - Such parties cannot invoke Article 1 para. 5. ### Article 101 — Criminal liability for disclosure/exploitation of banking secrecy - Disclosure or exploitation of facts subject to banking secrecy to create economic advantage or disadvantage: - Punishable by the court with a term of imprisonment of up to one year or with a fine of up to 360 day-fines. - In cases under para. (1), prosecution requires the authorisation of the person whose interest in secrecy was violated. ### VAG Insurance Supervision Act — Chapter: Prevention of Money Laundering and Terrorist Financing - Article 98a — Scope and definitions (life assurance business) - Chapter applies to insurance undertakings within the scope of the operation of the life assurance business. - Definitions: - “Politically exposed persons” (PEPs): persons exercising prominent public functions or who have exercised them up until a year ago, their immediate family members, or persons known to be close associates. - “Prominent public functions” include: heads of state, heads of government, ministers, deputy ministers, state secretaries; members of parliaments; members of supreme courts/constitutional courts/other high-level judicial bodies not subject to further appeal except in exceptional circumstances; members of courts of auditors or boards of central banks; ambassadors, chargés d’affaires, high-ranking officers in the armed forces; members of administrative/management/supervisory bodies of state-owned enterprises. Categories include Community and international level positions. - “Immediate family members” include: the spouse; any partner considered by national law equivalent to the spouse; children and their spouses or equivalent partners; parents. - “Persons known to be close associates” include: natural persons known to have joint beneficial ownership of legal entities/arrangements with a PEP or other close business relations with a PEP; natural persons with sole beneficial ownership of a legal entity/arrangement known to have been set up for the de facto benefit of a PEP. - “Business relationship”: business relationship between the insurance undertaking and the customer(s) entered into upon conclusion of an insurance contract, the assumption of an insurance contract or the assignment of a claim arising from an insurance contract. - “Beneficial owner”: natural persons who ultimately own or control the customer, including: - Corporate entities: - natural persons who ultimately own or control a legal entity through direct or indirect ownership or control over a sufficient percentage of shares or voting rights; a percentage of 25% plus one share deemed sufficient; - natural persons who otherwise exercise control over the management of a legal entity. - Legal entities/arrangements (foundations, trusts) administering and distributing funds: - where future beneficiaries determined: natural persons who are beneficiaries of 25% or more of allocations; - where beneficiaries not yet determined: class of persons in whose main interest the trust/entity is set up or operates; - natural persons who exercise control over 25% or more of the property of a trust or legal entity. - “Customer”: the policyholder and the beneficiary from the insurance contract; assignees of claims arising from an insurance contract deemed equivalent to the beneficiary. - Article 98b — Due diligence obligations for combating money laundering and terrorist financing - Insurance undertakings shall identify and verify the identity of a customer: - 1. prior to establishing a business relationship; - 2. prior to carrying out any transactions not within the scope of a business relationship that amount to at least EUR 15,000 or their euro equivalent, irrespective of whether the transaction is carried out in a single operation or in several operations which appear to be linked; if the amount is not known at the beginning of the transaction, identity shall be established as soon as the amount becomes known and has been determined as amounting to at least EUR 15,000 or their euro equivalent. *Italic: Source: _cr09298 - 4. removed; This English translation of the authentic German text serves merely information purposes. The* ### 3. if there is suspicion or reasonable grounds to suspect that the customer belongs to a terrorist ### _cr09298 - 3. if there is suspicion or reasonable grounds to suspect that the customer belongs to a terrorist ### Customer identification and verification - The identity of a customer shall be established by personal presentation of an official photo identification document. - Any documents issued by a government authority shall be deemed an official photo identification document if they come with a non-replaceable photo of the head of the person concerned, and if they include the name, the date of birth and the signature of the person as well as the authority issuing the document. - In the case of travel documents of foreigners, the full date of birth need not be included in the travel document if this complies with the law of the state issuing the document. - For legal persons and natural persons without legal capacity, the identity of the natural person holding the power of representation shall be established by presentation of his official photo identification document and the power of representation verified by means of appropriate certificates. - The identity of a legal person shall be established by means of meaningful supporting documents which are available pursuant to the legal standards prevailing in the country of the head office of the legal person. - Deviations from the above are allowed only in the cases pursuant to paras. 98c and 98e. - Technological progress: not all photo-ID criteria must be met if other equivalent criteria such as biometric data are introduced which are at least equivalent; however, the criterion that the document must have been issued by a government authority shall always be met. ### Trusts and trustees (Article 98b paras. 2 and 3) - Insurance undertaking shall request the person planning to establish a business relationship to inform it whether he acts as trustee; the request must be met. - If he announces that he will act as trustee, he shall also furnish proof of the trustor’s identity to the insurance undertaking. - The trustee shall be identified pursuant to para. 1, exclusively with his physical presence. Identifying the trustee by third parties shall also be ruled out. - Identity of the trustor: - Natural persons: presentation of the original or a copy of the trustor’s official photo identification document (para. 1). - Legal persons: by means of meaningful supporting documents pursuant to para. 1. - Trustee must make a written statement that he personally or by way of reliable sources convinced himself of the identity of the trustor. Courts, government authorities, notaries public, lawyers and third parties as defined by Article 98e are deemed reliable sources. ### Due diligence obligations (Article 98b para. 3) - Insurance undertakings shall: 1. ask the customer to make known the identity of the customer’s beneficial owner, which he must comply with, and take risk-based and adequate measures to verify his identity so that they are satisfied that they know who the beneficial owner is, including, as regards legal persons or trusts, take risk-based and adequate measures to understand the ownership and control structure of the customer; 2. take risk-based and adequate measures to obtain information on the purpose and intended nature of the business relationship; 3. take risk-based and adequate measures to conduct ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the insurance undertaking’s knowledge of the customer, the business and risk profile, including, where necessary, the source of monies or financial funds and ensure that the documents, data or information held are kept up-to-date. ### Risk analysis and supervisory proof (Article 98b para. 4–8) - Insurance undertakings shall subject their transactions to a risk analysis on the basis of appropriate criteria (products, customers, complexity of transactions, business of customers, geography in particular) concerning risk of misuse for money laundering or terrorist financing. - Insurance undertakings must furnish proof to the FMA that the extent of the measures taken as a result of the analysis can be deemed appropriate with respect to the risks of money laundering and terrorist financing. - By way of derogation from para. 1 no. 1, verification of the identity of the beneficiary under the insurance contract may be allowed only before payout or when the beneficiary exercises rights under the contract. - If unable to comply with paras. 1 to 3 pertaining to customer identification and obtaining other necessary information, they may not establish a business relationship or carry out transactions; consider sending a report about the customer to the authority (Article 6 of the Sicherheitspolizeigesetz [SPG]; Federal Law Gazette no. 566/1991) pursuant to Article 98f para. 1. - Apply CDD procedures to new and existing customers at appropriate times on a risk-sensitive basis. - Branches and subsidiaries in third countries: arrange measures at least equivalent to those in this federal act; inform the FMA where third-country legislation does not permit application and take additional measures to handle ML/TF risk. The FMA shall inform competent authorities of other signatory countries and the European Commission where coordinated action could be taken. - Article 78 para. 9 BWG, Federal Law Gazette no. 532/1965, applies correspondingly in connection with non-cooperative countries. ### Simplified customer due diligence (Article 98c) - Relief from Article 98b para. 1 nos. 1, 2 and 4, paras. 2 and 3 may apply subject to low-risk assessment under para. 2 in these cases: 1. where the customer is: a) an insurance undertaking, provided it is subject to the provisions of the present Chapter, a credit institution pursuant to Article 1 para. 1 BWG or a credit or financial institution pursuant to Article 3 of Directive 2005/60/EC; b) an insurance undertaking, a credit or financial institution situated in a third country within the meaning of Article 3 of Directive 2005/60/EC which imposes requirements equivalent to those laid down in Directive 2005/60/EC and is supervised for compliance with those requirements; c) listed companies whose securities are admitted to trading on a regulated market in one or several signatory countries and listed companies from third countries which are subject to disclosure requirements consistent and comparable with Community legislation, in accordance with a regulation to be issued by the FMA on the basis of its authority to issue regulations pursuant to Article 85 para. 10 BörseG; d) a domestic public authority; or e) a public authority or public institution meeting conditions aa) to dd) specified in the text. 2. vis-à-vis customers in respect of: a) life assurance contracts where the annual premium is no more than EUR 1,000 or the single premium is no more than EUR 2,500; b) insurance contracts for pension schemes if there is no surrender clause and they cannot be used as collateral for a loan. - Insurance undertakings shall assess whether there is little risk of ML/TF for customers in para. 1 no. 1 lit. c to e and products in para. 1 no. 2 lit. b; if risk may not be low, exemptions do not apply. - Keep appropriate records to prove conditions for applying simplified CDD are met. - Federal government may order exemptions not to be applied if European Commission decision pursuant to Article 40(4) of Directive 2005/60/EC; FMA shall inform competent authorities and the European Commission where a third country meets para. 1 conditions. ### Enhanced customer due diligence (Article 98d) - Apply, on a risk-sensitive basis, enhanced CDD measures in addition to Article 98b paras. 1–3 and 7 where higher risk of ML/TF exists. At a minimum: 1. Where customer or representative has not been physically present for identification, take specific and adequate measures to compensate for higher risk and ensure at least one of these: a) contractual declaration available by qualified electronic signature pursuant to Article 2 no. 3a SigG, or if not, contractual declaration by insurance undertaking is made in writing and sent by registered post to the customer address given; b) know name, date of birth and address of customer (or company name and head office for legal persons); head office must be seat of central administration for legal persons and customer must provide written statement; copy of official photo ID of customer or representative (or body holding power of representation for legal persons) must be submitted prior to establishment, unless transaction effected electronically by qualified electronic signature; c) if head office or residence outside the EEA, written confirmation by a credit institution with which the customer has a permanent business relationship confirming identification within Article 98b paras. 1, 2, para. 3 nos. 1 or 2 and/or Article 8(1)(a) to (c) of Directive 2005/60/EC; if credit institution head office is in a third country, that third country must set standards equivalent to Articles 16 to 18 of the Directive; alternatively, Austrian representation in the third country or a recognised certification agency may confirm; d) first payment within the business relationship is through an account opened in the customer’s name with a credit institution pursuant to Article 98e para. 1 no. 3 and para. 2; in this case, name, date of birth and address of customer (or company name and head office) must be known and copies of documents must be available, or written confirmation by the credit institution that the customer has been identified as per Article 98b paras. 1, 2, para. 3 nos. 1 or 2 and/or Article 8(1)(a) to (c) of Directive 2005/60/EC. - No. 1 exemptions shall not apply, subject to low-risk assessment, to insurance contracts and related transactions mentioned under Article 98b para. 1 no. 2. 2. For politically exposed persons of other signatory countries or third countries: a) have appropriate risk-based procedures to determine whether the customer is a politically exposed person; b) obtain senior management approval for establishing business relationships with such customers; c) take adequate measures to establish the source of wealth and source of funds involved in the business relationship or transaction; d) conduct enhanced ongoing monitoring of the business relationship. - Scrutinise with special care any establishment of a business relationship or transaction likely connected with money laundering (Article 165 StGB) or terrorist financing (Article 278d StGB) and, if necessary, take measures to forestall misuse. ### Performance by third parties (Article 98e) - Insurance undertakings may rely on third parties to meet obligations in Article 98b paras. 1, 2 and 3 nos. 1 and 2, but ultimate responsibility remains with the insurance undertaking. - “Third parties” include: 1. insurance undertakings subject to the present Chapter, insurance undertakings as defined in Article (3)(2)(b) of Directive 2005/60/EC; 2. insurance intermediaries pursuant to Article 365 para. 3 no. 4 GewO 1994, insurance intermediaries as defined in Article 3(2)(e) of Directive 2002/92/EC; 3. credit institutions pursuant to Article 1 para. 1 BWG, credit and financial institutions as defined in Article 3(1) and (2)(a)(c)(d) and (f) of Directive 2005/60/EC; unless authorised exclusively to carry out bureaux de change or money transmission/remittance operations; 4. persons referred to in Article 2(1)(3)(a) and (b) of Directive 2005/60/EC whose head offices are within domestic territory or the EEA. - Legal or natural persons in third countries are deemed third parties if they: 1. are subject to mandatory professional registration, recognised by law; and 2. apply CDD and record keeping requirements as laid down in the present Chapter or equivalent to Directive 2005/60/EC and their compliance is supervised in accordance with Section 2 of Chapter V, or are situated in a third country which imposes equivalent requirements. - FMA shall inform competent authorities and the European Commission where, in its opinion, a third country meets these conditions. - If European Commission adopts a decision pursuant to Article 40(4) of Directive 2005/60/EC, the federal government may prohibit relying on third parties from the third country concerned. - Insurance undertakings shall arrange that third parties make requested information immediately available and forward copies of identification/verification data and other relevant documentation on request. - Paragraph does not apply to outsourcing/agency relationships where contractual arrangement treats provider/agent as part of the insurance undertaking obliged to meet Article 98b paras. 1, 2 and 3 nos. 1 and 2. ### Reporting obligations (Article 98f) - If there is suspicion or reasonable grounds to suspect: 1. that the intended establishment of a business relationship or an existing business relationship serves money laundering purposes (Article 165 StGB– including asset components which stem from a criminal offence committed by the perpetrator himself); 2. that a transaction which has already been carried out, is ongoing or imminent serves money laundering purposes (Article 165 StGB– including asset components which stem from a criminal offence committed by the perpetrator himself); 3. that the policyholder failed to comply with the obligation to disclose trusts pursuant to Article 98b para. 2; - (text continues beyond the provided extract). *Source: _cr09298 - 3. if there is suspicion or reasonable grounds to suspect that the customer belongs to a terrorist* ### 4. that a customer belongs to a terrorist organisation pursuant to Article 278b StGB, or that the ### 4. that a customer belongs to a terrorist organisation pursuant to Article 278b StGB, or that the ### Suspicion, reporting and authority directives - If insurance undertakings suspect that a customer: - belongs to a terrorist organisation pursuant to Article 278b StGB, or - that the establishment of a business relationship or the transaction serves to finance terrorism pursuant to Article 278d StGB, they shall immediately notify the authority (Article 6 SPG) and refrain from establishing the business relationship or carrying out any transaction until the facts have been ascertained, unless there is danger that this would complicate or hinder the investigation of the facts. - Insurance undertakings shall 81 pay special attention to any activity which they regard as particularly likely, by its nature, to be related to money laundering or terrorist financing; this concerns in particular complex or unusual contract terms and transactions which have no apparent economic or visible lawful purpose. Suitable records thereof shall be kept. - Insurance undertakings may demand a decision from the authority (Article 6 SPG) whether there are objections to the immediate carrying out of a transaction; if the authority (Article 6 SPG) does not reply by the end of the following bank working day, the transaction may be carried out without delay. - Insurance undertakings shall provide any information to the authority (Article 6 SPG), at its request, which it deems necessary to prevent or prosecute money laundering or terrorist financing. - The authority (Article 6 SPG) is authorised to direct that an ongoing or imminent transaction suspected of serving money laundering purposes (Article 165 StGB) or to finance terrorism (Article 278d StGB) is not carried out or preliminarily postponed. The authority (Article 6 SPG) shall inform the public prosecutor’s office of the directive without unnecessary delay. - Notification to the customer must include: - a note that he or another individual concerned are entitled to file an appeal against violation of their rights to the Unabhängiger Verwaltungssenat (UVS; Independent Administrative Tribunal); - a note on the provisions contained in Article 67c of the Allgemeines Verwaltungsverfahrensgesetz (AVG; Code of Administrative Procedure) 1991, Federal Law Gazette no. 51/1991. - The authority (Article 6 SPG) shall revoke the directive pursuant to para. 3 as soon as the conditions for issuing it cease to exist or the state prosecutor’s office declares that the conditions for a seizure pursuant to Article 109 no. 2 and Article 115 para. 1 no. 3 StPO 1975, Federal Law Gazette no. 631/1975, do not exist. - The directive shall expire: - 1. if six months have passed since it was issued; or - 2. as soon as the court has finally decided on an application for seizure pursuant to Article 109 no. 2 and Article 115 para. 1 no. 3 StPO. ### Confidentiality and permitted disclosures - Insurance undertakings shall treat as confidential any and all events which serve compliance with paras. 1 to 3 vis-à-vis customers and third parties. - Once a directive pursuant to para. 3 has been issued, insurance undertakings may refer the customer to the authority (Article 6 SPG); with the consent of the authority (Article 6 SPG), they may also inform the customer of the directive themselves. - The prohibition on disclosure does not apply to: 1. disclosure of information to the FMA, the Oesterreichische Nationalbank or disclosure of information for the purposes of prosecution; 2. disclosure between subsidiaries from signatory countries, or from third countries provided that they meet requirements equivalent to those laid down in Directive 2005/60/EC, belonging to the same group as defined by Article 2(12) of Directive 2002/87/EC and are supervised for compliance with those requirements; 3. in cases related to the same customer and the same transaction involving two or more insurance undertakings pursuant to Article 98e para. 1 no.1 or credit institutions pursuant to Article 98e para. 1 no. 3, disclosure between them provided they are situated in a signatory country, or in a third country which imposes requirements equivalent to those laid down in Directive 2005/60/EC, and that they are from the same professional category and are subject to equivalent obligations as regards professional secrecy and personal data protection. The information exchanged shall be used exclusively for the purposes of the prevention of money laundering and terrorist financing. - The FMA shall inform competent authorities in other signatory countries and the European Commission of cases in which, in their opinion, a third country meets the conditions in nos. 2 and 3. Where the European Commission adopts a decision pursuant to Article 40(4) of Directive 2005/60/EC, the federal government shall — in agreement with the Main Committee of the National Council — prohibit by regulation disclosure amongst insurance undertakings and persons from the third country concerned. ### FMA and supervisory interactions - If the FMA has reasons to suspect, when exercising insurance supervision, that a business relationship or transaction serves money laundering or terrorist financing purposes, it shall inform the authority (Article 6 SPG) thereof without delay. - Data investigated by the authority (Article 6 SPG) pursuant to paras. 1, 2 or 6 must not be used, otherwise becoming null and void, to the detriment of the accused or intervening third parties in proceedings conducted exclusively in respect of financial offences, with the exception of financial offences falling under the jurisdiction of the courts, of smuggling or the evasion of import or export duties. - If the authority (Article 6 SPG) merely suspects a criminal offence as per the first sentence, it shall not make a report pursuant to Article 78 StPO or Article 81 of the Finanzstrafgesetz (FinStrG; Tax Offences Act), Federal Law Gazette no. 129/1958. - No claims for damages may be asserted owing to the fact that an insurance undertaking or one of its employees carried out a transaction late or not at all as a result of a negligent lack of knowledge that the suspicion of money laundering or terrorist financing or the suspicion of violation as defined in Article 98b para. 2 was false. ### Record keeping and statistical data (Article 98g) - Insurance undertakings shall keep the following documents and information for use in any investigation into, or analysis of, possible money laundering or terrorist financing by the authority (Article SPG) or the FMA: 1. any and all documents which serve as identification pursuant to Article 98b paras. 1 to 3 and 7 as well as supporting evidence and records on the insurance contract for at least five years following the termination of the insurance contract; 2. the supporting evidence and records for a period of at least five years following the carrying out of the transactions. ### Internal procedures, training and compliance (Article 98h) - Insurance undertakings shall: 1. establish adequate and appropriate policies and procedures of customer due diligence, reporting, record keeping, internal control, risk assessment, risk management, compliance management and communication to forestall and prevent business relationships and transactions related to money laundering or terrorist financing; 2. communicate relevant policies and procedures to their branches and subsidiaries in third countries; 3. take appropriate measures so that employees entrusted with establishment of business relationships and transactions are aware of provisions to prevent or combat money laundering or terrorist financing, including participation in special ongoing training programmes to recognise and handle contracts or transactions which may be related to money laundering or terrorist financing; 4. have systems enabling them to respond fully and rapidly to enquiries from the authority (Article 6 SPG) or the FMA as to whether they maintain or have maintained during the previous five years a business relationship with specified natural or legal persons and on the nature of that relationship; 5. enable the FMA to review the effectiveness of their systems to combat money laundering or terrorist financing; 6. provide for a special person charged with guaranteeing compliance with Articles 98a to 98h to combat money laundering and terrorist financing. - The authority (Article 6 SPG) shall ensure that insurance undertakings have access to up-to-date information on the practices of money launderers and terrorist financers and on indications leading to recognition of suspicious business relationships and transactions, and shall, wherever practicable, provide timely feedback on effectiveness of and follow-up to reports of suspected money laundering or terrorist financing. ### Financial Market Authority Act (FMABG): Liability and supervisory duties - Section 3 (1): The Federal Government shall be liable pursuant to the Amtshaftungsgesetz (AHG; Public Liability Act), Federal Law Gazette no. 20/1949, for damage caused by the FMA’s bodies and employees in the enforcement of the federal acts specified under section 2. The FMA as well as its employees and bodies shall not be liable towards the injured party. - Section 3 (2): In its activities, the FMA shall take any and all supervisory measures that are necessary, expedient and appropriate after a due assessment of the circumstances and shall take care to maintain financial market stability. It may use audit reports of statutory auditors and bodies and audit reports of the Oesterreichische Nationalbank (OeNB) within its statutory auditing powers pursuant to the BWG, unless it has reasonable doubts about correctness or completeness or about auditors’ professional know-how or diligence. - Section 3 (3): If the Federal Government made good the damage to the injured party pursuant to section 1, it shall be entitled to demand reimbursement from the FMA’s bodies or employees according to the AHG. - Section 3 (4): The FMA shall support the Federal Government in public liability and reimbursement proceedings and provide information and documents and ensure Federal Government access to know-how of the FMA’s bodies and employees. - Section 3 (5): Statutory auditors appointed by supervised companies shall not be deemed bodies within the meaning of section 1 para 1 AHG, unless they perform audits pursuant to the federal acts specified under section 2 for the FMA upon its separate order. ### GewO Trade Act: Exclusions and special requirements - Scope and definitions: - Article 1 defines activities of trade or business, self-employment, and the presumption rules for repeated or regular activities. - Exclusions from carrying on trade or business (Article 13): - Natural persons excluded if sentenced by any court for specified offences (e.g., art. 153d StGB, art. 153e StGB, art. 156 to 159 StGB) or for any other criminal offence to a term of imprisonment of more than three months or a fine of more than 180 daily rates, and the sentence has not yet been removed from the criminal record. - Natural persons excluded from restaurant or catering business if record includes sentence for infringement of art. 28 to 31a SMG. - Fiscal convictions under certain provisions (FinStrG) result in exclusion if sentenced to a fine of more than €726, or to both a fine and imprisonment, and if no more than five years have elapsed since sentencing. - Legal entities excluded under specified insolvency-related conditions. - Rules on influence by persons with exclusion grounds and consequences for legal entities are detailed in paras. 5 and 7. - Special requirements for carrying on trade or business (Article 16): - Carrying on regulated trade or business is subject to qualification requirements; if applicant fails to prove qualifications, must appoint a managing director (art. 39). - Certificate of qualification means evidence of technical and commercial knowledge, skills and experience to perform typical activities of the trade or business. - Foreign certificates may be deemed equivalent if set out in international treaties or secondary legislation issued by the Federal Minister of Economics and Labour; authority shall issue a confirming letter if requested. - Insurance intermediation (Art. 137): - Defined as introducing, proposing or carrying out other work preparatory to conclusion of insurance contracts, concluding such contracts, or assisting in administration and performance of such contracts, in particular in event of a claim; activities can be those of an insurance agent or insurance broker per the Act on Insurance Contracts (VersVG) and the Broker Act (Maklergesetz). _Italic: Extracted content as provided from the source PDF._ ### 1. General provisions ### _cr09298 - 1. General provisions ### Single point of contact; electronic notifications (Article 333) - Authority of first instance shall mean district administration authority (Art. 333(1)). - Trade or business persons (Gewerbetreibende) may electronically submit to the competent trade authority: - the notification required to their competent social insurance institution (Sozialversicherungsanstalt der gewerblichen Wirtschaft) for compulsorily insured self-employed at the beginning of their compulsory insurance period; - the notification required to the competent tax office in terms of legal taxpayers upon business take-up (Art. 333(2)). - The competent trade authority shall forthwith communicate: - notification of any compulsorily insured self-employed to the competent social insurance institution; - notification of any legal taxpayer to the competent tax office (Art. 333(2)). ### Enforcement assistance, inspections and procedural safeguards (Articles 336, 336a, 338) - Enforcement and prevention duties: - Federal Police (Bundespolizei) and officers of agencies responsible for maintaining public security (Organe des öffentlichen Sicherheitsdienstes) shall use appropriate measures to prevent administrative offences and initiate administrative penal proceedings and help enforce: art. 366(1)(1), (2), (3); art. 367(35), (38), (50) and (51); art. 367a; and prevent infringements of shop closing hours (art. 113) (Art. 336(1)). - Same officers shall help enforce art. 367(25) when concerning requirements or instructions for music performances in restaurants, bars or similar locations (Art. 336(2)). - Where other suitable officers are available, the competent authority shall deploy them instead of public security officers (Art. 336(3)). - Reliability checks and data processing (Art. 336a): - In places having federal police offices (Bundespolizeidirektionen), these shall help district administration authorities with reliability checks for trades or businesses listed in art. 95 and where assistance by the Federal Minister of the Interior or a State Sicherheitsdirektion is required in procedures for acquiring a trade or business licence (art. 107(5), art. 132(1), art. 141(1), art. 148) (Art. 336a(1)). - Authorities obliged to check reliability may process personal data collected and report to trade authorities any data raising doubts as to reliability (Art. 336a(2)). - Entry, inspection and sampling powers (Art. 338): - Officers and experts executing trade law may enter and visit premises and store rooms during working hours, control stock on hand, inspect business records and secure evidence; owner or deputy shall be informed no later than upon entering (Art. 338(1)). - Where public security officers help under art. 336, trade or business persons shall produce and hand over for inspection all official documents relevant to carrying on the trade or business; persons suspected of administrative offences under art. 366(1)(1),(2) or (3) shall present ID papers (Art. 338(1)). - Owners or deputies must enable entry, comply with instructions to start/stop machinery, show mode of operation, carry out operations, provide necessary information and documents, and provide access to records of stock, incoming and outgoing goods (Art. 338(2)). - Officers/experts may take samples to the extent absolutely necessary; they shall issue written confirmation and, if requested, hand over a control sample. If requested by the owner, the Federal Government shall reimburse the cost price if the latter is more than €36, except where the sample engendered a measure under art. 69(4) or art. 360, a specific person has been fined, or the sample has been ordered to be forfeited (Art. 338(3)). - Officers must avoid unnecessary disruption or obstruction of operations (Art. 338(4)). - Information obtained under the last half-sentence of para. 2 shall only be used for enforcing trade law provisions (Art. 338(5)). - The Labour Inspection Act 1993 (Arbeitsinspektionsgesetz 1993 − ArbIG), Federal Law Gazette no. 27, and the Transport Labour Inspection Act (Verkehrsarbeitsinspektionsgesetz − VAIG), Federal Law Gazette no. 650/1994, are not affected by this Federal Act (Art. 338(6)). - Officers enforcing trade law may inform competent authorities when they have well-founded suspicions of infringements of labour law, social insurance law or tax law provisions (Art. 338(7)). - The Federal Ministry of Economics and Labour and the Financial Market Authority (Finanzmarktaufsichtsbehörde − FMA) shall cooperate in enforcing insurance mediation provisions under this Federal Act, the Banking Act (Bankwesengesetz − BWG) and the Insurance Supervision Act (Versicherungsaufsichtsgesetz − VAG) (Art. 338(8)). ### Measures to prevent money laundering and terrorist financing — general scope (Articles 365m–365z) - Directive transposition and secondary legislation: - Articles 365m to 365z transpose Directive 2005/60/EC and Directive 2006/70/EC for the scope of this Federal Act (Art. 365m(1)). - The Federal Minister of Economics and Labour may issue secondary legislation to define rules necessary for transposing other implementing measures, especially within the meaning of art. 40 of Directive 2005/60/EC (Art. 365m(2)). - Covered trade or business persons (Art. 365m(3)): - Dealers including auctioneers: only to the extent that payments are made in cash in an amount of €15000 or more, whether single operation or several linked operations. - Real estate agents. - Management consultants including organisation development experts when performing services for companies or trusts: forming companies or other legal persons; acting as or arranging for director/secretary/partner or similar; providing registered office/business address/correspondence/administrative address and related services; acting or arranging for trustee of a trust; acting or arranging nominee shareholder for another person other than a company listed on a regulated market subject to disclosure requirements consistent with Community legislation or equivalent international standards. - Insurance intermediaries as defined in art. 137a(1) when acting in respect of life insurance and other investment related services, unless insurance mediation is ancillary and offered only in conjunction with a main activity and all of the following apply: - within an individual transaction, any sales revenue from insurance mediation does not exceed 10 per cent of the sales revenue from the main transaction linked to it; - any total premium of the individual transaction, or of several transactions with a customer which appear to be linked, does not exceed €1000; - any turnover of insurance mediation does not exceed 5 per cent of the total turnover; - there is a cogent and economically useful close relationship between the mediated insurance contracts and the purpose of the trade or business person’s main activity; - the main activity is not an activity under para. 3(2), (3) or (4). - Supervisory and FIU responsibilities (Art. 365m(4)): - The financial intelligence unit (FIU) for preventing money laundering and terrorist financing shall be the Federal Minister of the Interior. - The FIU shall take suspicious transaction reports under Articles 365u to 365y. - The trade authority (art. 333) is responsible for other administrative tasks, including monitoring and ensuring compliance by trade and business persons with Articles 365m to 365z, sanctioning infringements, conducting risk-sensitive monitoring, compelling production of relevant information and performing on-site inspections and checks (art. 338). - Electronic money: - Electronic money (e-money) shall be equivalent to cash (Art. 365m(5)). ### Definitions relevant to anti-money laundering/terrorist financing (Article 365n) - “money laundering”: an offence pursuant to art. 165 of the Criminal Code (Strafgesetzbuch − StGB), Federal Law Gazette no. 60/1974 as amended (Art. 365n(1)). - “terrorist financing”: the provision of a financial contribution to support a terrorist group pursuant to art. 278b StGB to commit a terrorist offence pursuant to art. 278c StGB or to complete the offence pursuant to art. 278d StGB (Art. 365n(2)). - “beneficial owner”: the natural person who ultimately owns or controls the customer and/or on whose behalf a transaction or activity is being conducted, including: - Corporate entities: - natural person(s) who ultimately owns or controls a legal entity through direct or indirect ownership or control over a sufficient percentage of the shares or voting rights, including through bearer share holdings, other than a company listed on a regulated market subject to disclosure requirements consistent with Community legislation or equivalent international standards; a percentage of 25% plus one share shall be deemed sufficient to meet this criterion (Art. 365n(3)(a)(aa)); - natural person(s) who otherwise exercises control over the management of a legal entity (Art. 365n(3)(a)(ab)); - Legal entities such as foundations, and legal arrangements such as trusts: - where future beneficiaries are determined, the natural person(s) who is the beneficiary of 25% or more of the property (Art. 365n(3)(b)(ba)); - where beneficiaries are yet to be determined, the class of persons in whose main interest the arrangement operates (Art. 365n(3)(b)(bb)); - the natural person(s) who exercises control over 25% or more of the property of a legal arrangement or entity (Art. 365n(3)(b)(bc)). - “politically exposed persons” (Art. 365n(4)): - Natural persons who, except middle ranking or more junior officials, are or have been entrusted until no more than one year ago with specified high-level public functions (aa–ee) including heads of State, heads of government, ministers and deputies; members of parliament; members of supreme courts or constitutional courts in specified circumstances; members of courts of auditors or boards of central banks; ambassadors, chargés d'affaires and high-ranking officers in the armed forces; members of administrative, management or supervisory bodies of State-owned enterprises (Art. 365n(4)(a)(aa–ff)). - Family members: spouse; any partner considered equivalent to spouse by national law; children and their spouses or partners; parents (Art. 365n(4)(b)(aa–dd)). - Close associates who: - are known to have joint beneficial ownership of legal entities or arrangements; - have other close business relationships with the PEP; - have sole beneficial ownership of a legal entity or arrangement known to have been set up for the de facto benefit of the PEP (Art. 365n(4)(c)(aa–cc)). - “business relationship”: a business, professional or commercial relationship connected with the professional activities of covered trade or business persons expected at establishment to have an element of duration (Art. 365n(5)). - “electronic money”: as defined in Article 1(3)(b) of Directive 2000/46/EC — a monetary value represented by a claim on the issuer stored on an electronic device, issued on receipt of funds not less in value than the monetary value issued and accepted as means of payment by undertakings other than the issuer (Art. 365n(6)). ### Customer due diligence obligations (Articles 365o–365q) - Triggers for obligations (Art. 365o): - when establishing a business relationship; - when carrying out occasional transactions amounting to €15000 or more, whether single operation or several linked operations; - when there is a suspicion of money laundering or terrorist financing, regardless of any derogation, exemption or threshold; - when there are doubts about the veracity or adequacy of previously obtained customer identification data. - Minimum customer due diligence measures (Art. 365p(1)): - identify the customer and verify identity on the basis of an official identity card with picture (amtlicher Lichtbildausweis); - identify, where applicable, the beneficial owner and take risk-based and adequate measures to verify his identity so that it is satisfactorily known who the beneficial owner is; for legal persons, trusts and similar arrangements, take risk-based and adequate measures to understand the ownership and control structure of the customer; - obtain information on the purpose and intended nature of the business relationship; - conduct ongoing monitoring of the business relationship including scrutiny of transactions to ensure consistency with knowledge of the customer, the business and risk profile, including, where necessary, the source of funds, and ensure documents, data or information are kept up-to-date. - Risk-based application and existing customers (Art. 365p(2)–(3)): - The extent of measures shall be determined by the actual risk profile depending on type of customer, business relationship, product or transaction. A trade or business entity or person must be able to demonstrate the adequacy of measures to the competent trade authority (Art. 365p(2)). - Obligations apply also to customers already existing at the time of entry into force of these provisions (Art. 365p(3)). - If unable to comply (Art. 365p(4)): - Where trade or business persons are unable to comply with Art. 365p(1)(1)–(3), they must refrain from conducting transactions through a bank account, from establishing any business relationship, from carrying out the transaction, or must terminate the business relationship; they shall examine the necessity of reporting to the FIU pursuant to art. 365u(1). - Verification timing (Art. 365q): - Verification of identity of customer and beneficial owner takes place before establishment of business relationship or carrying out the transaction. Real estate transactions by a real estate agent require verification if the annual rent amounts to €15000 or more; if unknown at start, verify as soon as amount is known or can be ascertained and it becomes obvious threshold will be reached or exceeded (Art. 365q(1)). - Derogation: verification may be completed during establishment of a business relationship if necessary not to interrupt normal business and where there is little risk of money laundering or terrorist financing; must be completed as soon as practicable after initial contact (Art. 365q(2)). - Life insurance: verification of identity of the beneficiary under the policy shall take place at or before payout or at or before the time the beneficiary intends to exercise rights under the policy (Art. 365q(3)). ### Simplified customer due diligence (Article 365r) - Exemptions where requirements of art. 365o(1)(1),(2) and (4), art. 365p(1) and (2) and art. 365q(1) do not apply if the customer is: - a credit institution or financial institution covered by Directive 2005/60/EC or a credit or financial institution situated in a third country imposing equivalent requirements and supervised for compliance (Art. 365r(1)(1)); - listed companies whose securities are admitted to trading on a regulated market within the meaning of Directive 2004/39/EC in one or more Member States and listed companies from third countries subject to disclosure requirements consistent with Community legislation (Art. 365r(1)(2)). *Source: _cr09298 - 1. General provisions* ### 3. domestic public authorities; or ### _cr09298 - 3. domestic public authorities; or ### Exemptions and scope (public authorities and public bodies) - Public authorities or public bodies entrusted with public functions pursuant to the Treaty on European Union, the Treaties on the Communities or Community secondary legislation qualify where: - their identity is publicly available and transparent and certain; - their activities and accounting practices are transparent; and - they are either accountable to a Community institution or the public authorities or appropriate check and balance procedures exist. - Trade or business persons shall gather sufficient information to establish if the customer qualifies for an exemption as mentioned above. ### Exemptions from specific articles (art. 365o, 365p, 365q) - The requirements of art. 365o(1)(1), (2) and (4), art. 365p(1) and (2) and art. 365q(1) shall not apply to: - 1. life insurance policies where the annual premium is no more than €1000 or the single premium is no more than €2500; or - 2. insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral; or - 3. a pension, superannuation or similar scheme that provides retirement benefits to employees, where contributions are made by way of deduction from wages and the scheme rules do not permit the assignment of a member's interest under the scheme; or - 4. electronic money where: - if the device cannot be recharged, the maximum amount stored in the electronic device is no more than €150, or - where the device can be recharged, a limit of €2500 is imposed on the total amount transacted in a calendar year, except when an amount of €1000 or more is redeemed in that same calendar year by the bearer as referred to in art. 3 of Directive 2000/46/EC; or - 5. any other savings, insurance and investment product under the following conditions: - a) the product has a written contractual base; - b) related transactions are carried out through an account of the customer with a credit institution covered by Directive 2005/60/EC or a credit institution situated in a third country which imposes requirements equivalent to those laid down in that Directive; - c) the product or related transactions are not anonymous and their nature is such that it allows for the timely application of art. 365o(3); - d) policies where the annual premium is no more than €1000 or the single premium is no more than €2500; - e) the benefits of the product or related transactions cannot be realised for the benefit of third parties, except in the case of death, disablement, survival to a predetermined advanced age, or similar events; and - f) where products allow investment of funds in financial assets or claims, including insurance or other contingent claims, the benefits are only realisable in the long term, the product cannot be used as collateral and during the contractual relationship no accelerated payments are made, no surrender clauses are used and no early termination takes place. ### Enhanced customer due diligence procedures (Article 365s) - (1) For distance transactions where the customer has not been physically present: - trade or business persons shall send order forms to the customer's residence or seat by registered mail; - the customer shall add to the returnable order form a readable copy of an official identity card with picture for verification. - (2) For auction transactions where the minimum estimated value, or the start price if no estimated value is indicated, and the customer’s bid amount to €15000 or more, and payment is made in cash and the customer has never been physically present: - auctioneers shall request a readable copy of an official identity card with picture and use it to verify identity; - they shall take additional measures, such as ensuring that the first payment is carried out through an account opened in the customer's name with a credit institution. - (2a) Identification in the above cases may be dropped if the customer’s identity is proved by a qualified electronic signature within the meaning of the Signature Act (Signaturgesetz), Federal Law Gazette I no. 190/1999, as amended. Art. 40b(1)(1)(b) to (d) BWG shall be applied accordingly. - (3) Transactions or business relationships with politically exposed persons residing in another Member State or a third country require: - 1. appropriate risk-based procedures to determine whether the customer is a politically exposed person; - 2. senior management approval for establishing business relationships with such customers; - 3. adequate measures to establish the source of wealth and source of funds involved; and - 4. enhanced ongoing monitoring of the business relationship. - (4) Trade or business persons shall pay special attention to products or transactions that might favour anonymity and take measures to prevent their misuse for money laundering or terrorist financing. ### Reporting obligations (Articles 365t–365v, 365w) - Article 365t: - Trade or business persons shall pay special attention to transactions particularly likely to be related to money laundering or terrorist financing, especially complex or unusually large transactions or unusual patterns with no apparent economic or lawful purpose. - Article 365u: - (1) Trade or business persons and, where applicable, their directors and employees shall: - 1. promptly inform the FIU where they know, suspect or have reasonable grounds to suspect money laundering or terrorist financing is being or has been committed or attempted; and - 2. if requested, promptly provide all necessary information and documents to the FIU. - (2) Information under para. 1 does not breach restrictions on disclosure imposed by contract or legislative, regulatory or administrative provision, and shall not lead to liability. - Article 365v: - (1) Trade or business persons shall refrain from carrying out transactions they know or suspect to be related to money laundering or terrorist financing until necessary action per art. 365u(1) is completed; they may ask the FIU for a decision and, if no response by the end of the following business day, may carry out the transaction. - (2) If refraining is impossible or likely to frustrate pursuit of beneficiaries, the trade or business persons shall inform the FIU immediately afterwards. - (3) The FIU is authorised to order non-performance or provisional postponement of a suspected transaction; the FIU shall inform the customer and the public prosecutor without undue delay and include reference to appeal rights to the Independent Administrative Tribunal (Unabhängiger Verwaltungssenat − UVS) and art. 67c AVG. - (4) The FIU shall revoke the order after grounds cease to exist or the public prosecutor declares no grounds for attachment. The order also ceases when: - 1. six months have elapsed since its issue; or - 2. the court has passed a non-appealable decision on attachment pursuant to art. 109(2) and art. 115 StPO. - Article 365w: - Trade authorities discovering facts that could be related to money laundering or terrorist financing during inspections or otherwise shall promptly inform the FIU. ### Prohibition of disclosure (Article 365x) - (1) Trade or business persons and, where applicable, their directors and employees shall not disclose to the customer concerned or other third persons that information has been transmitted under art. 365u or that a money laundering or terrorist financing investigation is being or may be carried out. - (2) This prohibition does not include disclosure to competent authorities or disclosure for law enforcement purposes. ### Record keeping and statistical data (Article 365y) - (1) Trade or business persons shall keep the following documents and information for at least five years after carrying out the transaction or after ending the business relationship: - 1. concerning customer data a copy or the references of the evidence required including the type of document, the document number, the date of issue, the issuing authority and the country of issue; and - 2. any supporting evidence and records concerning business relationships and transaction. - (2) Insurance intermediaries, when acting in respect of life insurance and other investment related services, shall apply, where applicable in their branches and majority–owned subsidiaries located in third countries, the measures set out in the first paragraph with regard to customer due diligence and record keeping. They shall inform the FIU in writing of cases where the legislation of any third country does not permit application of such equivalent measures. The FIU shall inform the European Commission of cases where it arrives at the opinion that coordinated action could be taken to pursue a solution. Where a third country does not permit application of such measures, insurance intermediaries shall take additional measures to effectively handle the risk. - (3) Insurance intermediaries shall have systems enabling them to respond fully and rapidly to enquiries from the FIU or other authorities as to whether they maintain or have maintained during the previous five years a business relationship with specified natural or legal persons and on the nature of that relationship. ### Internal procedures, training and feedback (Article 365z) - (1) Trade and business persons shall establish adequate and appropriate policies and procedures of customer due diligence, reporting, record keeping, internal control, risk assessment, risk management, compliance management and communication to prevent operations related to money laundering or terrorist financing. - (2) Insurance intermediaries shall communicate the measures in para. (1) to their branches and majority–owned subsidiaries located in third countries where applicable. - (3) Trade or business persons shall take appropriate measures so that relevant employees are aware of provisions on prevention of money laundering and terrorist financing, including participation in special ongoing training programmes to recognise and handle suspicious operations. - (4) The Federal Minister of the Interior shall take suitable measures to inform the Federal Economic Chamber (Wirtschaftskammer Österreich − WKO) of the practices of money launderers and terrorist financers and of indications leading to recognition of suspicious transactions. ### Penal provisions (Chapter V) - Article 366 (1): - An administrative offence carrying a fine of up to €3600 is committed by whoever, contrary to the provisions of art. 365u, fails to promptly inform the FIU, promptly provide all the necessary information and all the necessary documents to the FIU. - Article 367: - An administrative offence carrying a fine of up to €2180 is committed by whoever fails to comply with the provisions of Articles 355m to 365z concerning measures to prevent money laundering and terrorist financing. - Article 370: - (1) If the appointment of a managing director has been reported or approved, any fines or other penalties shall be imposed upon this director. - (1a) Fines may also be imposed on legal persons or registered partnerships held liable for infringements referred to in Articles 365m to 365z which are committed for their benefit by any person in a leading position based on: - 1. a power of representation of the legal person or the registered partnership; - 2. an authority to take decisions on behalf of the legal person or the registered partnership; or - 3. an authority to exercise control within the legal person or registered partnership. - (1b) Legal persons or registered partnerships can also be held liable where the lack of supervision or control by a person referred to in para. 1a has made possible the commission of the infringements referred to in para. 1a for the benefit of the legal person or registered partnership by a person under its authority. *Source: _cr09298 - 3. domestic public authorities; or* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09298.pdf_