Austria
Last updated: 10/03/2010
CENTRAL AUTHORITY FOR REPORTING.
Austrian laws and regulations do not explicitly provide for the establishment of a Financial Intelligence Unit (FIU). However, each of the ten laws and regulations (please see below) covering the subjected entities refer to an authority that is competent for the reception of suspicious transactions reports (STRs) in the case of money laundering or terrorist financing. The description of the competent authority varies for each reporting entity. Lawyers, for example, report to the Federal Office of Criminal Investigation (Bundeskriminalamt - BKA).
Please also see in this respect the Financial Action Task Force Mutual Evaluation Report dated 26 June 2009 (the “FATF Report”).
Despite these slight differences, the common understanding amongst the authorities and reporting entities, and actual practice, is that the STRs have to be reported to the Austrian Financial Investigation Unit (Meldestelle Geldwäsche - A-FIU) in the BKA. This is supported by the BKA website, the FMA circulars for financial institutions and the OENK guidance for notaries, and explanatory notes of some relevant laws.
The A-FIU receives both all STRs and conducts criminal investigations on ML cases. The same law enforcement officers perform both tasks. Should the STRs received by the A-FIU relate to financing of terrorism then the A-FIU has to forward them to the Federal Agency for State Protection Counter Terrorism (Bundesamt für Verfassungsschutz und Terrorismusbekämpfung – BVT) which is the competent authority for such cases.
The FATF Report further concluded that the Austrian Financial Investigation Unit (A-FIU) is an effective police unit, but it does not fulfil the STR analysis and dissemination functions of an FIU.
ANTI-MONEY LAUNDERING REGULATOR(S).
The FATF Report states that the Federal Ministry of Justice carries out an overall responsibility for criminal law, for example, the Criminal Code (StGB) and the Code of Criminal Procedure (StPO).
The Federal Ministry of Justice is further responsible for regulating the activities of lawyers and notaries, as regards to the Lawyers Act, the Disciplinary Statute for lawyers and lawyer-candidates and the Notarial Code.
The Austrian Financial Market Authority (Österreichische Finanzmarktaufsicht - FMA) serves as integrated supervisor of financial institutions and activities, that are banking, insurance, securities and pension fund activities which does include the supervision and enforcement of Anti- Money Laundering and Combating the Financing of Terrorism requirements.
However, the Austrian banking supervision is split between the FMA and the Austrian Nationalbank (Oesterreichische Nationalbank – OeNB) whereas the legal supervision has been allocated to the FMA and the operational supervision (audits of banks) to the OeNB.
HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?
The third EU Money Laundering Directive has been implemented, inter alia, by incorporation into the regulations of the legal profession, Rechtsanwaltsordnung (RAO), by Federal Law Gazette I No. 111/2007 (BGBl I Nr. 111/2007) and into the provisions of the Austrian Banking Act, by Federal Law Gazette I No 108/2007 (BGBl I Nr. 108/2007).
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
The following laws (as amended from time to time) include provisions on anti-money laundering:
The current versions of the laws can be downloaded at the RIS (Rechtsinformationssystem) website.
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
European lawyers in terms of the Federal Act on the Free Trade in Services and the Establishment of European Attorneys-at-Law in Austria (EIRAG) (citizens of EU or EEA member states who are entitled to practice law in a EU / EEA jurisdiction other than Austria; also including Switzerland) are subject to the same rights and obligations as Austrian lawyers.
Thus, the RAO provisions including the anti-money laundering apply also to visiting lawyers wanting to practice in Austria.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.
According to the FATF Report, for lawyers, the AML/CFT requirements and measures are governed by the Lawyer‘s Act, RAO, and the Disciplinary Statute for Lawyers and Law Degree Candidates (Disziplinarstatut, DSt, Federal Law Gazette Nr. 474/1990 as amended from time to time). The RAO includes in particular in its Article 8a-8f, 9, 9a and 12 AML/CFT requirements and measures.
Besides, there are statutory regulations set down in the Directives of the Austrian Bar Association, in the first place the Directive on the practice of the lawyers‘ profession and the supervision of the lawyers‘ duties (Richtlinien für die Ausübung des Rechtsanwaltsberufs und für die Überwachung der Pflichten des Rechtsanwaltes – RL-BA 1977).
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
The competent authority for supervision of the legal profession including AML/CFT supervision is the relevant Board of the Bar Association (Ausschuss der Rechtsanwaltskammer).
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.
In case of any transaction listed in Section 8a subsection 1 RAO:
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Buying or selling of real property or business entities;
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Management of client monies, securities or other assets, the opening or management of deposits, savings or security accounts; and
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Creation, operation or management of trusts companies, business entities or similar structures such as trusts or foundations, including the procurement of the funds required for creation, operation or management of companies,
any lawyer is obligated to determine and verify the client’s and the beneficial owner’s identity by personal presentation of an official identification documentation in case of natural persons and in case of legal persons on the basis of documents, data or information obtained from a reliable and independent source, upon the following events:
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Upon establishment of a business relationship intended for a longer period prior to acceptance of such mandate;
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In case of any transaction with a value of at least EUR 15.000;
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If he knows, suspects or has a legitimate reason to assume that a certain transaction serves money laundering (Section 165 StGB) or the financing of terrorism (Section 278d StGB);
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He doubts the authenticity or appropriateness of the identification data received.
Moreover, pursuant to Section 8b Subsection 5 and Subsection 6 RAO lawyers have to keep the documentation on which the identification was based, to obtain information on the purpose and the kind of the business relationship and to monitor the business relationship and update of respective information.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
Yes. Please see below.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Enhanced due diligence measures are required in cases with a higher risk, e.g. in respect of long distance business relationships (Ferngeschäft) (Section 8b Subsection 3 RAO) or if politically exposed persons resident in another EU member state or outside the EU (Section 8f RAO) are involved.
Long Distant Transactions
Section 8b Subsection 3 RAO: If a client is not physically present upon establishment of a business relationship or during execution of any transaction (long distance business relationship), any lawyer is obligated to take additional adequate and probative measures to verify the party’s identity and to ensure that the client’s first payment within the scope of the transaction concerned is carried out through an account opened in the client's name with a credit institution to which EU Directive EC/60/2005 applies.
Beneficial Owner
Section 8b Subsection 4 RAO: The obligations to indentify and verify the beneficial owner have to follow a risk-based approach.
Politically Exposed Persons
Section 8f, subsection 3 RAO: In case of any transaction listed in Section 8a Subsection 1 RAO the respective lawyer as to verify whether a politically exposed person based in another EU Member State or Non-EU Member State is involved. The establishment of a business relationship in such a case requires prior consent of a lawyer holding a managing position.
Further, the respective lawyer is obligated to take adequate measures to verify the sources of the funds used in the transaction or within the scope of the business relationship and subject the business relationship to increased monitoring.
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
Section 8e RAO defines simplified due diligence measures regarding certain authorities or public institutions, e.g. listed companies whose securities are admitted to trade on a regulated market in terms of Section 2 item 37 Austrian Banking Act or domestic authorities.
In these cases the obligations set out under Section 8b RAO (except in the cases of Section 8b Subsection 1 No 3 RAO) do not apply (determination and verification of client’s and beneficial owner’s identity, obtaining information on the purpose and the kind of the business relationship, monitoring of the business relationship and updating of the information).
However, the lawyer has to obtain enough information to determine that such exemption applies to the client concerned.
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.
No. Lawyers and notaries are not permitted to rely on intermediaries or other third parties to perform any elements of the Customer Due Diligence process.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
Pursuant to Section 8c subsection 1 RAO any lawyer must inform the BKA without delay in cases set out under Section 8a subsection 1 RAO (please see above) if he knows, suspects or has a legitimate reason to assume that a certain transaction serves money laundering (Section 165 StGB) or the financing of terrorism (Section 278d StGB) (Notification due to suspicion – Verdachtsmeldung).
The reporting to the BKA is further mandatory if the party did not comply voluntarily with the requirement of disclosing its identity (Section 8b Subsection 7 RAO).
Contact details for the General Directorate for Public Security of the Home Office to which such suspicious transactions shall be addressed are available here.
DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
Lawyers are not obliged to report suspicions with regards to information they receive from, or obtain on, one of their clients, when providing legal advice or when representing their 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 money laundering or terrorist financing (according to Section 8c Subsection 1 RAO.
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
If any lawyer has to make a notification pursuant to Section 8c subsection 1 RAO, he may not execute the transaction prior to notification of the BKA.
Lawyers are entitled to request for a decision from the BKA as to whether or not there are any concerns regarding the immediate execution of the transaction. If the BKA) does not reply until the end of the following working day, the transaction may be carried out without delay. BKA is further authorised to prohibit or to postpone the transaction (Section 8c subsection 2 and 3 RAO).
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
If any lawyer has to make a notification pursuant to Section 8c subsection 1 RAO, he may not execute the transaction prior to notification of the Home Secretary (Federal Office of Criminal Investigation).
Lawyers are entitled to request for a decision from the Home Secretary (Federal Office of Criminal Investigation) as to whether or not there are any concerns regarding the immediate execution of the transaction. If the Home Secretary (Federal Office of Criminal Investigation) does not reply until the end of the following working day, the transaction may be carried out without delay.
The Home Secretary (Federal Office of Criminal Investigation) is authorised to prohibit or to postpone the transaction (Section 8c subsection 2 and 3 RAO).
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
Yes, there is. According to Section 8c subsection 1a RAO lawyers may only inform the authorities responsible for fighting money laundering and terrorism, the bar association and the law enforcement authorities of a notification to the BKA Such information may be passed on, however, within the respective law firm.
Further, such tipping-off prohibition does not prevent the lawyer to try to prevent the client to commit any unlawful act.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.
In case of any transaction listed in Section 8a (1) RAO any lawyer is obligated to verify the client’s and the beneficial owner’s identity.
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Upon establishment of a business relationship intended for a longer period prior to acceptance of such mandate;
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In case of any transaction with a value of at least EUR 15.000;
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If he knows, suspects or has a legitimate reason to assume that a certain transaction serves money laundering (Section 165 StGB) or the financing of terrorism (Section 278d StGB);
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If he doubts the authenticity or appropriateness of the identification data received.
If a lawyer is not or no longer able to determine and verify the identity of the client and the beneficial owner or to obtain information on the purpose and the kind of the business relationship, he is not allowed to start the business relation (Section 8b subsection 7 RAO).
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.
Any lawyer is obligated to obtain information on the purpose and the kind of the business relationship and to monitor the business relationship constantly. Such monitoring includes verification of the transactions conducted in the course of the business relationship.
If the lawyer is not or no longer able to determine and verify the identity of the client and the beneficial owner or to obtain information on the purpose and the kind of the business relationship, an already existing business relationship shall be terminated (Section 8b subsection 6 and 7 RAO).
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.
In deviation to Section 40a Subsection 5 Austrian Banking Act, lawyers have to identify and verify the identity of each individual trustor regarding fiduciary accounts (Anderkonten) held by the lawyers The lawyer has to provide such information to credit institutions upon their request.
The respective documentation has to be kept by the lawyer in original version (if possible; Section 9a RAO).
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
As per today, we are not aware of any lawyers being involved in money laundering issues, including any type of complaint, arrest or prosecution.
HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
The Financial Action Task Force completed a Mutual Evaluation Report on Austria, which is dated 26 June 2009. In the Report FATF concluded the following regarding lawyers:
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Weaknesses of the simplified CDD framework in order to ascertain the exemptions applying to the parties;
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Absence of requirements concerning existing customers at appropriate times;
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No requirement to pay special attention to all complex and unusual transactions;
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Effective implementation limited by the absence of guidance for lawyers.
Information supplied by:
Dr. Christian Herbst, iur., LL.M. (Harvard)
Schönherr Rechtsanwälte GmbH
A-1010 Vienna, Tuchlauben 17
t: + 43 1 534 37 129, f: + 43 1 534 37 6129
m: +43 676 83 93 33 09
ch.herbst@schoenherr.at
www.schoenherr.eu