Compliance Guidelines:

Regulatory Bodies in Austria

The major regulatory bodies overseeing AML regulations in Austria are:

Financial Market Authority (FMA)

The FMA is the primary supervisory authority for the financial market in Austria. It oversees banks, insurance companies, pension companies, securities firms, and other financial institutions. The FMA is responsible for ensuring that these entities comply with AML regulations and other related laws.

Oesterreichische Nationalbank (OeNB)

The Austrian central bank plays a role in the supervision of financial institutions, especially in terms of data collection and analysis. While its primary focus is on monetary policy and financial stability, it works in conjunction with the FMA on certain supervisory matters, including aspects of AML.

Financial Markets Anti-Money Laundering Act

Transactions and Business Relationships with PEPs:

• This article mandates additional customer due diligence measures for business relationships involving politically exposed persons (PEPs). Obligated entities must have risk management systems in place to determine if a customer or their beneficial owner is a PEP. Before establishing or continuing business relationships with PEPs, approval from senior management is required.

Enhanced Due Diligence:

• In cases where there’s an increased risk of money laundering or terrorist financing, entities are required to apply enhanced customer due diligence. This is to manage or mitigate such risks adequately. The article lists scenarios where enhanced due diligence is necessary and provides guidelines for its application.

Simplified Due Diligence:

• Even in areas where simplified due diligence is applied, entities must ensure adequate monitoring of transactions and business relationships to detect any unusual or suspicious activities.

Ongoing Monitoring of Business Relationships:

• Entities are required to continuously monitor business relationships. This includes scrutinizing transactions to ensure they align with the entity’s knowledge of the customer, their business, and risk profile. It also emphasizes keeping documents and information updated.

Article 3

• A coordinating committee is established at the Federal Ministry of Finance. Its role is to develop strategies for preventing money laundering and terrorist financing, and to assess and mitigate risks in Austria related to these issues. The committee collaborates with various federal ministries and institutions.

Article 4

• Obligated entities must identify and assess potential risks of money laundering and terrorist financing they might face. This assessment is based on various risk factors, including those related to customers, geographic areas, products, services, and technologies.

The Austrian Banking Act

Article 27

• The act emphasizes the importance of detailed risk management criteria. If these obligations are not sufficiently detailed, risk management shall be deemed adequate if the criteria meet the standard of international legal development concerning the management of banking risks. The criteria encompass qualitative standards such as the organization and responsibilities of a risk control unit, the implementation of stress testing and backtesting, involvement of management in the risk control process, and more.

Article 27

• Credit institutions and groups of credit institutions are required to appropriately limit the particular banking risk inherent in a large exposure. This includes being informed about the economic development of debtors and the retention of value and enforceability of collateral.

Article 27(9)

• Credit institutions are required to establish adequate administrative, accounting, and control procedures for recording large exposures and subsequent changes to them. The adequacy of these procedures and their enforcement should be reviewed by the internal audit annually.

Article 40(3)

• Credit institutions and enterprises conducting business are required to scrutinize transactions that may be connected with money laundering. Additionally, credit institutions should ensure that risk positions of the trading book can be calculated at any time and that the documentation for internal models can be duplicated and challenged with test cases.

References

1. Oesterreichische Nationalbank
2. Financial Markets Anti-Money Laundering Act (FM-GwG)