Austria

CENTRAL AUTHORITY FOR REPORTING

The Austrian Financial Investigation Unit (Geldwäschemeldestelle, "A-FIU") is established as division of the Federal Office of Criminal Investigation (Bundeskriminalamt, "BKA") pursuant to the Austrian Criminal Intelligence Service Act (Bundeskriminalamt-Gesetz).

Following the introduction of amendments to all relevant sectoral laws (please see below) all ML-related suspicious transactions reports ("STRs") have now to be reported to the A-FIU.

The A-FIU is responsible for (i) combating money laundering by receiving, analysing and disseminating money laundering-related STRs, as well as for (ii) the receipt, analysis and dissemination of terrorist financing-related STRs for the purposes of money laundering. Should the STRs received by the A-FIU relate to terrorist financing then the A-FIU has to forward them to the Federal Agency for State Protection Counter Terrorism (Bundesamt für Verfassungsschutz und Terrorismusbekämpfung – BVT) which remains the competent authority for combating terrorist financing as such.

Please see in this respect the Financial Action Task Force Mutual Evaluation Report dated 26 June 2009 and the 3rd Follow-up Report dated 14 February 2014.

Due to the amendments made after the issuance of the FATF Report the A-FIU is now clearly the national central point for the receipt, analysis and dissemination of money laundering related STRs.

ANTI-MONEY LAUNDERING REGULATOR(S)

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). It is further responsible for regulating the activities of lawyers and notaries, particularly via the Lawyers Act, the Disciplinary Statute for lawyers and lawyer-candidates as well as the Notarial Code.

The Federal Ministry of Finance is responsible for adaptations of the Banking Act, the Insurance Supervision Act, the Securities Supervision Act and Gambling Law to incorporate the latest international standards in the area of money laundering. It also represents Austria in the FATF.

The Austrian Financial Market Authority (Österreichische Finanzmarktaufsicht - FMA) is responsible for the supervision of credit institutions, insurance undertakings, investment firms, investment service providers as well as payment institutions. As supervisory authority the FMA supervises compliance with legal provisions and due diligence obligations in the area of money laundering and terrorist financing and takes appropriate steps in case of violation of these responsibilities. The FMA further enacts a regularly updated regulation regarding countries with an increased risk of money laundering.

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.

For the responsibilities of the A-FIU and the BVT please see above.

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 into the sectoral laws such as, inter alia, the Lawyers' Act (Rechtsanwaltsordnung, RAO, Federal Law Gazette I No. 111/2007) and the provisions of the Austrian Banking Act (Bankwesengesetz, BWG, Federal Law Gazette I No 108/2007); see for further details the section below.

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 anti-money laundering rules 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.

For lawyers, AML/CFT requirements and measures are governed by the Lawyer‘s Act (RAO), and the Disciplinary Statute for Lawyers and Law Degree Candidates (Disziplinarstatut für Rechtsanwälte und Rechtsanwaltsanwärter - DSt). The RAO particularly addresses AML/CFT requirements and measures in its Articles 8a-8f, 9, 9a and 12.

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 lawyers‘ profession and the supervision of 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 money laundering and terrorist financing 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.

Client due diligence measures must be applied upon any of the following events:

  • establishment of a business relationship;
  • in case of any transaction with a value of at least EUR 15,000;
  • where one knows, suspects or has a legitimate reason to assume that a certain transaction serves money laundering or terrorist financing;
  • where there is doubt regarding the authenticity or appropriateness of the identification data received.

First, the potential client's and (where applicable) the beneficial owner's identity as well as the identity of an eventual attorney-in-fact or trustee has to be determined and verified (know your customer – KYC) as follows:

  • the identity of the client and an eventual attorney-in-fact or trustee has to be verified by personal presentation of an official identification document 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;
  • if the client may not be physically present (long distance transaction), additional conclusive and adequate measures for the identification of such client must be taken; the lawyer further has to procure that the client carries out an account payment or a first payment through a bank account opened in the client's name with a credit institution subject to the AML Directive; and
  • where applicable, the identity of a beneficial owner must be verified by taking risk-based and adequate measures so that the lawyer is satisfied that he/she knows who the beneficial owner is, including, as regards legal persons, trusts and similar legal arrangements, understanding the ownership and control structure of the client.

Second, the lawyer is further obliged to obtain risk-based information on the purpose and intended nature of the business relationship and to conduct ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of that relationship.

Third, the lawyer has to verify whether a politically exposed person ("PEP") is involved as client or beneficial owner. In case a PEP is involved, due diligence measures are enhanced (please see below).

Moreover, lawyers must (i) store identification documents and other records and copies in connection with KYC checks, (ii) obtain information on the purpose and the kind of the business relationship and (iii) 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?

In addition to the required checks and monitoring obligation described above the lawyer must apply enhanced client due diligence, on a risk-sensitive basis, in especially complex and unusual transactions and in situations which, by their nature, can present a higher risk of money laundering or terrorist financing and at least in the following situations:

  • long-distance transactions;
  • where a client demands exceptional and unusual anonymity or discretion;
  • if the client/representative/beneficial owner is domiciled or resides in a risk-prone and/or corruption-prone country;  and
  • where a PEP is involved as client/representative/beneficial owner.

Long Distance Transactions

If the client may not be physically present, the lawyer must take additional conclusive and adequate measures for the identification of such client and procure that the client carries out an account payment or a first payment through a bank account opened in the client's name with a credit institution subject to the EU AML Directive (EC/60/2005).

Beneficial Owner

Where applicable, the identity of a beneficial owner must be verified by taking risk-based and adequate measures so that the lawyer is satisfied to know who the beneficial owner is, including, as regards legal persons, trusts and similar legal arrangements, understanding the ownership and control structure of the client. Mandates involving a PEP also require appropriate action to review the source of funds used during the mandate and escalated, continuous monitoring.

Risk-prone or corruption-prone Country

In Austria, countries with an enhanced risk in terms of money laundering and terrorist financing are listed in a regulation of the Austrian financial market authority (BGBl II 485/2013).

Politically Exposed Persons

In case of any risk-prone matter, the lawyer has 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?

Due diligence obligations are simplified regarding certain authorities or public institutions, e.g. listed companies whose securities are admitted to trading on a regulated market and where the client is a credit or financial institution, in each case as defined in the local laws implementing the AML Directive. In this case the lawyer is not obliged to apply any of the client due diligence measures set forth above; however, he/she has to obtain enough information to determine that such exemption applies.

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?

Any lawyer must inform the A-FIU without delay if he/she knows, suspects, or has a legitimate reason to assume that a certain transaction serves money laundering and terrorist financing (Notification due to suspicion – Verdachtsmeldung).

The following circumstances regarding a person or conduct of a client must be deemed conspicuous and may trigger a suspicious activity report, if plausible reasons for these issues cannot be found (suspicions based on individual's behaviour):

  • the client demands discretion or anonymity to an unusual extent;
  • the client attempts to avoid personal contact with the lawyer (and deploys a front man instead);
  • the client makes false, ambiguous or misleading statements or denies them for no plausible reason;
  • the client frequently changes lawyers without plausible reason;
  • lack of interest in an explanation of costs by lawyer;
  • the client requests lawyer to conduct layered activity;
  • forced (cash) payments into custodial/escrow accounts (e.g. retainer) by the client; and
  • withdrawal of assets shortly after crediting to the custodial/escrow account or investment account, etc.

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 regard 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.

DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

If a lawyer is obliged to report a suspicious activity, he/she may not execute the transaction prior to the notification of the A-FIU.

Lawyers are entitled to request for a decision from the A-FIU as to whether or not there are any concerns regarding the immediate execution of the transaction. If the A-FIU does not reply until the end of the following working day, the transaction may be carried out without delay. The A-FIU is further authorised to prohibit or to postpone the transaction.

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?

See above.

IS THERE A TIPPING-OFF PROHIBITION?  IF YES, PLEASE DESCRIBE.

Yes, there is. Lawyers may only inform the authorities responsible for fighting money laundering and terrorist financing, the bar association and the law enforcement authorities of a notification to the A-FIU. 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.

Clients may not be accepted if due diligence measures are required but not properly fulfilled (see above).

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS?  IF YES, PLEASE DESCRIBE.

In any risk-prone matter or wherever there exists any suspicion of money laundering or terrorist financing activities, a 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.In addition to the required checks and monitoring obligation described above the lawyer must apply enhanced client due diligence, on a risk-sensitive basis, in especially complex and unusual transactions and in situations which, by their nature, can present a higher risk of money laundering or terrorist financing.

DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

A lawyer has to identify and verify the identity of each individual trustee regarding fiduciary accounts (Anderkonten) held by such lawyer. The lawyer has to provide such information to credit institutions upon their request. The respective original documents have to be stored.

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

As of 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 adopted a Mutual Evaluation Report on Austria (MER) on 26 June 2009. At the same time, Austria was placed in a regular follow-up process and reported back to the FATF in February 2011 (first follow-up report) and 2012 (second follow-up report). In the Third Follow-Up Report from February 2014, the FATF concluded that Austria has addressed the deficiencies related to all core and all but one key recommendation, and brought the level of technical compliance with these recommendations up to a level of "largely compliant". Moreover, Austria was said to have made a considerable progress in remedying deficiencies in the most of the remaining (non-core and key) recommendations, especially in the designated non-financial business or profession sector. Overall, the majority of all recommendations that were rated non or partially compliant were said to have been brought to a level of compliance essentially equivalent to largely compliant (18 out of 24), which means, in turn, that Austria has taken sufficient measures to be removed from the regular follow-up process.

The only remaining key recommendation where no LC was awarded is no. R23 (Supervision): according to the FATF a number of legislative changes were undertaken, along with the reform of the supervision regime. However, some important technical deficiencies still remain, and the practical results of the supervision reform regime do not reach the level of expectations set out in the MER.


Contributor:

Mag. Jakob Kisser

Attorney-at-Law

Director Knowledge & Compliance

Schönherr Rechtsanwälte GmbH
A-1010 Vienna, Tuchlauben 17
t: + 43 1 53437 50760, f: + 43 1 53437 66060

m: +43 664 800 604060
j.kisser@schoenherr.eu
www.schoenherr.eu


SOURCES:

Rechtsinformationssystem:

www.ris.bka.gv.at

Austrian Financial Market Authority:
http://www.fma.gv.at/cms/site/DE/index.html

Federal Office of Criminal Investigation:
http://www.bmi.gv.at/cms/BK/start.aspx

FATF Mutual Evaluation Report:
http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Austria%20full.pdf

FATF Mutual Evaluation of Austria: 3rd Follow-up Report
http://www.fatf-gafi.org/media/fatf/documents/reports/mer/FUR%20Austria.pdf