The international community of states has intensified the fight against terrorist organisations and organised crime over the past years. In this context, one of the key measures focuses on those organisations’ financial sources and flows of funds. Within the scope of the multilateral “Financial Action Task Force on Money Laundering and Terrorist Financing (FATF)”, commonly accepted packages of measures are developed and transposed into EU and national law. As part of implementing these measures and in order to enforce the know-your-customer principle, the FMA has now published a “Circular Letter on Identification” for financial service providers.
“The fight against money laundering and terrorist financing is a matter of course for any civilised financial market,” says FMA Executive Director Kurt Pribil, adding: “In doing so, it is necessary to strike a balance between the endeavours to fight the roots of crime and terror, i.e. the financial sources, and the protection of individuals’ privacy, also when it comes to their financial affairs.” The aim of the identification measures is “on the one hand, to prevent financial transactions by persons from terrorist organisations and organised crime who have already attracted the attention of the authorities and, on the other hand, to make financial transactions in unsuspicious areas traceable should any suspicions arise at a later stage,” says FMA Executive Board Director Heinrich Traumüller.
As requested by financial service providers in particular, the “FMA Circular Letter on Identification” lays out the current, complex legal provisions on the identification of customers in a structured manner, especially section 40 of theBankwesengesetz (BWG; Austrian Banking Act), in the light of international best practices. Above all, it is intended to unify the interpretations, which have often varied considerably in practice until now, and further strengthen <country-region></country-region><place></place>Austria </place><//place></country-region><//country-region>’s high standard in the fight against money laundering.
The circular letter covers issues such as the identification of legal persons, the establishment of agency relationships (in particular with minors or in the case of trusteeship) and the appropriate procedure in the case of “non-face to face operations”, securities transactions and savings deposits. Moreover, the archiving requirements for identification documents are examined.
The know-your-customer principle serves as the supreme principle for banks, insurers and brokers of financial services. The customer’s identity has to be established, while of course maintaining the banker’s duty to secrecy. Moneys from anonymous individuals must not be accepted.
This is to make sure that from the beginning no business relations are established with persons who are under investigation or suspicious persons who are on international wanted persons lists. At the same time, since the customer’s identity is known, subsequent investigations can determine whether certain accounts belong to the assets of a criminal organisation or with which other parties financial transactions were made. This may be important for the compensation of crime victims.
As this guarantees that financial service providers themselves know their customers and have their identification data available at any time, investigating authorities will only obtain access to the relevant information in concrete cases of suspected criminal offences.
The target group of this circular letter comprises employees of financial service providers acquiring customers and conducting financial transactions in the front office in particular. Moreover, it is recommended to all persons that have to follow regulations on the prevention of money laundering as part of their activities, as similar questions may also arise with the identification of customers of business trustees, lawyers and notaries public.
For further information please contact
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-5106
+43/(0676)/882 49 516