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Financial Market Authority FMA publishes a “Circular on Identification and Verification of Identity” to prevent money laundering and terrorist financing

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The Financial Market Authority FMA published a “Circular on Identification and Verification of Identity” addressed to credit institutions operating in Austria to contribute to the prevention of money laundering and terrorist financing today. With this Circular, the Authority offers credit institutions help in interpreting the tighter identification provisions which entered into force on January 1, 2008 as a consequence of the EU’s Third Money Laundering Directive having been transposed into Austrian law. Accordingly, the identity of a customer must be ascertained if a permanent business relationship is being established, if an individual transaction amounts to at least €15,000 or the circumstances leading to a transaction being carried out cause suspicion of money laundering or terrorist financing activity. If identification is not possible or there is suspicion of money laundering or terrorist financing, a business relationship must not be established.

“We are convinced that this Circular offers Austrian institutions a helpful and practical guideline on how to apply European law considering the special conditions in Austria in a consumer-friendly way. In particular, we wish to help them tackle the continually increasing requirements in connection with the prevention of money laundering and terrorist financing and to keep the burdens for consumers as low as possible,” say FMA Executives Helmut Ettl and Kurt Pribil.

The FMA details in the 48-page Circular how the terms used in the law are to be understood in practice, which parties are addressed by identification obligations and how to proceed with identification and with verifying the information thus obtained. Furthermore, it explains in detail concrete cases and special obligations applying to certain transactions such as savings account transactions, securities transactions, non-face to face transactions, school savings schemes and corporate provision fund transactions.

The Circular details which information on identity is required by law for natural and legal persons, and additional recommendations are also made. Furthermore, the criteria which an official photo identification document must fulfil in order to be accepted as suitable ID are given, as are tips on how to recognise forged or pseudo identification documents. The obligation to identify the final “beneficial owner” is also expounded on; a “risk-based approach” must be applied in this case, which means that the credit institution must decide for itself when it believes it has sufficient information about the beneficial owner. At any rate, trustees must disclose the identity of the trustor.

The credit institution is obliged to inform the FMA about its customers and the kind of business relationship being maintained at any time. The information on identity must also be subjected to a renewed review at regular intervals, with documents having to be kept for a minimum period of five years.

This Circular addresses credit institutions, investment firms and investment service providers, financial institutions as well as foreign institutions which operate in Austria under the freedom to provide services and the freedom of establishment. Two further circulars on the prevention of money laundering and terrorist financing will follow this year for these parties: one on the topic of the “risk-based approach”, which will explain how and to what extent to apply the customer due diligence requirements based on the concrete risk of money laundering and terrorist financing. The other will deal with aspects of the “Client Regulation”, which specifies the submission of a complete set of data in the case of transfers. Finally, a separate circular for insurance undertakings and identification is also being planned.

For further information please contact
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0676)/882 49 516

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