In 2022 the Austrian Financial Market Authority (FMA) supervised compliance with statutory provisions and due diligence obligations for the prevention of money laundering and terrorist financing at more than 1,000 financial services providers. 770 of them were subjected to a detailed risk assessment about the possibility of their being misused for money laundering purposes. A large proportion of these financial services providers, more specifically around two-thirds (492) were banks, a sixth (134) were investment services provider and investment firms, a tenth (79) were investment fund management companies and alternative investment fund managers, with the remainder split between insurance undertakings, virtual asset service providers (VASPs), payment institutions, electronic money institutions and money remitters. As the FMA’s current risk assessment shows, there is an uneven distribution of the risk of being misused for the purposes of money laundering: For example at 20% of VASPs the risk is very high, whereas in the case of insurance companies 7.4% of providers are affected, and 3.3% of banks. Investment service providers and asset managers (KAGs/MCs and AIFMs) in contrast are only exposed to a low to medium risk. In accordance with its risk-based approach to supervision, in 2022 the FMA therefore initiated 165 investigative procedures and 49 on-site measures, which ultimately led to 117 administrative penal proceedings as well as four enforcement procedures for establishing legal compliance. These are the findings of the FMA’s “Thematic Priorities and Trends for the Prevention of Money Laundering and Terrorist Financing 2022“, which was published today.
The FMA’s priorities for supervision and zero-tolerance policy have yielded fruits
The FMA’s zero-tolerance policy, which it applies consistently in the prevention of money laundering, as well as the priorities for supervision and inspections that have been derived in recent years from the risk assessment have proven effective. A significant fall in the number of particularly risk-prone business relationships with offshore centres and high risk jurisdications as well as correspondent banking business has been observed, while back-to-back transactions are barely conducted any longer. Additionally, transactions with constructions under company law, which may assist concealing the real ultimate beneficial owner – such as trusts, foundations or similar contractual arrangements have also fallen. In its ongoing supervision, the FMA has observed continuing weaknesses in relation to the “ongoing monitoring of the business relationship”, the “checking of the origin of funds”, the “regular updating of customer information” as well as the orderly “reviewing of the purpose and nature of the business relationship”.
The monitoring of virtual asset service providers (VASPs), which have been within the scope of the Financial Markets Anti-Money Laundering Act (FM-GwG; Finanzmarkt-Geldwäschegesetz) in Austria since 2020, is viewed as a particular challenge in practical terms, in relation to the necessary checking of the registration through to compliance with due diligence requirements. This is also reflected in a significant number of registrations that have been rejected, withdrawn and surrendered.
The FMA therefore published a separate Circular about the requirements for VASPs.
The Europeanisation of the Fight against Money Laundering
Cross-border cooperation remains the largest challenge in a battle against money laundering as well as in its prevention. European institutions are therefore working with great intensity on a robust common framework in the battle against money laundering, which in building on the common regulatory framework will now also europeanise operational supervision. This has been apparent from the intensifying of the FMA’s work in international bodies and European committees, in cross-border procedures as well as the establishment of European AML colleges for groups that are active on a cross-border basis. “The establishment of the European Anti-Money-Laundering Authority (AMLA), will on the one hand coordinate the activities of national authorities, while on the other hand also directly supervising large groups that are active on a cross-border basis, and is another considerable stride forward,” remarked the FMA’s Executive Directors, Helmut Ettl and Eduard Müller: “The FMA will represent Austria in this EU authority, and intensive preparations are already underway for working in this European network.”
The full report can be found on the FMA website at: https://www.fma.gv.at/en/cross-sectoral-topics/prevention-of-money-laundering-terrorist-financing/
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