In 2004 the International Monetary Fund (IMF) released its assessment on Austria's compliance with the Financial Action Task Force (FATF) Recommendations on Anti-Money Laundering and Combating the Financing of Terrorism. The overall legal and institutional framework is comprehensive, and Austria has achieved a good level of compliance with the FATF Recommendations. This assessment was based on the 2002 methodology for assessing compliance with the FATF recommendations. However, in 2004, the FATF released its revised methodology to assess compliance with FATF recommendations and since, there has been no comprehensive assessment publicly available as to Austria's compliance with FATF requirements. A 2007 report by the U.S. Department of State indicates that the Austrian authorities facilitated the implementation of the third European Union (EU) Money Laundering Directive in 2006, which contains the requirement for all EU member states to implement the FATF's recommendations. However, there is little subsequent information publicly available as to whether Austria adopted the third EU Money Laundering Directive into legislation. The Banking Act and Criminal Code criminalize activities related to money laundering and financing of terrorism, and Austria's Financial Intelligence Unit, the Federal Criminal Police Office was established within the Interior Ministry in 2002.

General Overview

According to a 2004 Financial System Stability Assessment (FSSA) by the International Monetary Fund (IMF), which is based on the Financial Action Task Force (FATF) Recommendations, Austria has achieved a good level of compliance with the FATF's 2002 Recommendations for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). Furthermore, Austria's overall legal and institutional framework is comprehensive. The IMF report nonetheless identified weaknesses regarding customer identification, monitoring of the phase-out of anonymous passbooks, and level of disclosures and resulting investigations. The IMF recommended strengthening the suspicious transaction reporting (STR) regime by increasing resources for the financial supervisors and the financial intelligence unit (FIU). However, the 2004 IMF assessment was based on the 2002 (old) methodology for assessing compliance with the FATF recommendations. In 2004 the FATF released its revised methodology and, since then, there has been little information publicly available addressing Austria's compliance with the revised FATF recommendations.

Money laundering and terrorism financing are mainly criminalized under the Banking Act (Bankwesengesetz, or BWG) and the Criminal Code (Strafgesetzbuch, or StGB). The AML/CFT provisions of the BWG entered into force in 1994 and apply to financial and credit institutions, as noted in the IMF's 2004 report. An amendment to the Criminal Code in 2002 established terrorist financing as a separate criminal offense. In 2004, per the same report, amendments to the Customs Procedures Act and the Tax Crimes Act addressed the problem of cash couriers and international transportation of illegal-source currency and monetary instruments. The Code of Criminal Procedure (Strafprozessordnung, or StPO) also empowers prosecutors and the police to identify, freeze, and seize funds under judicial control. The U.S. Department of State (DoS), in a 2007 International Narcotics Control Strategy Report, suggested amending the Criminal Code to penalize negligence in reporting, and improving cross border declaration and disclosure.

In 2006, according to the 2007 U.S. DoS report, Austrian authorities facilitated the implementation of guidelines for the FATF's Special Recommendation VII on wire transfers, as well as the third European Union (EU) Money Laundering Directive, which contains the requirement for all EU member states to implement the FATF's recommendations. Furthermore, the EU regulation on wire transfers, which entered into force on January 1, 2007, was directly transposed into Austrian law. However, there is little subsequent information publicly available as to whether Austria adopted the third EU Money Laundering Directive into legislation.

One of the substantial changes which took place in 2002 was the integration of Austria's former FIU (Einsatzgruppe D gegen Organisierte Kriminalität, or EDOK) into the Federal Criminal Police Office (Bundeskriminalamt, or BKA) within the Interior Ministry (Bundesministerium für Inneres, or BMI). As noted in the IMF's 2004 report, the BKA is a "police-type unit" (p. 42) with full access to police information, and strong investigative powers following STRs. Furthermore, the BKA entered into a Memorandum of Understanding (MoU) with the Federal Agency for State Protection and Counter Terrorism (Bundesamt für Verfassungsschutz und Terrorismusbekämpfung, or BVT), which requires the BKA to transfer disclosure information to the BVT. Per the 2004 IMF FSSA, the Financial Market Authority (Finanzmarktaufsicht, or FMA), was established in 2002 as an independent, autonomous and integrated financial supervisory authority, consolidating the supervisory agencies for banking, insurance, securities, and pension funds. The FMA "examines whether the legal obligations as well as the general duties to take due care in connection with money laundering are fulfilled and takes appropriate measures in case of these obligations being violated," as noted in the FMA's 2006 Annual Report.

Austria is a member of the FATF, and the BKA is part of the Egmont Group. Furthermore, Austria is a party to the 1988 United Nations (UN) Drug Convention, the Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime, the 1999 UN International Convention for the Suppression of the Financing of Terrorism, and the 2000 UN Convention against Transnational Organized Crime. It has also ratified the 2003 UN Convention against Corruption. Although Austria is not an important regional financial center, its financial and non-financial institutions are vulnerable to money laundering, as stated in the 2007 U.S. DoS report, and money laundering activities are mainly derived from serious fraud, corruption, and trafficking in narcotics and persons. Furthermore, there is a substantial amount of undetected organized crime originating from the former Soviet Union. In 2006, per the same report, 521 STRs were filed, a 12 percent increase from the previous year, but no accounts showed any link to terrorist financing.

The Principles

1. Legal Systems and Related Institutional Measures

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According to the IMF's 2004 FSSA, Austria has criminalized money laundering and financing of terrorism in line with international standards. Although the IMF assessed Austria's observance of the FATF's recommendations, its assessment was based on the FATF's 2002 methodology. This was revised in 2004, when the FATF issued a new methodology to assess country compliance against FATF recommendations. Since the release of the 2004 methodology, there has been little information publicly available addressing Austria's compliance with the recommendations relating to this principle. Money laundering and the financing of terrorism are mainly criminalized under the BWG and the StGB. The AML/CFT provisions of the BWG entered into force in 1994, and apply to financial and credit institutions. An amendment to the Criminal Code in 2002 established terrorist financing as a separate criminal offense. In 2004, amendments to the Customs Procedures Act and the Tax Crimes Act addressed the problem of cash couriers and international transportation of illegal-source currency and monetary instruments. The 2007 U.S. DoS report noted that Austria amended its Customs Procedures Act in order to implement the EU regulation on controls of cash entering or leaving the EU.

In its 2004 assessment, the IMF observed that the knowledge requirements and the penalty regime of the money laundering offense needed to be revised. The IMF report suggested increasing penalties for money laundering offences, as well as easing the burden of proof on prosecutors in money laundering-related prosecutions. In relation to the freezing and confiscation of funds used for financing of terrorism, the StPO gives the authority to prosecutors and the police to identify, freeze, and seize funds under judicial control. Although the BKA is also entitled to block transactions, it lacks freezing powers. Furthermore, its financial analytical capability is limited, and access to financial information is subject to judicial authorization. The IMF report recommended enabling the BKA to access information subject to bank secrecy more easily and to freeze bank accounts when necessary. It further advised developing additional statistics on the freezing, seizure, and confiscation of property. With regards to law enforcement and prosecution, Austrian authorities have adequate powers to investigate and prosecute cases related to money laundering, as stated in the IMF's 2004 report.

2. Preventive Measures - Financial Institutions

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The AML/CFT provisions of the BWG entered into force in 1994, and apply to financial and credit institutions, as noted in the IMF's 2004 report. Bureaux de change and money remitters are also defined as credit institutions as a result of the Amendment to the BWG in June 2003. Identical AML/CFT requirements apply to investment firms under the Securities Supervision Act, and to life insurance companies under the Insurance Supervision Act. With regard to customer identification, the IMF recommended ensuring that "all anonymous passbook holders are identified and that Austria eventually eliminates the system of anonymous savings passbooks completely" (p. 45). The report added that in April 2004 the FMA issued a guideline for banks regarding internal controls and procedures, as well as STR requirements for AML/CFT. Similar guidelines were being developed for insurance companies and investment service providers. However, the IMF report noted that the number of STRs was relatively low during the time of the assessment due to the high level of suspicion required by the BWG for reporting (i.e. reasonable suspicion). According to the 2007 U.S. DoS report, "during the first nine months of 2006, the AFIU received 521 suspicious transaction reports from banks and fielded requests for information from Interpol, Europol, members of the Egmont Group, and other authorities. This represents an increase from the 467 suspicious transactions reported in 2005." This increase in STRs according to the same report is the result of increased awareness and reporting of money laundering activity.

The IMF report also observed that while the FMA's enforcement powers and sanctions were adequate, it lacked resources to conduct onsite inspections. Hence, the IMF encouraged the FMA to increase its resources and develop inspection manuals, and advised it to closely monitor the level of reporting, and take corrective actions if necessary. Regarding wire transfers rules, the IMF report recommended requiring financial institutions to include "accurate and meaningful originator information in wire transfers" (p. 48) in line with EU regulations. The 2007 U.S. DoS report noted that Austria implemented the EU regulation on wire transfers on January 1, 2007. Despite this descriptive information, there is little information publicly available as to Austria's compliance with the recommendations relating to this principle, since the 2004 IMF assessment was based on the FATF's old (2002) methodology, which was revised in 2004.

3. Preventive Measures - Designated non-Financial Business and Professions

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In 2003, as stated in the U.S. DoS 2007 report, amendments to the Gaming Act, the Business Code, which was replaced by the Enterprise Code on January 1, 2007, and other laws governing lawyers, notaries and accounting professionals, introduced additional money laundering regulations. Under these regulations, designated non-financial business and professions, including dealers in high-value goods, auctioneers, real estate agents, casinos, lawyers, notaries, certified public accountants, and auditors, must comply with identification, record keeping, and STR requirements. Nevertheless, there is insufficient information publicly available as to Austria's compliance with the recommendations relating to this principle.

4. Legal Person and Arrangements & Non-Profit Organizations

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The 2004 IMF report noted that the introduction of an effective system of liability for legal persons involved in money laundering or terrorist financing offences was being discussed. The 2007 U.S. DoS report mentions the 2006 Law on Responsibility of Associations (Verbandsverantwortlichkeitsgesetz) that introduces criminal responsibility for all legal entities, general and limited commercial partnerships, registered partnerships and European Economic Interest Groupings. In its 2007 report, the U.S. DoS states that the Austrian government had "generally implemented the FATF's Special Recommendation on Terrorist Financing regarding nonprofit organizations." The U.S. DoS report further specifies that special provisions would enter into force on January 1, 2007 for organizations with finances exceeding a certain threshold. Per the same report, the FMA announced its intention "to employ 45 additional auditors to focus on combating money laundering, terrorist financing, as well as to better monitor offshore banking and charitable foundations." However, there is insufficient information publicly available as to Austria's compliance with the recommendations relating to this principle.

5. National and International Co-operation

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According to the IMF's 2004 report, Austria has ratified all Council of Europe treaties related to mutual legal assistance (MLA) and extradition, and has concluded bilateral and multilateral treaties on MLA and extradition with many countries, including Australia, Canada, Monaco, Poland, the U.S. and Yugoslavia. The IMF report further notes that bilateral MLA treaties can be used as an alternative to legislation for the sharing of confiscated assets with other governments. The FMA has established an internal Task Force on Money Laundering, including banking, insurance, securities, and international experts. With regard to dual criminality, as noted in the IMF's 2004 report, although Austrian law does not enable the extradition of Austrian nationals, prosecutors are required to institute legal proceedings. The principle of dual criminality is being abandoned, at least in part. In its 2004 assessment, the IMF recommended facilitating the exchange of information between FIUs through bilateral MoUs, as well as developing additional statistics on MLA requests and exchange of information with foreign authorities. As stated in the U.S. DoS 2007 report, Austria has concluded information-exchange agreements with nine other EU members, as well as Bulgaria and Croatia. Nevertheless, there is insufficient information publicly available as to Austria's compliance with the recommendations relating to this principle.

Austria is a member of the FATF, and the BKA is part of the Egmont Group. Furthermore, Austria is a party to the 1988 United Nations (UN) Drug Convention, the Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime, the 1999 UN International Convention for the Suppression of the Financing of Terrorism, and the 2000 UN Convention against Transnational Organized Crime. It has also ratified the 2003 UN Convention against Corruption.