Now the cat is out of the bag: Austria has passed the money laundering test of the international anti-money laundering authority Financial Action Task Force (FATF). This is confirmed by the international organization’s final report, which was published on Thursday.
It brought a sigh of relief to many authorities and ministries in Austria. In a preliminary interim report it looked as if the Republic would be equated with Syria and Congo and put on the gray list. The consequences would have been fatal. Not only would close monitoring have been sharpened and an image of a money laundering paradise would have emerged, the domestic economy would also have been threatened with billions in damage. Only high-risk countries such as North Korea, Iran and Myanmar, which are on the blacklist, are worse off.
“The responsible authorities were unable to prove that criminals were actually deprived of their proceeds to a sufficient extent.”
FATF report
The report was actually discussed at the FATF plenary session in February. Austria had sent an entire delegation to Mexico City. But the authority wanted to subject the report to a “global quality check”. Apparently all comma errors have now been corrected. The assessment that “Die Presse” already reported has not changed. Any leaks from the “press” on this topic were sharply criticized by the authority. Because it is actually kept under the strictest secrecy.
Austria sent a delegation to Mexico for the FATF plenary session. FATF
Nevertheless, the document is explosive. Austria is fighting money laundering and terrorist financing more effectively than initially suggested in the interim report. The FATF audit began in autumn 2024. An on-site audit took place in July. Nevertheless, it becomes clear; the republic has serious weaknesses. Not every authority wanted to cooperate fully during the audit. The inspectors also record their dissatisfaction with this in the report: (…) “some important authorities either did not contribute at all or contributed only insufficiently,” “which led to significant gaps in the quality of the risk analysis,” it says. “The lack of a comprehensive understanding of transnational threats, the lack of understanding of the national vulnerabilities that can be exploited by the various threats and the severity of the threats and significant limitations in data and other information sources hinder the development of an overarching and comprehensive risk picture.”
As “Die Presse” already reported, the criticism was primarily aimed at the non-financial sector. The FATF urges caution here. The biggest weak point are the lawyers and notaries. Law firms should, for example, be obliged to appoint a compliance officer. “There is no express obligation for lawyers, notaries and auditors to have an independent audit function,” the report criticizes.
Austria urgently needs to improve its investigations, prosecution and confiscation of criminal assets. “The legal framework would allow for the confiscation and confiscation of criminal assets, but the relevant authorities cannot demonstrate that criminals are effectively deprived of their proceeds to a sufficient extent.”
The authorities should also strengthen supervision of the non-financial sector. There are weaknesses, especially when uncovering networks involving non-profit organizations or legal entities. 80 of the 1,200 non-profit organizations (NPOs) in Austria are “potentially exposed to the risk of terrorist financing”. Although the general money laundering risk in the sector is considered to be low, these 80 NPOs are potentially affected by money laundering.
According to the report, Austria is exposed to illegal activities by organized criminal groups who launder their proceeds in Austria through cash-intensive companies and couriers, money transfer systems and real estate. “Legal entities are exposed to a high risk of abuse as their beneficial owners can be concealed by creating opaque ownership relationships.” The country is also a cash-intensive economy within the Eurozone and money laundering is particularly attractive through high-quality real estate and other luxury goods.
“Especially in geopolitically uncertain times, Austria has a special responsibility to make its contribution resolutely.”
Markus Marterbauer
Finance Minister
In order to minimize risks in the financial sector, the supervisory authority is recommended to adopt a more risk-based approach to audits. “We have specifically strengthened structures, instruments and assertiveness in recent years,” says the Board of Directors of the Financial Market Authority, Helmut Ettl. “That is demanding – but a bad result would be much more expensive for the financial center.” FMA board member Mariana Kühnel also says: “The international confirmation by the FATF strengthens the reputation of the Austrian financial market.”
The report is “a clear signal to consistently continue our joint efforts and to continually adapt the instruments to new challenges,” says Finance Minister Markus Marterbauer. “Especially in geopolitically uncertain times, Austria has a special responsibility to make its contribution resolutely.”
Austria is combating money laundering and terrorist financing better than the FATF initially expected. The press
All categories that were rated as “low” effective in combating money laundering in the interim report are now rated as “moderate”. This is a significantly better result than the last audit in 2016. The FATF has given Austria numerous recommendations. The Republic has three years to implement this. Next up are on-site tests for the Czech Republic, Cuba and the USA, among others.
At a glance
Money laundering or money laundering refers to the process of smuggling illegally obtained money or assets, so-called black money, into the legal financial and economic cycle. According to the Federal Criminal Police Office, almost every criminal activity has the goal of generating profit. Money laundering is essential for criminals because it serves to keep these “black” assets out of the reach of the authorities.
