Unusually high or unexpected incoming payments may act as a warning signal for money laundering. Criminals often attempt to introduce funds obtained by illegal means into legal financial circulation using normal bank accounts. Financial institutions are able to detect anomalies at an early stage by checking whether income or incoming payments match customers’ financial situations, and whether they have a plausible provenance. Such checks are conducted not only for ensuring the safety of the financial system, but also protect customers against being unwittingly caught up in criminal activities.
In the latest video in the series “1 Minute – 1 Begriff” (“A term explained in a minute”) the Austrian Financial Market Authority (FMA) explains why banks, insurance companies and other financial institutions are legally obliged to be able to plausibilise their customers’ financial situation. The are only allowed to accept funds where their origins can be plausibly proven. In the case of transactions that are extraordinarily high, or in the case of a new business relationship, proof may be submitted like payslips, purchase agreements, insurance policies or similar items. By doing so, enquiries are normally resolved quickly. In a similar manner to a passport check at the border or a security check conducted at an airport, as a rule everyone is subject to such checks, without them being under general suspicion.
In the event that the necessary information about the origin of funds is not provided, institutions may be obliged to reject payments, terminate business relationships, or even to submit a report to the Criminal Intelligence Service Austria. These rules prevent the financial system from being abused for criminal activities such as fraud, drugs or human trafficking, as well as terrorist financing.
In its series “1 Minute – 1 Begriff”, the FMA’s experts explain important financial terms in a concise, succinct, and easy to understand manner. All videos in the series can be found in German only on the FMA’s Instagram channel @redenwiruebergeld and on the FMA’s YouTube Channel.
Journalists may address further enquiries to
Boris Gröndahl (FMA Media Spokesperson)
Telephone: +43 (1) 249 59 6010
Mobile: +43 676 8824 9995
E-Mail: [email protected]