FinTech & AML
In order to ensure the stability and the image of the financial sector, provisions have also been introduced in Austria with regard to preventing the usage of the financial system for the purposes of money laundering and terrorist financing (further information can be found on the FMA Website). In accordance with these provisions, certain financial market participants (e.g. credit institutions, insurance undertakings, payment institutions, electronic money institutions etc.), as well as other players in addition to the aforementioned (e.g. certain businessmen or lawyers and notaries), are expected to comply with due diligence obligations for the combatting of money laundering and terrorist financing.
FinTechs are also expected to comply with these due diligence obligations for the combatting of money laundering and terrorist financing, if they provide activities that require a licence and are therefore subject to supervision by the Austrian Financial Market Authority (FMA). In this regard, the specific type of activities requiring a licence that a FinTech provides is not significant. The respective applicable laws (i.a. the Securities Supervsion Act 2018 (WAG 2018; Wertpapieraufsichtsgesetz 2018) the Payment Services Act 2018 (ZaDiG 2018; Zahlungsdienstegesetz 2018), the Alternative Investment Fund Manager Act (AIFMG; Alternative Investmentfonds Manager-Gesetz), the E-Money Act (E-Geldgesetz 2010) refer to the relevant provisions for the prevention of money laundering and terrorist financing contained in the Financial Markets Anti-Money Laundering Act (FM-GwG; Finanzmarkt-Geldwäschegesetz). In the event that a FinTech does not conduct any activities that require a licence, the obligation to comply with the provisions on the prevention of money laundering and terrorist financing may in certain circumstances exist on the basis of the Commercial Code (GewO; Gewerbeordnung) (e.g. in the case of specific activities as a retail tradesperson, a real estate agent, a consultant or an insurance broker). In these cases supervision is not conducted by the Austrian Financial Market Authority (FMA), but by the relevant competent administrative authorities.
In the event that FinTechs neither conduct activities that require a licence that are subject of supervision by the Austrian Financial Market Authority (FMA), nor activities where they are obliged under commercial law to comply with due diligence obligations for the combatting of money laundering and terrorist financing, under the current legislation they are not the intended addressee of these rules. It should however be highlighted that the (contractual) partners of FinTechs are often required to comply with the due diligence obligations for the combatting of money laundering and terrorist financing.
Furthermore the FMA also advises that an amendment to the FM-GwG will enter into force on 10 January 2020 (the amendment published in Federal Law Gazette I no. 62/2019). This amendment inter alia transposes the 5th Anti-Money Laundering Directive in Austria. In the future providers of services in relation to virtual currencies (Article 2 no. 21 of the amended version of the FM-GwG) will be subject to the due diligence and reporting obligations set out in FM-GwG and must register with the FMA. The possibility to apply to register exists from 1 October 2019. Pursuant to Article 2 no. 22 FM-GwG in the amended version, this affects service providers offering one or more of the following services
- services to safeguard private cryptographic keys, to hold, store and transfer virtual currencies on behalf of a customer (custodian wallets);
- exchanging of virtual currencies into fiat currencies and vice versa
- exchanging or one or more virtual currencies between one another;
- transferring of virtual currencies
- the provision of financial services for the issuance and selling of virtual currencies.
The FMA also refers in this regard to the Financial Action Task Force (FATF) “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers” published in June 2019. This Guidance contains more detailed information about the application of FATF Standards that apply both to supervisory authorities as well as service providers in relation to virtual currencies.
Following the entry into force of the Financial Markets Anti-Money Laundering Act (FM-GwG; Finanzmarkt-Geldwäschegesetz) on 01.01.2017, “video-based identification” is also possible in Austria. The necessary safeguards to be observed for a procedure for video-based online identification of customers was determined by the FMA in a dedicated Regulation. This Regulation entered into force on 03.01.2017.
In addition to the Act and the Regulation, English translations of which can be downloaded from the FMA Website, the following FMA Press Release also contains a brief overview: FMA enables online customer identification – 2 January 2017.
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