Mutual Evaluation of Austria

The assessment of the implementation of anti-money laundering and counter-terrorist financing ( AML/CFT) standards in Austria was conducted by a team of assessors composed of staff of the International Monetary Fund (IMF) and one expert acting under the supervision of the IMF.

The key findings of this report are :

The crime level in Austria is among the lowest in European Union (EU) Member States, and the authorities consider that the country’s exposure to money laundering (ML) and financing of terrorism (FT) risks is limited. However, due to its geographical location and its historical ties with Central, Eastern and Southeastern Europe (CESE) countries, Austria may be used by foreign criminal organizations as a transit point for drugs and other trafficking, as well as a destination for criminal money, attracted by its reputation for political stability, tradition of banking secrecy, and attractive tax regime.

The authorities have designed and are implementing a comprehensive AML/CFT system, supported by well-developed federal administrative and supervisory bodies, and active professional organizations.

Criminalization of ML is generally in line with the FATF standards, and the legal framework provides for a wide range of confiscation and provisional measures. However, the low number of convictions for ML, low legal penalties and low amounts confiscated raise questions about the overall effectiveness of the system. Criminal provisions for the FT, although largely consistent with the 1999 United Nations (UN) Terrorist Financing Convention, do not cover the full range of activities covered by the FATF standard.

The transposition of the Third EU AML Directive resulted in a large overhaul, expansion and strengthening of the Austrian AML/CFT regime which now covers the broadest range of financial activities and designated non-financial businesses and professions (DNFBPs), except certain casinos. However, some provisions have to be brought more closely into line with the FATF standards, and overall, more time is needed before all requirements are fully implemented.

The supervisory system for financial institutions is generally sound and efficient. Licensing requirements and the regime of sanctions need to be strengthened, and additional resources should be allocated to supervisory bodies.

The Austrian Financial Investigation Unit (A-FIU) is an effective police unit, but it does not fulfill the suspicious transaction report (STR) analysis and dissemination functions of an FIU. Possible disclosure of information to the defendant, pursuant to the criminal procedure, may contribute to the overall low level of reporting.

Legal provisions and jurisprudence provide gateways for the authorities to obtain data protected by banking secrecy, but requests by public prosecutors are subject to restrictive conditions that financial institutions and legal professions may exploit to decline to supply information.

While the registration system is generally well-developed, access to beneficial ownership data of some non-profit organizations (NPOs), legal arrangements (Treuhand) and some legal persons, notably foundations and companies issuing bearer shares, is hindered.

Various fora have been established to ensure national cooperation and coordination. The deficiencies noted in the domestic legal framework slow down the provision of mutual legal assistance.

Key recommendations include: conduct a ML/FT risk assessment; align the criminalization of ML/FT with the standards; widen the scope of customer due diligence (CDD) obligations; ease legal requirements for authorities to have access to information held by financial institutions and legal professions; extend the functions of the A-FIU to analysis and dissemination; broaden the STR provisions; strengthen licensing requirements and available sanctions for financial institutions; align preventive measures for DNFBPs with the FATF standards; ensure adequate transparency of beneficial ownership of legal persons and legal arrangements.

For further information, journalists are invited to contact the FATF Secretariat ( tel: +33 1 45 24 90 90, fax: +33 1 44 30 61 37, e-mail: contact@fatf-gafi.org; 2, rue André-Pascal, 75775 Paris cedex 16, FRANCE.

This mutual evaluation was conducted using the FATF Recommendations as published in October 2004, and the 2004 Methodology for Assessing Compliance with the FATF 40 Recommendations and FATF 9 Special Recommendations.