The Financial Market Authority (FMA) initiates investigations if suspicion exists of unauthorised business operations being conducted. The Financial Market Authority receives information and tip-offs from market participants and other authorities as well as from its own official observations. Unauthorised business operations are deemed to exist if they are conducted without the appropriate licence. This page contains information about the legal means at the Financial Market Authority’s disposal to stop and punish such illegal activities.
The following sections contain information about the legal possibilities at the Financial Market Authority’s disposal to stop and punish such illegal activities.
- Transactions requiring a licence
- Investigation proceedings
- Prohibition proceedings
- Administrative penal proceedings
- Civil law/Criminal law
Transactions requiring a licence
The following transactions, conducted in Austria on a commercial basis, require a licence from the Financial Market Authority:
- Conducting banking transactions (Article 1 para. 1 Banking Act (BWG – Bankwesengesetz))
- Provision of payment services (Article 1 para. 2 Payment Services Act (ZaDiG – Zahlungsdienstegesetz))
- Provision of investment services (Article 3 para. 2 Securities Supervision Act (WAG 2007 – Wertpapieraufsichtsgesetz 2007))
- Operating a securities exchange (Article 2 para. 2 Stock Exchange Act (BörseG – Börsegesetz))
- Managing an alternative investment fund in accordance with the Alternative Investment Funds Manager Act (AIFMG – Alternative Investmentfonds Manager-Gesetz))
- Issuance of electronic money in accordance with the Electronic Money Act (E-GeldG – E-Geldgesetz)
- Establishment and operation of a Pensionskasse (pension company) in accordance with the Pension Funds Act (PKG – Pensionskassengesetz))
- Operation of contractual insurance in accordance with the Insurance Supervision Act 2016 (VAG 2016 – Versicherungsaufsichtsgesetz 2016).
An administrative offence is committed If these activities are conducted without the relevant licence having been granted by the Financial Market Authority. The Financial Market Authority can impose fines of up to EUR 5 million.
It is necessary to differentiate between the following proceedings:
The Financial Market Authority initiates investigation proceedings to ascertain whether unauthorised business is actually being conducted. Pursuant to Article 22b of the Financial Market Authority Act (FMABG – Finanzmarktaufsichtsbehördengesetz) , The Financial Market Authority is entitled to make use of its power to collect information from all natural and legal persons, and to process the necessary information accordingly. This includes the power to access books, documents and electronic data carriers on-site as well as to allow extracts to be obtained. The Financial Market Authority may also exercise its powers to issue summons to the involved parties and witnesses.
Such investigation proceedings have the form of administrative proceedings in accordance with the General Administrative Procedure Act (AVG – Allgemeines Verwaltungsverfahrensgesetz). The granting of party status as listed in Article 8 AVG applies and consequently in particular the right to inspect files pursuant to Article 17 AVG. This, however, only applies to parties. If party status is not granted, the Financial Market Authority is subject to the obligation to maintain official secrecy, and is not permitted to release any information about the parties concerned or the progress of the proceedings.
If the suspicion of an unauthorised business operation in Austria is detected during investigation proceedings, the Financial Market Authority issues a procedural instruction on the basis of Article 22d of the Financial Market Authority Act (FMABG – Finanzmarktaufsichtsbehördengesetz). The affected parties are instructed to restore legal compliance and to cease to conduct the unauthorised business activities. The Financial Market Authority may issue an administrative decision prohibiting the business if the affected party does not comply with the procedural instruction. Measures are ordered to cease to conduct the unauthorised business in the administrative decision prohibiting the business. If the measures stipulated in the administrative decision prohibiting the activity are not implemented, then the coercive penalty advised in the administrative decision prohibiting the activity will be enforced.
The Financial Market Authority has the authority to inform the general public by means of an investor warning that a named provider is not authorised to conduct specific activities. Such investor warnings are published on the Financial Market Authority’s website and in the Official Gazette of the Wiener Zeitung. These investor warnings are a particularly efficient means, if providers are very difficult to trace and for the authorities to pursue (for example in the case that their registered office is not in Austria).
The Financial Market Authority may also publish measures or sanctions imposed due to unauthorised business operations being conducted. Such announcements are published in the Official Gazette of the Wiener Zeitung and on the website of the Financial Market Authority.
If unauthorised business operations exist, the Financial Market Authority also initiates administrative penal proceedings, in addition to prohibition proceedings, and may impose fines of up to EUR 5 million. The legal basis of this kind of proceedings can be found in the Administrative Penal Act (VStG – Verwaltungsstrafgesetz).
The Financial Market Authority does not possess any competences in regard to claims under civil law (in particular claims for compensation) by affected investors. Affected parties must petition civil law courts or contact consumer and investor protection organisations to assert their claims against unauthorised providers. If unauthorised transactions are conducted, any remuneration associated with such transactions e.g. interest or commissions (Article 100 BWG) shall become void.
The prosecution of criminal offences, e.g. fraud, (Article 146 of the Penal Code (StGB – Strafgesetzbuch) is the responsibility of the penal authorities. If suspicion emerges during the Financial Market Authority’s investigations that acts punishable by a court have occurred, the Financial Market Authority shall notify the competent Public Prosecutor’s Office or the Criminal Investigation Department about the case in hand. Financial offences such as the evasion of payment of duties also do not fall within the scope of competence of the Financial Market Authority.