DNFBPs

Casino Supervisory Body

120. The MoF is the responsible supervisory authority for casinos. The surveillance of casinos is conducted by a team of independent inspectors of the MoF. An appointed state commissioner attends all meetings of the supervisory board and the general meeting of the shareholders. Additionally, a special department of the Local Tax Authority for Fees and Transaction Taxes mandates independent inspections of casinos, in order to control proper determination of the tax base, such control contributing to the overall prevention of ML/FT. Local tax authorities report to the MoF.

Traders, TCSPs

121. Under the responsibility of the MoE and the state governors, local district authorities are responsible for the licensing and prudential supervision of all activities conducted under the GewO, including trust or company service providers, real estate agents and dealers including auctioneers and insurance intermediaries. Their function includes checking compliance with AML/CFT measures and issuing administrative sanctions for regulatory breaches. The MoE can give instructions to lower level authorities. Since the last amendment of the GewO in 2008, police services must cooperate with and support the trade authorities in the execution of AML/CFT provisions.

Lawyers, Notaries and Accountants

122. The Board of the Bar Association, where a lawyer is registered, is the responsible authority for monitoring compliance with professional regulations, including AML/CFT requirements. Board members are elected by the plenary meeting for a three-year term. Disciplinary offenses are to be handled by the Disciplinary Council, elected by the Bar Association.

123. The competent regional Chamber of Civil Law Notaries is the responsible supervisory authority for notaries, and this function includes verifying whether notaries comply with the provisions serving to prevent or fight ML or FT.

124. The Chamber of Chartered Public Accountants and Tax Consultants and the Parity Commission for the Accountancy Professions, which are the competent supervisory authorities for AML/CFT preventive measures for accountants, are subordinated to the MoE.

Registry for Companies and Other Legal Persons, and for Legal Arrangements

125. The Central Register of Associations (ZVR) is administered by the MoI. The Commercial Register contains records about the ownership and control details for all companies and other legal persons, and is administered by the Commercial Courts. Changes in ownership and control information must be kept up to date. All information is available to the public.

Non-Profit Organizations (NPOs)

126. NPOs are mainly organized as associations which are listed in a public register administered by the MoI. The MoI is the authority responsible for regulating associations and has the competence to give instructions to the lower level authorities. Associations (as well as other NPOs) with charitable or welfare purposes or purposes connected to a state-approved church are tax-exempted, independently of their legal form (association or otherwise). Tax authorities have to verify the purpose of the organization, based on the statutes and accounts. In 2002, the eight most important umbrella organizations (representing more than 350 charities and all catholic orders in Austria) signed a contract with the Chamber of Chartered Public Accountants and Tax Consultants on a seal of quality for donation organizations.

Other Bodies

127. The local district authorities, in the first instance, and the regional governors, as the second instance, are competent for the supervision of domestic financial institutions, according to the provisions of the General Administrative Procedure Act (Allgemeines Verwaltungsverfahrensgesetz, AVG).

128. The Austrian Federal Economic Chamber (WKO) and its nine state chambers, as well as other chambers of various professions (e.g., lawyers and notaries, accountants and tax consultants), play an important role in Austrian public life. Their duties include representation of membership interests domestically and internationally, as well as information and advisory service to their members. By law, governments are obliged to consult with the chambers on legislative projects and important regulations. Many legal provisions involve the chambers in decision-making and administrative procedures, and may entrust them with supervisory or regulatory powers.

129. In the course of their auditing work, external auditors carry out particular investigations on financial institutions’ compliance with prudential and AML/CFT legal requirements and report on these issues to the FMA.

Approach Concerning Risk

130. Austria has transposed the Third EU ML Directive, including the risk-sensitive measures that it requires, into the Austrian legal framework, with effect on January 1, 2008. The authorities underlined that, as a member state, Austria contributed to the risk assessment and analysis conducted at the EU level and to the resulting legal provisions. The risk-based approach in place since January 2008 therefore, stems from the EU Directive; it is not the result of a domestic assessment of the overall money laundering and terrorist financing risk in Austria. The authorities pointed that some risk analysis had been conducted prior to the implementation of the EU Directive and resulted in the introduction of legal provisions such as those that require customers to indicate if they are acting on behalf of a third party, as well as those that subject non-face-to-face business to enhanced due diligence and include the money remittance business into financial activities subject to licensing. While this would indeed tend to indicate that some partial risk analysis was conducted at the time, it does not however point to a comprehensive assessment of the money laundering and terrorist financing risks in Austria. It is unclear for instance why the level of risk posed by other areas of relevance to the Austrian financial sector (such as private banking for example) has not been assessed.

131. The new regime entrusts persons and entities subject to AML/CFT provisions with defining and operating preventive measures adjusted to risks, while it lists situations allowing lower or higher CDD. Persons and entities subject to AML/CFT provisions are required to conduct a risk-analysis of their business, using suitable criteria, and to take appropriate risk-based measures to ascertain customer information and conduct ongoing monitoring.

132. Austria’s financial sector structuring in decentralized and multi-tiered groups results in a large number of financial institutions. Supervisors have long adopted a risk-sensitive approach to onsite examinations. Mission planning and inspection scope are based on assessments of ML and FT risks across institutions, and weaknesses in preventive measures detected by external auditors or OeNB and FMA supervisors.

Progress Since the Last Evaluation

133. The last assessment of Austria compliance with the previous FATF Recommendations was conducted by the IMF in the course of the 2003 FSAP, using the former methodology. The assessors concluded that the overall legal and institutional framework was comprehensive and that Austria had achieved a good level of compliance with the FATF 40+8 Recommendations. However, they identified several areas which needed further strengthening:

• greater clarity in some of legal provisions, defining suspicion of money laundering and the obligation to screen unusual transactions;

• further guidance to financial institutions on AML/CFT duties, in particular on the identification of customers;

• enhanced monitoring of compliance by the supervisors in all financial institutions subject to AML/CFT obligations, including through on-site inspections; and

• sustained supervisory attention during the process of phasing out anonymous savings deposit accounts.

134. Subsequent legislative and regulatory revisions and the implementation of the Third EU ML Directive resulted in a large overhaul of the AML/CFT regime, addressing the above-mentioned concerns:

• identification and verification requirements, notably for beneficial owners in legal entities, and beneficiaries of insurance policies, have been strengthened, and implementing guidelines have been issued;

• a risk-based approach must be applied to business relationship monitoring, based notably on the customer’s business and risk profile, and the grounds for suspicion have been broadened;

• supervision of compliance with AML/CFT provisions has been amplified and reorganized, notably reallocating all onsite and offsite banking supervision tasks to the OeNB; and

• savings deposit accounts review is incorporated into onsite supervisory examinations; credit institutions must inform the A-FIU of all requests to withdraw funds from savings deposits with a balance of at least EUR 15,000, when the identity of the customer has not being ascertained.

135. In addition, amendments to the legal framework have enlarged categories of higher risk customers to include PEPs and correspondent relationships, broadened the scope of activities related the financing of terrorism, subjected money transmitters and exchange bureaus to the BWG provisions, and expanded preventive measures to additional categories of DNFBPs. The Austrian Federal Statute on the Responsibility of Entities for Criminal Offenses provides a general criminal liability for legal persons and entities for all penal offenses. Austria has ratified the Palermo Convention on 23 September 2004. In the area of international cooperation, the Vienna Convention has been ratified and implemented.

Legal Framework

136. In Austria, Article 165 of the StGB set forth the offense of Money Laundering (ML). The offense was established in 1993 and amended several times. Austria has signed and ratified the 1988 United Nations (UN) Convention on Illicit Drugs and Psychotropic Substances (Vienna Convention) and the 2000 UN Convention against Transnational Organized Crime (Palermo Convention).

Criminalization of Money Laundering (c. 1.1—Physical and Material Elements of the Offense)

137. Article 165 sets forth three different types of conducts that constitute the ML offense, all of which are largely in line with the material elements listed in Article 3(1) (b) and (c) of the Vienna Convention and Article 6(1) of the Palermo Convention:

The Laundered Property (c. 1.2)

138. The offense of ML extends to any type of property, regardless of its value, that directly or indirectly represents the proceeds of crime. Article 165 paragraph 4 of the StGB specifically provides that “a property item shall be deemed to derive from an offense when the perpetrator of the crime has obtained it through that offense or received it for the commission of that offense, or when it represents the value of the originally obtained or received property item.” It follows from this provision that the Austrian notion of proceeds covers any property that is the result of, or the reward for the crime, or the value thereof.

Proving Property is the Proceeds of Crime (c. 1.2.1)

139. The conviction of the offender for the predicate offense is not a necessary pre-condition to bringing charges for ML, although the prosecutors and judges met by the assessors indicated that when proving that property is the proceeds of crime, a conviction for the predicate offense is the best evidence that can be submitted. In any case, although the conviction for the predicate offense is not necessary to establish that assets were the proceeds of a predicate offense, the level of evidence required to prove the predicate offense (particularly in the case of the first two types of ML) is “beyond reasonable doubt.” This means that the prosecutor will have to prove the specifics of the predicate offense, for example, that the conduct amounted to a designated offense, the timeframe when the predicate offense was committed, the perpetrator, the types of assets that originated from the predicate offense, which is a rather high standard of proof. The various prosecutors and judges met by the assessors indicated that the standard of proof required to link ML to the predicate offense constitutes one of the most difficult obstacles (especially when the predicate offense was committed abroad). In case of laundering “in the interest of a criminal organization or of a terrorist group” (Article 165, paragraph 5), it is not necessary to link the ML activity to a specific predicate offense and it is sufficient to prove that the property laundered belongs to a criminal organization or a terrorist group. However, as indicated by the authorities, the conditions to prove that an associated group constitutes a criminal organization are also challenging.

The Scope of the Predicate Offenses (c. 1.3)

140. Predicate offenses for ML are all “crimes”, that is, offenses that are intentional acts punishable by life imprisonment or a term of more than three years (Article 17, paragraph 1 of the StGB), as well as a list of “designated misdemeanors” that include public corruption and bribery offenses, forgery of documents, criminal association as well as financing of terrorism. The list of misdemeanors was added in 2002. The range of penalties set forth in the StGB for these offenses does not reach the threshold of three year imprisonment, consequently, these offenses would not have qualified as predicate offenses for ML without their specific inclusion in Article 165 StGB.

141. The list of predicate offenses to ML covers all the categories of offenses designated by the FATF, with the notable exception of counterfeiting and piracy of products, which is a misdemeanor in Austria and which is not included in the list of misdemeanors referred to in Article 165:

Statistical Table 8.

Predicate offenses in Austria

Statistical Table 8.

Predicate offenses in Austria

Designated categories of offenses in the Glossary to FATF 40	Predicate offenses explicitly mentioned in Article 165 StGB (designated list of misdemeanors)	Predicate offenses that are “crimes” (as defined by Article 17 StGB)
Participation in an organized criminal group and racketeering	Article 278 StGB	Article 278a StGB.
Terrorism, including terrorist financing	Article 278b StGB, 278d StGB	Article 278d StGB.
Trafficking in human beings and migrant		Article 217 StGB, Article 104a StGB; Article 114 Aliens Police Act.
smuggling
Sexual exploitation, including sexual exploitation of children		Article 201 et seq. StGB.
Illicit trafficking in narcotic drugs and psychotropic substances		Article 28 Act on Addictive Drugs, Article 28a Act on Addictive Drugs; Article 31 Act on Addictive Drugs;
		Article 31a Act on Addictive Drugs; Article 32 Act on Addictive Drugs.
Illicit arms trafficking		Article 177a StGB; Article 177b StGB.
Illicit trafficking in stolen and other goods		Article 164 StGB.
Corruption and bribery	Article 304 to 308 StGB	Article 302 StGB; Article 153 StGB.
Fraud		Article 147 StGB; Article 148 StGB; Article 148a StGB.
Counterfeiting currency		Article 232 StGB.
Counterfeiting and piracy of products	Not a predicate offense	Not a predicate offense.
Environmental crime		Article 180 StGB, Article 181 StGB, Article 181b - 181e StGB; Article 171 StGB, Article 172 StGB; Article 176 StGB, Article 177 StGB.
Murder, grievous bodily injury		Article 75 StGB, Article 76 StGB; Article 85 - 87 StGB.
Kidnapping, illegal restraint and hostage-taking		Article 99 StGB, Article 100 -102 StGB.
Robbery or theft		Article 142, 143 StGB; Article 128 StGB; Article 129 - 131 StGB.
Smuggling;	Tax offense of smuggling or
	evasion of import or export taxes (insofar as these fall within the
	competence of the courts)
Extortion		Article 144, 145 StGB.
Forgery	Article 223, 224, 225, 229, 230 StGB.
Piracy		Article 102 StGB; Article 142, 143 StGB; Article 144, 145 StGB.
Insider trading and market manipulation		Article 48b BörseG.

View Table

Statistical Table 8.

Predicate offenses in Austria

Designated categories of offenses in the Glossary to FATF 40	Predicate offenses explicitly mentioned in Article 165 StGB (designated list of misdemeanors)	Predicate offenses that are “crimes” (as defined by Article 17 StGB)
Participation in an organized criminal group and racketeering	Article 278 StGB	Article 278a StGB.
Terrorism, including terrorist financing	Article 278b StGB, 278d StGB	Article 278d StGB.
Trafficking in human beings and migrant		Article 217 StGB, Article 104a StGB; Article 114 Aliens Police Act.
smuggling
Sexual exploitation, including sexual exploitation of children		Article 201 et seq. StGB.
Illicit trafficking in narcotic drugs and psychotropic substances		Article 28 Act on Addictive Drugs, Article 28a Act on Addictive Drugs; Article 31 Act on Addictive Drugs;
		Article 31a Act on Addictive Drugs; Article 32 Act on Addictive Drugs.
Illicit arms trafficking		Article 177a StGB; Article 177b StGB.
Illicit trafficking in stolen and other goods		Article 164 StGB.
Corruption and bribery	Article 304 to 308 StGB	Article 302 StGB; Article 153 StGB.
Fraud		Article 147 StGB; Article 148 StGB; Article 148a StGB.
Counterfeiting currency		Article 232 StGB.
Counterfeiting and piracy of products	Not a predicate offense	Not a predicate offense.
Environmental crime		Article 180 StGB, Article 181 StGB, Article 181b - 181e StGB; Article 171 StGB, Article 172 StGB; Article 176 StGB, Article 177 StGB.
Murder, grievous bodily injury		Article 75 StGB, Article 76 StGB; Article 85 - 87 StGB.
Kidnapping, illegal restraint and hostage-taking		Article 99 StGB, Article 100 -102 StGB.
Robbery or theft		Article 142, 143 StGB; Article 128 StGB; Article 129 - 131 StGB.
Smuggling;	Tax offense of smuggling or
	evasion of import or export taxes (insofar as these fall within the
	competence of the courts)
Extortion		Article 144, 145 StGB.
Forgery	Article 223, 224, 225, 229, 230 StGB.
Piracy		Article 102 StGB; Article 142, 143 StGB; Article 144, 145 StGB.
Insider trading and market manipulation		Article 48b BörseG.

Threshold Approach for Predicate Offenses (c. 1.4)

142. As noted earlier, the predicate offenses to ML include all serious offenses under Austrian criminal law (“crimes” as stipulated by Article 17 of the StGB, that is, intentional criminal offenses punishable with more than three years of imprisonment), as well as a wide range of designated misdemeanors (which does not include counterfeiting and piracy of products).

Extraterritorially Committed Predicate Offenses (c. 1.5)

143. The Austrian authorities state that as a matter of principle they can establish jurisdiction for ML offenses irrespective of the place where the predicate offense was committed, as Austrian criminal law does not require that the latter offense be committed domestically, provided it would constitute a criminal offense under Austrian law. This view is reflected in the language of Article 165, Paragraph 1 (.”.. property items that derive from the crime of another person …”) which does not limit the scope of the ML offense to domestic predicate offenses. Moreover, Article 64, Paragraph 1 (8) of the StGB explicitly provides ground for jurisdiction when it states that: “Austrian penal laws are applicable regardless of the penal laws which are valid for the scene of crime to the following offenses being committed abroad”, quoting explicitly the offense of ML, when the laundering activities are committed abroad and the predicate offense is committed in Austria. In addition, Article 65 of the StGB (“Criminal offenses committed abroad which are subject to prosecution only if they are liable to prosecution according to the laws which are valid for the scene of the crime”), states the general principle (Paragraph 3) that “it is sufficient that the offense is liable to prosecution according to Austrian law if there is no penal power at the place where the criminal act was committed.”

Laundering One’s Own Illicit Funds (c. 1.6)

144. Self-laundering is not criminalized in Austria as Article 165 limits the scope of the ML offenses to assets “that derive from the crime of another person.” ML undertaken by a person “acting on behalf or in the interest of a criminal organizations or the terrorist group” (Article 165, paragraph 5) could however amount to self-laundering in this specific case if the ML activity is undertaken by a member of the criminal organization or of the terrorist group.

145. The authorities explained this limitation by referring to the criminal law principle according to which an offender (i.e., the one having committed the predicate offense) cannot be additionally and separately punished for a “post-offense behavior” that relates to the proceeds of his/her own crime (principle of “post factum delicti”). According to this principle of Austrian criminal law, one punishable act (the predicate offense) includes another concurring act (the concealing or disguising of property items that derive from the predicate offense’s perpetrator) and the penalty set forth for the punishable act is deemed to cover the entire unlawfulness of the offenders’ act. According to a further explanation given, the self-laundering activities are not considered to be subject to criminalization because they are deemed not to entail any additional damage to further rights than the one already caused by the predicate offense. In several rulings, the Supreme Court confirmed that the laundering activities undertaken by the perpetrator of the predicate offense do not constitute autonomous criminal activities, because they have to be seen as part of the “same historical happening” (which is interpreted in very broad terms in regard to the timeframe in which the predicate offense and the laundering activities are undertaken) of the predicate offense and they do not entail an autonomous and additional damage to vested rights, the protection of which is already ensured by the punishment of the predicate offense.

146. However, these rulings do not explicitly indicate that self-laundering is contrary to a fundamental principle of Austrian law and the officials met by the assessors did not have a uniform view as to whether there is a fundamental principle on the subject; it was pointed out that an amendment to the StGB could suffice to overturn this principle of criminal law. With respect to the “same historical happening” jurisprudence, one could argue -especially when the laundering activity does not simply amount to the mere possession or use, but also involves the transfer or the concealment and disguise through the financial system—that an additional damage to further rights than the one already caused by the predicate offense—as well as an additional social danger (to the soundness and the integrity of the financial system) can be envisaged autonomously. In light of the above, it was not established that the non-criminalization of self-laundering is supported by principles that amount to fundamental principles according to the FATF standards.

Ancillary Offenses (c. 1.7)

147. The Austrian criminal law provides for appropriate ancillary offenses to the offense of ML. Attempt (as well as “any participation in an attempt”) is criminalized for all offenses by Article 15 of the StGB, therefore including for ML. Article 12 of the StGB (“Treatment of all participants as offenders”) covers aiding and abetting, facilitating and counseling, for its broad language, as clarified by the authorities, states that “a criminal offense is committed … also by anybody who abets another person to commit the offense or who contributes to its perpetration in any other way.” Article 3 (1) (c) iii of the Vienna Convention, that requires the criminalization of “publicly inciting or inducing others, by any means, to commit any of the offenses established in accordance with this Article [including ML]”) is also covered by Article 12 of the StGB (if the incitement or the induction is for the specific offense of ML) and, more generally, by Article 281 (“Incitement to disobedience of laws”) and 282 (“Incitement to criminal offenses and approval of criminal offenses”), in the case in which the incitement is generically to commit criminal offenses or to disobey laws.

148. Conspiracy to commit ML, in the sense generally known in common law systems (that envisage conspiracy also in the case of an agreement of only 2 persons), is not to be found in Austrian criminal law. Austria has a civil-law based criminal system and the basic concepts of such a system do not provide that such behavior constitutes punishable criminal conduct. Instead Austrian criminal law criminalizes “criminal association” (Article 278 of the StGB), as “a union planned for a longer time of more than two persons aiming at the commitment of one or more crimes”, with a specific cross-reference to Article 165 of the StGB. This is in line with the Vienna and Palermo Conventions (Article 3, paragraph 1, c, iv and Article 6, paragraph 1, b, ii, respectively, which require the establishment of an offense either for conspiracy or association, subject to the constitutional/basic concepts of the jurisdiction’s legal system).

Additional Element—If an act overseas which do not constitute an offense overseas, but would be a predicate offense if occurred domestically, lead to an offense of ML (c. 1.8)

149. As noted earlier, Article 65, paragraph 3 of the StGB states the principle according to which “it is sufficient that the offense is liable to prosecution according to Austrian law if there is no penal power at the place where the criminal act was committed.”

Liability of Natural Persons (c. 2.1)

150. The Austrian criminal law knows three types of mens rea that characterize the offender’s action (or inaction): “intentionally”, “willfully” or “knowingly” (Article 5 of the StGB).¹¹ The authorities explained that “intentionally” (dolus) is the broadest standard, for it includes also “dolus eventualis” (blind willfulness or recklessness, bedingter Vorsatz). When a criminal provision does not specify the mens rea required (as in the case of the first type of ML conduct, the one set forth by Article 165, paragraph 1), it is always assumed that the type of mens rea that applies is “intentionally.”

151. In the case of ML the mens rea requirements are differentiated according to the modus operandi of the ML offense: in the case of Paragraph 1 of Article 165 the act of concealing/disguise has to be committed with intent. In this case the mens rea is broader than that required by the Vienna and Palermo Convention, because it also includes dolus eventualis. Paragraph 2 of 165 requires that the acts of acquiring, converting, transferring, etc. be committed “knowingly.” This standard also appears to be broader than the one envisaged by the Vienna and Palermo Conventions, in the sense that it does not require the specific “purpose of concealing or disguising the illicit origin of property or of helping any person who is involved in the commission of the predicate offense to evade the legal consequences of his/her action” (Article 3, paragraph 2, b, i and Article 6, paragraph 1, a, I, respectively). Knowledge that the assets are proceeds of crime is sufficient.

The Mental Element of the ML Offense (c. 2.2)

152. Although the criminal law does not explicitly provide that the intentional element of the offense of ML may be inferred from objective factual circumstances, Austria relies on the principle of free evaluation of evidence by the judiciary, codified by Article 14 of the Criminal Procedure Code (Strafprozessordnung, StPO), which enables the judge to make this inference. As indicated by the authorities, the objective factual circumstances will very often be the most important clue for the judge’s assessment of evidence.

Liability of Legal Persons (c. 2.3)

153. The Austrian Federal Statute on the Responsibility of Entities for Criminal Offenses (Verbandsverantwortlichkeitsgesetz, VbVG), which entered into force on January 1, 2006, provides for general criminal liability of legal persons and other entities such as commercial partnerships (Personenhandelsgesellschaften), private foundations or registered partnerships (eingetragene Erwerbsgesellschaften) for all criminal offenses (therefore including for ML), in addition to and independent from the liability of the natural persons prosecuted for the same act.

154. According to Article 3 of the VbVG, criminal liability is explicitly provided for an offense committed by a person with a leading position (“decision-maker”) on the one hand and for an offense by a person under its authority (“staff-member”) based on the lack of supervision or control of such a person in a leading position on the other. A legal person is responsible for a criminal offense (including ML) if either the offense was committed for the benefit of the entity or resulted from a neglect of the due diligence required of the entity. According to Article 3, paragraph 2 of the VbVG, the entity shall be responsible for offenses committed by a decision maker if the decision maker acted illegally and culpably.

155. In particular, according to Article 3, paragraph 2 of the VbVG, an entity is responsible for criminal offenses committed by a “decision maker” if he/she acted illegally and culpably, whereas in the case of its staff-member the legal person is responsible (paragraph 3) if:

Liability of Legal Persons should not preclude possible parallel criminal, civil or administrative proceedings (c. 2.4)

156. As ML constitutes an offense under penal law also in the case of legal persons, administrative proceedings to address the conduct of legal persons or entities who may have engaged in money laundering offenses are not foreseen by the law. However, the criminal liability of legal persons or entities does not exclude civil liability which may result from the respective unlawful act.

Sanctions for ML (c. 2.5)

157. Penalties for ML vary based upon the amount of proceeds involved. The basic ML offenses defined at paragraphs 1 and 2 of Article 165 are misdemeanors and carry a maximum penalty of two years of prison or a fine, which is calculated on daily rates¹² (the maximum amount for this fine equals to 360 daily rates). They become subject to a higher penalty ranging from six months to five years of prison when aggravated circumstances occur, that is when the assets involved exceed the value of EUR 50,000 or when the crime is committed as “a member of a criminal group associated for the purpose of continuous ML (Article 165, paragraph 3). The authorities clarified that this aggravating circumstance occurs also if the criminal association has carried out only one act of ML, as long as it can be ascertained at least that the purpose for which the association was established is “continuous ML”). In case of ML conducted “on behalf or in the interest of a criminal organization … or terrorist group, the penalty is imprisonment for a term not exceeding three years (Article 165, paragraph 5). In this case, if the value of the assets exceeds EUR 50,000, the penalty goes up to a prison term ranging from six months to five years.

158. Article 4 VbVG provides for fines being imposed on legal persons. Similar to fines imposed on natural persons, the VbVG provides a daily rate system, in which the amount of the fine depends on two factors:

159. The maximum daily rate is set at EUR 10,000 and the minimum daily rate, which is only relevant for entities that have not earned profit over a reasonable period of time, is EUR 50.

160. The authorities explained that the VbVG deliberately does not define the assessment basis for revenues or permissible deductions as a result of the broad coverage of all legal persons, which are generally subject to various accounting standards depending on their legal structure. On the other hand, the VbVG does not determinate the relevant time period for the calculation of profits. This provides some protection against manipulations of the amount of revenue. The current provision enables the court to average out the proceeds of the legal person or entity over several years, thus minimizing the risk of manipulating the amount of the fine by transferring gains of one given period to previous periods with losses.

161. The authorities explained that as the minimum daily rate has been fixed at EUR 50 and the maximum daily rate EUR 10,000, the minimum fine for the offense of ML committed by a legal person in the case of ML is EUR 3,500 and the maximum fine EUR 1,000,000.

162. Furthermore, Article 10 of the VbVG stipulates that the legal consequences shall also apply to a legal successor, if the rights and obligations of the legal person or entity have been transferred to another association by way of universal succession. Legal consequences imposed on the legal predecessor shall therefore also apply to the legal successor. If there are more than one legal successor, a fine imposed on the legal predecessor may be enforced vis-à-vis any legal successor. Other legal consequences may be attributed to individual legal successors to the extent that this is in line with their area of activity.

163. The sanctions set forth for ML in the case of natural persons and the minimum sanction established in the case of legal persons are too lenient (particularly in the case of basic ML) and do not seem effective, nor proportionate or dissuasive, especially considering that ML in most instances is not a crime but a simple misdemeanor. The authorities explained that, as a matter of criminal policy, ML is seen mostly as an ancillary offense and that prosecutors prefer to consider the ML activity as “participation” in the commission of the predicate offense (for the broad terms in which Article 12 is formulated, described above), which carries the same penalty as the predicate offense (usually higher than the one envisaged for ML) and may be easier to prove than ML (where, as mentioned earlier, it may be difficult to prove the link between ML and the predicate offense).

164. From a more general standpoint it has also to be noted that the relatively low penalties applied so far (see statistics) do not seem to constitute a strong deterrent to prevent ML activities.

Effectiveness

165. While the ML criminal provision is largely in line with the material elements of the Vienna and Palermo Conventions, questions can be raised in regard to its effective implementation. One issue is that the number of convictions for ML under Article 165 (official statistics are available for 2004-2006 in the case of convictions; for conditional, unconditional and partially unconditional sentences statistics are also available for 2007)¹³ is extremely low:

Statistical Table 9.

Money Laundering Cases

Statistical Table 9.

Money Laundering Cases

	ML cases total	ML investigations (by public prosecutors)	ML prosecutions (dealt with by courts)	ML Convictions (as published by Statistics Austria)
2003	29	17	12	7
2004	47	34	13	5
2005	24	20	4	3
2006	75	61	14	3

View Table

Statistical Table 9.

Money Laundering Cases

	ML cases total	ML investigations (by public prosecutors)	ML prosecutions (dealt with by courts)	ML Convictions (as published by Statistics Austria)
2003	29	17	12	7
2004	47	34	13	5
2005	24	20	4	3
2006	75	61	14	3

166. The authorities explained that these figures are not conclusive as in the Austrian system of criminal statistic, convictions are counted only in relation to convictions for the offense which has the highest punishment (which is hardly the case for ML, when it is concurrent with other crimes). Therefore, a conviction in the criminal statistics is counted once only, irrespective of the number of offenses underlying the conviction. So the official statistics for ML include only cases in which ML was the sole offense or the offense with the highest threat of punishment among other offenses proven, but they do not include the number of convictions where ML was proven among other offenses.

167. According to a separate statistic complied by the A-FIU and based on the actual number of ML charges underlying a conviction (“effective number of convictions”), there were 12 ML convictions in 2003, 10 in 2004, 5 in 2005, 10 in 2006, and 18 in 2007.

168. Even so, the number of convictions still appears low, and raises an issue of effectiveness of the ML provisions, considering the statistics on convictions and investigations for the most serious predicate offenses that generate illicit proceeds, particularly drug-related offenses.

Statistical Table 10.

Statistic of Convictions for Serious Offenses

(source: Statistics Austria)

Statistical Table 10.

Statistic of Convictions for Serious Offenses

FATF Serious Offenses	Number of Convictions
	2004	2005	2006	2007
Participation in organized criminal group	10	28	17	19
Racketeering	57	59	46	52
Terrorism and terrorist financing	0	0	0	0
Trafficking in human beings and migrant smuggling	335	375	333	n.v.
Sexual exploitation and sexual exploitation of children	55	38	24	43
Illicit trafficking in narcotic drugs and psychotropic substances	5703	6127	5794	5435
Illicit arms trafficking	256	307	329	346
Illicit trafficking in stolen and other goods	391	409	389	437
Corruption and bribery	49	2	7	3
Fraud	3189	3261	3139	2981
Counterfeiting currency	102	113	63	94
Counterfeiting and piracy of products	9	7	15	5
Environmental crimes	11	9	7	7
Completed murder	24	28	33	34
Attempted murder	12	21	15	20
Grievous bodily injury	1423	1359	1239	1284
Kidnapping, illegal restraint and hostage-taking	55	72	61	44
Robbery	619	627	680	737
Theft	9480	9316	8523	8518
Smuggling	25	22	8	n.v.
Extortion	57	49	46	52
Forgery	564	502	538	493
Piracy	0	0	0	0
Insider trading	0	0	0	1

(source: Statistics Austria)

View Table

Statistical Table 10.

Statistic of Convictions for Serious Offenses

FATF Serious Offenses	Number of Convictions
	2004	2005	2006	2007
Participation in organized criminal group	10	28	17	19
Racketeering	57	59	46	52
Terrorism and terrorist financing	0	0	0	0
Trafficking in human beings and migrant smuggling	335	375	333	n.v.
Sexual exploitation and sexual exploitation of children	55	38	24	43
Illicit trafficking in narcotic drugs and psychotropic substances	5703	6127	5794	5435
Illicit arms trafficking	256	307	329	346
Illicit trafficking in stolen and other goods	391	409	389	437
Corruption and bribery	49	2	7	3
Fraud	3189	3261	3139	2981
Counterfeiting currency	102	113	63	94
Counterfeiting and piracy of products	9	7	15	5
Environmental crimes	11	9	7	7
Completed murder	24	28	33	34
Attempted murder	12	21	15	20
Grievous bodily injury	1423	1359	1239	1284
Kidnapping, illegal restraint and hostage-taking	55	72	61	44
Robbery	619	627	680	737
Theft	9480	9316	8523	8518
Smuggling	25	22	8	n.v.
Extortion	57	49	46	52
Forgery	564	502	538	493
Piracy	0	0	0	0
Insider trading	0	0	0	1

(source: Statistics Austria)

Statistical Table 11.

Statistics on persons under investigation for the designated categories of offenses referred to by the Glossary (2006)

Statistical Table 11.

Statistics on persons under investigation for the designated categories of offenses referred to by the Glossary (2006)

Designated Offenses	Section (StGB)	Number of Persons under Investigation
Participation in organized criminal group	§§ 278, 278a StGB	351
Racketeering	§§ 144, 145 StGB	345
Terrorism and terrorist financing	§§ 278b, c, d StGB	0
Trafficking in human beings and migrant smuggling	§§ 104a StGB, § 116 FPG bzw. §§ 104, 105 FremdenG 1997	10
Sexual exploitation and sexual exploitation of children	§§ 214, 215a, 216, 217 StGB	256
Illicit trafficking in narcotic drugs and psychotropic substances	§§ 27, 28, 30 - 32 SMG	23,444
Illicit arms trafficking	§ 50 WaffenG, § 7 KriegsmatG, § 177a StGB	1,088
Illicit trafficking in stolen and other goods	§ 164 StGB, § 37 FinStrG	1,321
Corruption and bribery	§§ 168c, d StGB, § 304 - 308 StGB	n.a
Fraud	§§ 146 - 148 StGB	18,583
Counterfeiting currency	§§ 233 - 236 StGB	375
Counterfeiting and piracy of products	§ 42 GebrauchsmusterG, § 22 HalbleiterschutzG, §§ 60, 68h MarkenschutzG, § 35 MusterschutzG, § 25 SortenschutzG	n.a
Environmental crimes	§§ 180, 181, 181b, 181c, 181d, 182, 183 StGB	143
Completed murder	§ 75 StGB	58
Attempted murder	§§ 15, 75 StGB	88
Grievous bodily injury	§§ 84, 85, 86, 87 StGB	3,269
Kidnapping, illegal restraint and hostage-taking	§§ 99, 100, 101, 102 StGB	391
Robbery	§§ 142, 143 StGB	2,346
Theft	§§ 127 - 131 StGB	46,415
Smuggling	§ 35 FinStrG	n.a.
Extortion	§ 144, 145 StGB	345
Forgery	§§ 223, 225, 225a, 237, 238, 241a, 293, 311 StGB	6,165
Piracy	§§ 185, 186 StGB	n.a
Insider trading	§ 48b BörseG	n.a

View Table

Statistical Table 11.

Statistics on persons under investigation for the designated categories of offenses referred to by the Glossary (2006)

Designated Offenses	Section (StGB)	Number of Persons under Investigation
Participation in organized criminal group	§§ 278, 278a StGB	351
Racketeering	§§ 144, 145 StGB	345
Terrorism and terrorist financing	§§ 278b, c, d StGB	0
Trafficking in human beings and migrant smuggling	§§ 104a StGB, § 116 FPG bzw. §§ 104, 105 FremdenG 1997	10
Sexual exploitation and sexual exploitation of children	§§ 214, 215a, 216, 217 StGB	256
Illicit trafficking in narcotic drugs and psychotropic substances	§§ 27, 28, 30 - 32 SMG	23,444
Illicit arms trafficking	§ 50 WaffenG, § 7 KriegsmatG, § 177a StGB	1,088
Illicit trafficking in stolen and other goods	§ 164 StGB, § 37 FinStrG	1,321
Corruption and bribery	§§ 168c, d StGB, § 304 - 308 StGB	n.a
Fraud	§§ 146 - 148 StGB	18,583
Counterfeiting currency	§§ 233 - 236 StGB	375
Counterfeiting and piracy of products	§ 42 GebrauchsmusterG, § 22 HalbleiterschutzG, §§ 60, 68h MarkenschutzG, § 35 MusterschutzG, § 25 SortenschutzG	n.a
Environmental crimes	§§ 180, 181, 181b, 181c, 181d, 182, 183 StGB	143
Completed murder	§ 75 StGB	58
Attempted murder	§§ 15, 75 StGB	88
Grievous bodily injury	§§ 84, 85, 86, 87 StGB	3,269
Kidnapping, illegal restraint and hostage-taking	§§ 99, 100, 101, 102 StGB	391
Robbery	§§ 142, 143 StGB	2,346
Theft	§§ 127 - 131 StGB	46,415
Smuggling	§ 35 FinStrG	n.a.
Extortion	§ 144, 145 StGB	345
Forgery	§§ 223, 225, 225a, 237, 238, 241a, 293, 311 StGB	6,165
Piracy	§§ 185, 186 StGB	n.a
Insider trading	§ 48b BörseG	n.a

169. The authorities further indicated that the low figures can be explained by the lack of criminalization of self-laundering in Austria and by the fact that the prosecutors prefer to indict the ML activities under “participation”, because by doing so, they can apply the higher penalty provided in the case of participation in the predicate offense and, in practice, it is easier to prove participation in the predicate offense than the ML activity as a stand-alone crime.

170. However the assessors are of the view that criminalizing basic ML as a misdemeanor (therefore perceived as a low-danger offense) and the difficulties encountered by the prosecutors in proving the predicate offense have a significant influence in the low number of convictions.

171. In addition, penalties provided for these convictions were extremely low, (according to the official statistics for 2004-2007, which, as explained above, are compiled for the case where ML was convicted with the higher terms). The most severe penalty imposed was imprisonment for 1 to 3 years, in a case judged in 2006.

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Statistical Table 12.

ML Convictions 2004-2007 Conditional, Unconditional and Partly Unconditional Fines

Statistical Table 12.

ML Convictions 2004-2007 Conditional, Unconditional and Partly Unconditional Fines

	Conditional Sentences					Unconditional Sentences
	2004	2005	2006	2007		2004	2005	2006	2007
Imprisonment up to 1 Month	0	0	0	1		0	0	0	0
Imprisonment 1 to 3 Months	2	1	1	1		0	0	0	0
Imprisonment 3 to 6 Months	1	0	0	3		0	0	1	0
Imprisonment 6 to 12 Months	0	0	0	5		0	1	0	0
Imprisonment 1 to 3 Years	0	0	0	0		0	0	1	0
Imprisonment 3 to 5 Years	0	0	0	0		0	0	0	0
Imprisonment over 5 Years	0	0	0	0		0	0	0	0
Fine 60 to 120 Daily Rates	0	0	0	1		0	0	0	0

View Table

Statistical Table 12.

ML Convictions 2004-2007 Conditional, Unconditional and Partly Unconditional Fines

	Conditional Sentences					Unconditional Sentences
	2004	2005	2006	2007		2004	2005	2006	2007
Imprisonment up to 1 Month	0	0	0	1		0	0	0	0
Imprisonment 1 to 3 Months	2	1	1	1		0	0	0	0
Imprisonment 3 to 6 Months	1	0	0	3		0	0	1	0
Imprisonment 6 to 12 Months	0	0	0	5		0	1	0	0
Imprisonment 1 to 3 Years	0	0	0	0		0	0	1	0
Imprisonment 3 to 5 Years	0	0	0	0		0	0	0	0
Imprisonment over 5 Years	0	0	0	0		0	0	0	0
Fine 60 to 120 Daily Rates	0	0	0	1		0	0	0	0

Statistical Table 13.

ML Convictions 2004-2007 Sentences for Imprisonment

Statistical Table 13.

ML Convictions 2004-2007 Sentences for Imprisonment

	2004	2005	2006	2007
Section 12 Juvenile Court Act (JGG)	1	0	0	0
Partly Unconditional Imprisonment	1	1	0	3

View Table

Statistical Table 13.

ML Convictions 2004-2007 Sentences for Imprisonment

	2004	2005	2006	2007
Section 12 Juvenile Court Act (JGG)	1	0	0	0
Partly Unconditional Imprisonment	1	1	0	3

Recommendation 1

Recommendation 2

Legal Framework

173. The financing of terrorism (FT) was criminalized in Austrian law by Article 278d of the StGB in 2002 on the basis of the International Convention for the Suppression of the Financing of Terrorism (ICSFT).

Criminalization of Financing of Terrorism (c. II.1)

174. Article 278d of the StGB (“Financing of terrorism”) states the following:

“(1) A person who provides for assets or collects them with the intent that they are used for the commitment:

1. of a hijacking (Article 185) or an intentional danger to the safety of aviation (Article 186);

2. of an extortionate kidnapping (Article 102), or the threat with it;

3. of an attack on life and limb or the freedom of a person protected by international law or a violent attack on an apartment, the official premises or the means of transportation of such a person which is appropriate to expose this person to a danger to life and limb or freedom or a threat with it;

4. of an intentional endangering by nuclear energy or ionized radiation (Article 171) or a threat with it, of a unlawful use of nuclear materials or radioactive substances (Section 177b), of any other criminal offense to obtain nuclear materials or radioactive substances or of the threat to commit a theft or robbery of nuclear materials or radioactive substances aiming to force another person to an action, permission or omission;

5. of a considerable attack on life and limb of another person on an airport serving the international civil aviation, of an destruction or considerable damaging of such an airport or a civil aircraft being on it or an interruption of the services on the airport, so far as the offense is committed by the use of a weapon or other device and is appropriate to endanger the security of the airport;

6. of a criminal offense committed in a way mentioned in Arts. 185 or 186 against a vessel or a fixed platform, against a person being on board of a vessel or a fixed platform or against the cargo loaded on a ship or an equipment of the ship;

7. of the transportation of a blasting composition or another deadly device in a public place, to a governmental or public institution or a public traffic system or services of supply or of the operation of these means aiming to cause the death or a grievous bodily injury of another person or the destruction of the place, institution or system to a high degree, as far as the destruction is appropriate to bring about a considerable economic damage;

8. of a criminal offense which shall effect the death or a grievous bodily injury of a civil person or another person not being actively involved in the hostilities of an armed conflict if this act is aimed by the reason of its nature and the circumstances at threatening a group of the population or forcing a government or an international organization to an action or omission; is to be sentenced to imprisonment from six months to five years. But the nature and extent of the sentence must not be severer than the penalty provided for the financed offense.

(2) The offender shall not be punished under paragraph 1 if the offense is subject to a severer penalty under another provision.”

175. This provision, largely in line with Article 2 of the 1999 ICSFT, criminalizes the provision or collection of assets with the intent that such assets be used for committing one of the listed offenses, including hijacking, kidnapping for ransom, offenses against internationally protected persons, offenses involving misuse of nuclear material, offenses against airport staff or material, offenses against the safety of navigation, terrorist bombing or any other terrorist offense against civilians in armed conflicts. The offenses listed by Article 278d mirror the offenses which fall within the scope of the nine international treaties appearing in the annex to the ICSFT and the language of Article 2, Paragraph 1 (b) of the ICSFT and thus fully cover the FT offense defined under its Article 2, Paragraph 1.

176. The StGB has also a separate provision (Article 278c) which criminalizes the commission of terrorist criminal offenses.¹⁴ These acts are series of offenses set forth by the StGB or by special laws and coincide to a certain degree with the list of offenses referred to by the FT provision; when they amount to acts of terrorism, the maximum punishment which is set forth for the offenses by the specific provisions of the StGB is increased by half, but it cannot exceed 20 years of imprisonment.

177. As previously noted, the FT offense of Article 278d technically refers to the offenses set forth by Article 2, paragraph 1 of the ICSFT rather than to those listed in the StGB (Article 278c). This distinction is relevant for the following reason: Article 278c, paragraph 3 introduces an exclusion of criminality for the offenses considered as terrorist acts listed in Paragraph 1, because it states that “the offense is not regarded as terrorist criminal offense if it is directed to the establishment or re-establishment of a democratic and constitutional situation or the exercise or observance of human rights.” In this case, the offenses are not considered “terrorist criminal offenses” under Article 278c and are punished according to the penalties set forth by the specific provisions of the StGB. This exclusion of criminality, which was criticized by the UN Sanction Committee, although not technically applicable to the case of FT (because Article 278d does not cross refer to 278c), has some cascading effects on other elements of SR.II, discussed below.

178. Article 278d does not explicitly indicate whether the indirect provision/collection also constitutes FT, but the authorities clarified that this case would nevertheless trigger criminal responsibility under Article 278d. They quoted a case, currently pending at the stage of pre-trial, which involved the indirect collection of money through an organization which was then providing the funds collected to another organization situated in a conflict zone.

179. The prosecutors and judges met by the assessors also confirmed that the offense does not require that the funds be linked to a specific terrorist act, nor that a terrorist act is committed or even attempted; being sufficient the provision or collection of the funds or other assets with the intent they are intended to be used or they will be used for the commission of a terrorist act.

180. The term “assets of property” includes any funds in the term defined by the ICSFT, including funds from a legitimate or illegitimate source.

181. Attempt (including “participation in an attempt”) is criminalized for all offenses, including FT, in Article 15 of the StGB. The types of conduct set out in Article 2, paragraph 5 of the ICSFT -participation as an accomplice, organization and direction of others, contribution to the commission of the offense by a group of persons acting with a common purpose- are covered by Article 12 (“Treatment of all participants as offenders”) and 278b of the StGB (“Terrorist Association”) -though not in all instances. Article 12 covers participation as an accomplice, as it states that “a criminal offense is committed not only by the immediate perpetrator that commits the criminal offense but also by anybody who abets another person or who contributes to its perpetration in any other way.”

182. Organization and direction of others (in regard to the commission of terrorist acts) trigger criminal responsibility for “terrorist group” and in particular for “leading a terrorist association” (Article 278b, paragraph 1). A “terrorist group” is defined as a “union planned for a longer time of more than two persons aiming at the commitment of one or more terrorist criminal offenses—listed by Article 278c—by one or more members of the group. However, the scope of this provision is limited by the exclusion of criminality contained in paragraph 3 of Article 278c, in the sense that if the union is planned for the commission of acts listed in 278c but for the purpose of the establishment or re-establishment of a democratic and constitutional situation or the exercise or observance of human rights”, it will not qualify as a “terrorist group.”

183. More complicated is to envisage criminal responsibility for organization and direction of others, as well as contribution to the criminal activities committed by a group of persons acting with a common purpose when the organization and direction of others or the contribution are only in regard to FT (and not to the commission of terrorist acts). It appears that a group established for the sole purpose of FT is not subject to the criminal responsibility set forth in the case of a “terrorist group” under Article 278b, because of the reference to the acts indicated by Article 278c (which do not include Article 278d) as a qualifying element for the constitution of the offense. Nor can such criminal responsibility always be envisaged by applying Article 278 (Criminal association because when FT is a misdemeanor (i.e., when the act of FT is not punished with more than three years of imprisonment), it is not included in the list of misdemeanors which constitute one of the material elements of the criminal association.

184. The offense of FT as defined by Article 278d of the StGB adequately covers the material elements set out in Article 2, paragraphs 1, a and b and paragraph 5, a of the ICSFT, but it does not cover in all instances the direction and organization of others and the contribution to a group of persons acting with a common purpose (as required by Article 2, paragraphs 5, b and c, when organization/direction is solely for FT and when the group of persons has only FT as a common purpose).

185. The offense of FT is also not entirely consistent with SR.II. in the sense that it does not fully cover the financing of terrorist organizations and the financing of the individual terrorist regardless of whether that financing is for criminal activities, legal activities or general support. The provision/collection of funds for a terrorist organization or for the individual terrorist would not amount to a criminal offense unless it can be established that the perpetrator knew (also by the broader standard of the dolus eventualis, which is applicable in the case of FT, as discussed later) that the funds are intended to be used or will be used for the commission of a terrorist act as defined by Article 278d.

186. In the case of financing of a terrorist association, the authorities are of the opinion that Article 278b, paragraph 2, in combination with Article 278, paragraph 3, provides ground for the criminalization of financing the terrorist organization per se, regardless of whether that financing is for committing terrorist acts, criminal activities, legal activities or general support. Article 278b, paragraph 2 criminalizes the participation in the terrorist association as a member, and for the definition of “member” it refers to Article 278, paragraph 2. Indeed this provision criminalizes in broad terms as “member participation in a criminal association” whoever participates in the association’s activities “by providing assets or in another way with the knowledge that he/she promotes thereby the association or its criminal acts.” The authorities maintain that the mere provision of funds or other assets with the aim of promoting the association or its acts would be sufficient to constitute the offense of “participation as a member” in the association, and to apply the relevant punishment. They state that, mutatis mutandis, this can also be applied to the provision/collection of funds for a terrorist association, even in the case of a single act of provision/collection. However, the exception of criminality set forth in paragraph 3 of Article 278c would constitute an impediment to pursue the financing of a terrorist association (or the individual terrorist) in the sense indicated by the authorities (participation as a member), because if the acts are committed for one of the purposes indicated in these provisions, they are not deemed as terrorist acts and, consequentially, an association established for these purposes would not be considered a terrorist association.

187. The financing of the individual terrorist regardless of whether that financing is for committing terrorist acts, criminal activities, legal activities or general support can only trigger criminal responsibility if it can be proved that the financier was at least aware that the funds were meant to be used or intended to be used for the commission of a terrorist act (including if the knowledge is in the form of dolus eventualis: the authorities indicated the example in which the financier accepted the possibility that the person could be part of a dormant terrorist cell, in which case this would suffice to trigger the criminal responsibility for FT).

Predicate Offense for Money Laundering (c. II.2)

188. The FT is a predicate offense to ML, as Article 165 of the StGB (“Money Laundering”) explicitly cross-references to Article 278d (“Financing of Terrorism”).

Jurisdiction for Terrorist Financing Offense (c. II.3)

189. FT offenses apply regardless of whether the person alleged to have committed the offense(s) is in the same country or a different country than the one in which the terrorist(s)/terrorist organization(s) is located or the terrorist act(s) occurred/will occur. As mentioned earlier, a case which is currently in a pre-trial phase involves the collection and provision of funds through an organization in a third country that is experiencing a conflict.

190. The FT offense applies if the provision or collection of assets takes place in Austria, irrespective of the place where the terrorist act is, or is planned to be committed. If the FT offense itself was committed abroad, according to Article 64, paragraph 1(10), Austria may have jurisdiction only if: (i) the perpetrator was Austrian at the time of the offense or he/she has gained the Austrian citizenship afterwards and is still in its possession at the time of the institution of criminal proceedings; or (ii) the perpetrator was a foreigner at the time of the offense, but is in Austria at the time of prosecution and cannot be extradited.

The Mental Element of the FT Offense (applying c. 2.2 in R.2)

191. The criterion is met.

Liability of Legal Persons (applying c. 2.3 & c. 2.4 in R.2)

192. The criterion is met.

Sanctions for FT (applying c. 2.5 in R.2)

193. The penalty that the FT offense carries is a prison term ranging from six months to five years, but the sentence imposed must not exceed the penalty provided for the financed offense and the offender will be punished to a more severe penalty if the FT is subject to a more severe penalty under another provision. The authorities explained, regarding the principle of penalty equation with the financed offense or its total consumption by a more severe penalty, that this derives from the accessory nature of the FT offense, which would normally be regarded as an act of aiding and abetting and thus would, under general criminal law principles, carry exactly the same penalty as the main offense. However this may create an issue with respect to the specificity of the financed offense (considering that, according to the international standard, there should not be a specific linkage between the financing and a specific terrorist act).

194. Legal persons can also be held criminally responsible for FT. Article 4 of the VbVG provides for a maximum fine of 100 daily rates for the offense of FT. Therefore, the maximum fine for FT for legal persons and entities is—as it is for ML—EUR 1,000,000.

195. The sanctions for natural persons appear to be too low, both in their minimum and their maximum, and therefore are not effective, nor proportionate or dissuasive.

Implementation and Effectiveness

196. The statistics available only show the number of investigations on FT cases. The authorities informed the assessors that between 2003 and 2006, 18 criminal cases related to FT were registered, but none of them led to an indictment (see breakdown below). In 16 cases, the proceedings were dismissed by the public prosecutors. In 2007, four FT cases were registered (two criminal investigation by public prosecutors and two preliminary investigations by investigative judge). Three of them have been terminated, one case is still pending. The authorities also reported that there was no conviction for FT between 2004 and 2007.

197. In 2003, four criminal cases related to FT were registered: criminal investigations were conducted by public prosecutors in three cases and a preliminary investigation was conducted by an investigative judge in the fourth. In 2004, five FT cases were registered: criminal investigations were conducted by public prosecutors in four cases and a preliminary investigation was conducted by an investigative judge in the fourth case. In 2005, three criminal investigations were led by public prosecutors. In 2006, six criminal investigations were conducted by public prosecutors and two preliminary investigations were led by investigative judges.

198. On March 12, 2008, a court sentenced a couple in Austria on the basis of charges of membership in a terrorist association (Al-Qaeda), threatening the Austrian Government, as well as attempted coercion for producing video promoting Al-Qaeda. The Supreme Court annulled the verdict on procedural grounds and remitted it to the court for re-examination.

199. The authorities deem the risk of FT in Austria low, compared with other European jurisdictions; the existence of 18 criminal investigations since 2003 show attentiveness to the risk that FT may pose.

Legal Framework

201. The Austrian criminal law provides for two possibilities to confiscate property that has been laundered or which constitutes proceeds of any ML, FT or other predicate offense: confiscation of profits (“Abschöpfung der Bereicherung”, Article 20 of the StGB) and forfeiture (“Verfall”, Article 20b of the StGB).

202. In addition, a third possibility is offered for the removal of instrumentalities used in and intended for use in the commission of any ML, FT or other predicate offense. For these, Article 26 of the StGB (confiscation, “Einziehung”) provides the confiscation of “objects which have been used or have been intended to be used to commit an offense or have been produced by this offense” if this is necessary to counteract the commitment of offenses.

203. Confiscation of profits applies to economic benefits derived from any criminal offense, whereas forfeiture to property being at the disposal of a criminal organization (Section 278a) or a terrorist group (Section 278b), or property that has been provided or collected as a means for financing of terrorism (Section 278d). In the latter case, property can be forfeited, even if it derives from an offense where Austrian jurisdiction does not apply, if the offense is punishable under the law of the State where it was committed. According to Article 65a of the StGB confiscation and forfeiture “apply to all property items in Austria.”

204. The decision of confiscation or forfeiture can be made either as part of the main criminal trial (if any) or separately (Sections 443, 445 and 445a of the StPO: in the case in which there is no conviction but sufficient grounds for an offense, the prosecutor can initiate another proceeding for confiscation or forfeiture).

Confiscation of Property related to ML, FT or other predicate offenses including property of corresponding value (c. 3.1) and Confiscation of Property Derived from Proceeds of Crime (c. 3.1.1 applying c. 3.1)

205. As mentioned above, in the Austrian criminal law “confiscation of profits” and “forfeiture” are provided in regard to property that has been laundered or which constitutes proceeds of ML, FT and other predicate offense. These measures apply to property that is derived directly or indirectly from proceeds of crime, including income, profits or other benefits from proceeds of crime, regardless of whether the property is held or owned by a third party. “Confiscation of profits” is value-based, so it also applies to property of corresponding value. For instrumentalities used in and intended for use in the commission of ML, FT or other predicate offense, “confiscation” will apply as set out by Article 26 of the StGB.

Confiscation of Profits (Article 20 of the StGB)

206. Confiscation of profits applies to a person who has committed an offense (including misdemeanors) and has obtained economic benefit from it, or has received economic benefit for committing an offense. The language used by the provision requires an illegal act only in objective terms, as a result of which the punishability of the offender is irrelevant for the confiscation of profits. The Austrian regime of confiscation of proceeds is value-based, so the person subject to confiscation under Article 20 will be issued a court order to pay an amount of money equivalent to the illegal profits gained. If the extent of the profits cannot be established at all, or cannot be established without disproportionate expenditure, the court may fix the sum of money to be confiscated according to its conviction.

207. Furthermore, under Article 20 the court may confiscate property that cannot be directly linked to a specified offense, based on a rebuttable legal presumption that benefits a defendant holds derive from other, non-identifiable offenses. This partially reverses the burden of proof. In this case there is no need for the prosecutor to prove that the money is the proceeds of a specific offense. This applies with regard to:

208. Under Article 20, paragraph 4, the value-based confiscation regime also covers third persons that benefit illegally and directly from an offense committed by another person, or from the economic benefit given for the commission of such an offense, as such persons may also be ordered to pay an amount of money equivalent to these profits. This applies mutatis mutandis to legal persons and partnerships that have gained profits. If the person who has gained illegal profits has died, or if the legal person or partnership has ceased to exist, the profits are to be confiscated from the legal successor insofar as they were still existent at the moment of transmission of rights (paragraph 5).

Forfeiture (Article 20b of the StGB)

209. Criminal forfeiture applies in two cases, namely when:

210. The forfeiture provision at Section 20b is aimed specifically at forfeiting property at the disposal of criminal organizations or terrorist groups (defined in Articles 278a and 278b). Such forfeiture does not require prior conviction, but the existence of a “criminal organization” or of a “terrorist group” has to be established and proved. This type of forfeiture has been very rarely applied, because, as indicated by the authorities, of the difficulty to prove the elements of a “criminal organization.” According to Article 278a, “criminal organization” is defined as an “association of a considerable number of persons, intended to last a longer period of time and similar to an enterprise.” The elements that constitute this crime include (as in the case of criminal association) any activity done in relation to the organization regardless of whether or not the action in and of itself is a crime. However, in the case of “criminal organization” the several conditions set out in Article 278a must exist simultaneously in order to fulfill the elements of the crime: the criminal organization has to be designed to exist for a longer period of time (indefinitely or at least for several weeks; the case law says at least about three months); the union has to be constructed “similarly to an enterprise”, which implies division of labor (for example into planning and implementation), hierarchical structure (that some have the authority to give directives and that others have to follow directives) and a specific existing infrastructure (for example organizational capabilities). The “considerable number of persons” has been defined in case law as meaning ten persons or more.

211. Forfeiture can also be applied to property “abandoned” in Austria and derived from an extraterritorial offense over which Austria has no jurisdiction but is punishable under the law of jurisdiction where it was committed. Authorities explained that this provision also covers the case in which the property is indirectly held by the criminal organization or terrorist association (as in the case of a straw-man); the main requirement is to prove that the property (which can be any type of property) is at “the disposal” of the criminal organization/terrorist association.

Confiscation (Article 26 of StGB)

212. According to this provision, which deals with instrumentalities, “Objects which have been used or have been intended to be used by the perpetrator to commit an offense or have been produced by this offense shall be confiscated, if the confiscation seems to be required by the special condition of the objects to counteract the commitment of offenses.” This provision allows for the confiscation of instrumentalities that are “objects”, not money which is subject to confiscation under Article 20 or forfeiture if it is at the disposal of the criminal organization/terrorist group. Confiscation of instrumentalities is also possible in the absence or a conviction or if the person cannot be subject to prosecution, as explicitly stated by Article 26, paragraph 3.

213. There are several exclusions from confiscation, confiscation of profits and forfeiture:

Provisional Measures to Prevent Dealing in Property subject to Confiscation (c. 3.2)

214. Provisional measures are provided for in Articles 109-115 of the StPO. These are “Seizure” (Sicherstellung, Article 110 of the StPO) and “Sequestration” (Beschlagnahme, Article 115 of the StPO). In addition to these measures, the A-FIU has the authority to block ongoing or to postpone imminent transactions that are reasonably suspected of serving the purpose of ML or FT, under various laws.

Seizure

215. According to Article 109-110 of the StPO, seizure consists of a temporary constitution of authority to dispose on objects, the prohibition to surrender objects or other assets to third parties and the prohibition to sell or pledge such objects and values, if these objects or assets are required for evidentiary purposes, or for securing civil claims, confiscation of profits (Article 20 of the StGB), forfeiture (Article 20b of the StGB), confiscation (Article 26 of the StGB) or any other order relating to property rights provided for in the law. Seizure is ordered by the office of the public prosecution and is executed by the criminal police (Article 110, paragraph 2). In certain instances (Article 110, paragraph 3)¹⁵, the criminal police is entitled to seize objects at its own discretion, but has to report to the office of public prosecution immediately and at the latest within 14 days from the seizure (Article 113, paragraph 2).

Sequestration

216. According to Articles 109 and 115 of the StPO, sequestration consists of a decision of the court to constitute or continue a seizure order, and in the prohibition, also ordered by a court, “to alienate, encumber or pledge real estates or rights listed in a public register” (Article 109, paragraph 2b). The sequestration is admitted if the objects seized presumably are required as evidence in a subsequent proceeding, are subject to civil law claims or will be needed to ensure a judicial decision on the confiscation of proceeds of crime, on forfeiture, on confiscation, or on any other order relating to property rights provided for in the law whose execution would otherwise be endangered or made considerably more difficult. Upon request of the office of public prosecution the court has to decide “immediately” about the sequestration.

217. Since Austria’s confiscation system is value-based and the purpose of the provisional measures is to safeguard any eventual value-based confiscation order, the seizure and sequestration can apply to legal, as well as illegal, property; in the case where seizure/sequestration are ordered to secure a judicial decision on the confiscation of proceeds of crime or forfeiture, an amount of money that will cover the presumable confiscation of proceeds of crime or the presumable forfeiture will have to be determined (Article 115, paragraph 5).

218. It has to be noted that, according to Article 110, paragraphs 4 and 115, paragraph 3 the seizure and the sequestration of objects for reasons of evidence is not admitted and in any case has to be terminated if the affected person requests it, “if and as soon as the aim of the evidence can be met with picture, sound or other recordings or with copies of written documents or data processed automation-aided and if there is no reason to assume that the seized objects themselves or the original versions of the information seized will have to be inspected during the court proceeding.”

A-FIU’s Power to Stop Transactions (Preliminary Injunction “Anordnung”)

219. In addition to seizure and the sequestration, another provisional measure available in the Austrian system is the power of the A-FIU to block an ongoing or postpone the execution of an imminent transaction reasonably suspected of serving ML or FT. This power is set forth in Article 41, paragraph 3 of the BWG, Article 98f, paragraph 3 of the VAG and Articles 6 &12, paragraph 4 of the WAG (similar provisions are contained in the legal acts for the remaining financial sector and the DNFBPs). According to these provisions, financial institutions and DNFBPs are obliged to inform the authorities without delay about transactions suspected of ML/FT. In such cases, the further execution of the transaction has to be stopped unless there is a risk that a delay in the transaction would complicate or obstruct investigations (Article 41, paragraph 1 of the BWG, Article 98f, paragraph 1 of the VAG, Articles 6 and 12, paragraph 4 of the WAG). The transaction can only be executed at the end of the following business day, unless otherwise instructed by the A-FIU.

220. If the A-FIU deems it appropriate, it can order the financial institution/DNFBPs not to execute the transaction. In this case, the A-FIU has to notify the client and the prosecutor forthwith upon taking such a measure. The notification of the client must contain the information that he/she, or any other thereby affected individual/entity, is entitled to file a complaint with the Independent Administrative Court for violation of his/her rights. The A-FIU will have to lift the order as soon as the reasons for blocking or postponing the transaction no longer exist, or when the prosecutor rules that the preconditions for confiscation, as defined in Article 109, no. 2 and 115, paragraph 1, no. 3 of the StPO no longer exist (these are the conditions for applying sequestration). Otherwise such a blocking or postponing order taken by the A-FIU expires 6 months after being issued or when a court imposes sequestration pursuant to Article 109, no. 2, and 115, paragraph 1, no. 3, of the StPO (Article 41, paragraph 3a of the BWG, Article 98f, paragraph 4 of the VAG and Articles 6 and 12, paragraph 4 of the WAG; see also Chapter 3.6, crit. 13.1).

Ex Parte Application for Provisional Measures (c. 3.3)

221. Seizure and Sequestration are applied ex-parte, with an order by the office of the public prosecution or by the criminal police in the circumstances set out in Article 110, paragraph 3, in the case of seizure. Sequestration has to be requested to the court by the office of the public prosecution “immediately.” No prior notice is required.

Identification and Tracing of Property subject to Confiscation (c. 3.4)

222. It should be noted that Austrian criminal procedural law is based on the principle of legality, which makes it mandatory for law enforcement agencies to start an investigation if there is suspicion that a criminal offense has been committed (Article 34, paragraph 1, Article 36 and 99-100 of the StPO). This principle also applies to the identification and tracing of property that is subject to confiscation or suspected of being the proceeds of crime or used for FT. In such cases, the criminal police may take the necessary provisional measures (seizure) in order to secure the property, and prosecutors may make applications to the court for sequestration.

223. Credit and domestic financial institutions according to Article 1, paragraph 2 of the BWG (as well as DNFBPs) are required, upon request, to provide the A-FIU “with all information which the authority (that is the A-FIU) deems necessary in order to prevent or pursue cases of ML or FT” (e.g., Article 41, paragraph 2 of the BWG). In such case the A-FIU can request the information without the need of a court order.

224. However, this does not apply to other law enforcement agencies investigating ML or FT, or in those situations where the financial institution or DNFBP has refused to comply with the A-FIU’s request and the A-FIU must seek an order to compel the production of, or search persons and premises for, the documents. Up to now there was only one case known regarding the refusal of answering a request by the A-FIU, which was deferred by the reporting entity to the Independent Administrative Tribunal (Unabhängiger Verwaltungssenat, UVS). The UVS decided that the request by the BKA was legal and the information was subsequently transmitted to the BKA.

225. Specific provisions exist to empower the police and the A-FIU to access to information on bank accounts and bank operations. In such cases, for financial institutions, Article 116 of the StPO on “information on bank accounts and bank operations” will apply.

226. This provision requires that the disclosure of information on bank accounts and bank operation is admitted “if it seems necessary to ascertain a criminal offense or a misdemeanor under the jurisdiction of the regional courts (that includes ML) and sets the principle of “judicial admission” for access to the information” (including for the search of the credit and domestic financial institutions according to Article 1, paragraph 2 of the BWG). This means that the office of the public prosecution must demand a court order and admission of the disclosure (or search).

227. The fact that in the above mentioned instances a court order is required to request (for law enforcement agencies) or to access/compel the information (for law enforcement agencies and the A-FIU) would not be an issue per se, except that the conditions for admitting the order are quite restrictive. The prosecutor must show on the basis of specific circumstances that the business relation of a person with the credit or financial institution is actually “connected to committing a criminal act” and that “either the holder of the account himself/herself is suspected of having committed the act or it is presumed that a person suspected of having committed the act will operate or has operated a transaction via the account”, or that “the business relation will be used for the transaction of a financial benefit that was gained through criminal acts or gained for them (Article 20 StGB) or is subject to the disposition of a criminal organization or terrorist group or is provided or collected as a means of financing terrorism (Article 20b StGB).

228. According to paragraph 4 of Article 116, the order and admission of the disclosure of information have to contain:

229. Specifically, the court has to consider the issue of proportionality, that is, whether the disclosure and expected results are justifiably proportionate to the presumed infringement upon the rights of disinterested third parties and whether there could be also a reasonable chance of achieving the same result by taking less intrusive measures.

230. In the case of DNFBPs protected by professional privilege (lawyers and notaries) the conditions set forth in Article 9(4) RAO and 37(4) NO), discussed under the DNFBPs section, will apply. The very broad notion of “legal advice” (also discussed in that section) may substantially limit the right of law enforcement agencies to obtain information.

Protection of Bona Fide Third Parties (c. 3.5)

231. Specific provisions exist for the protection of bona fide third parties and, in any event, the State is ultimately responsible under the Public Liability Act for any decision taken by public authorities that violates private individuals’ rights. Articles 20c and 26 of the StPO provide for abstention from forfeiture and confiscation if the property concerned is legitimately claimed by a person who has not participated in the offense or in the criminal organization or in the terrorist association (Article 20c) or for “objects” which are legitimately claimed by a person who has not participated in the offense, in which case they will only be confiscated if “the person concerned does not guarantee that the objects will not be used to commit the offense” (Article 26, paragraph 2). In the case of the A-FIU’s power to freeze a transaction, the customer or “another party concerned” has the right to file a complaint with the Independent Administrative Tribunal or a complaint under Article 67 of the AVG.

Power to Void Actions (c. 3.6)

232. Adequate provisions exist also for voiding contracts that aim to frustrate claims resulting from the operation of AML/CFT laws.

233. Concerning the possibility of voiding contracts that aim to frustrate seizure, confiscation or forfeiture orders, the authorities pointed to Article 879 of the Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB), which states as a general rule that contracts which violate existing (statutory) laws or which are contra bonos mores are null and void. This applies, for example, if the conclusion of the contract itself constitutes a criminal offense or if the contract was concluded with the intention to hinder the State’s ability to recover legitimate financial claims. In addition to and irrespective of any such nullity, any act (like the conclusion of contracts or the transfer of assets) of a debtor that prevents any of his/her creditors from satisfying their legitimate claims may be contested under insolvency law and creditor’s avoidance of transfers law.

Additional Elements (Rec 3)—Provision for a) Confiscation of assets from organizations principally criminal in nature; b) Civil forfeiture; and, c) Confiscation of Property which Reverses Burden of Proof (c. 3.7)

234. The Austrian confiscation regime does not authorize civil (in rem) forfeiture, but provides for the forfeiture of property belonging to organizations that are found to be primarily criminal in nature (Article 20b of the StGB, in regard to property that is at the disposal of a criminal organization or a terrorist association).

235. Confiscation of such “membership benefits”—in principle—does not require a prior conviction for membership in a criminal organization or terrorist group, and the confiscation procedure is based on the partial reversal of the burden of proof in that the person subject to it has to show that the alleged benefits did not derive from his/her membership in a criminal organization or terrorist group. Legally, this provision operates on the basis of a legal presumption that any property within the possession of a person convicted to belong to a criminal organization or terrorist group does originate from such membership, but he/she can rebut it by making plausible to the court that his/her property came from a legitimate source.

Effectiveness

236. While the legal framework for the confiscation regime is robust in that it provides for a wide range of confiscation, seizure and provisional measures with regard to property laundered, proceeds from and instrumentalities used in and intended for use in ML and FT or other predicate offenses, and property of corresponding value, issues can be raised about its effectiveness.

237. Some of these issues stem from the restrictive conditions envisaged in certain instances, such as in the case of forfeiture of property at the disposal of the criminal organizations (for the difficulties to prove all elements constituting a criminal organization) or for the conditions for law enforcement to have access to information from financial institutions/DNFBPs (with the exception of A-FIU when investigating ML) or to compel documents held by these institutions. A particular concern is that, in practice, it seems that forfeiture of property at the disposal of the criminal organization or the terrorist group has not yet been applied (no specific figures were provided by the authorities in regard to this measure).

238. Although neither confiscation of profits or instrumentalities nor forfeiture require a criminal conviction, the authorities indicated that confiscation without conviction is rare in practice.

239. It is difficult also to ascertain the value of property which was subject to final confiscation in the statistics provided by the authorities (for the period 2004-2006), as the amounts indicated include also property subject provisional measures (which are not final measures). But even looking at these overall figures (which may be lower in reality if referred to confiscation only), there is a considerable gap when these amounts are compared to the statistics provided in regard to the interim injunctions applied by the A-FIU.

240. The following table shows the number of cases and the amount of property seized according to the former provision of Article 144a of the StPO (which provided for provisional measures), confiscated or forfeited according to Section 20 and Article 20b of the StGB during the time period 2003-2006 (no statistics are available for 2007).

Statistical Table 14.

ML Offenses

(Article 165 StGB)

Statistical Table 14.

ML Offenses

(Article 165 StGB)

	2003	2004	2005	2006
Number of cases	3	4	0	1
Number of court orders (seizu re/confiscation)	3 (Article 144a StPO)	5 (Article 144a StPO)	0	1 (Article 144a StPO)
Amounts of property seized/confiscated	EUR 554.212,61 + USD 110.000	EUR 15.334.347	0	EUR 3.955.000

View Table

Statistical Table 14.

ML Offenses

(Article 165 StGB)

	2003	2004	2005	2006
Number of cases	3	4	0	1
Number of court orders (seizu re/confiscation)	3 (Article 144a StPO)	5 (Article 144a StPO)	0	1 (Article 144a StPO)
Amounts of property seized/confiscated	EUR 554.212,61 + USD 110.000	EUR 15.334.347	0	EUR 3.955.000

Statistical Table 15.

Interim injunctions by court order applied for by the A-FIU

Statistical Table 15.

Interim injunctions by court order applied for by the A-FIU

		2004	2005	2006	2007
Injunctions (number)		23	15	21	28
Amounts involved	Accounts Deposits	27.9	99.2	28	113.9
(EUR million)	Cash			0.2

View Table

Statistical Table 15.

Interim injunctions by court order applied for by the A-FIU

		2004	2005	2006	2007
Injunctions (number)		23	15	21	28
Amounts involved	Accounts Deposits	27.9	99.2	28	113.9
(EUR million)	Cash			0.2

Freezing Assets under S/Res/1267 (c. III.1) and Freezing Assets under S/Res/1373 (c. III.2)

251. Austria’s framework for implementation of the financing of terrorism aspects of UNSCR 1267 and subsequent resolutions on the sanctions regime against Al-Qaeda/Taliban is through EC Regulation 881/2002. The implementation of UNSCR 1373 is through EC Regulation 2580/2001. These regulations are applicable in the case of EU externals only. For EU internals, the authorities consider that implementation of the relevant UNSCRs is through Official Announcement issued by the OeNB, pursuant to the Exchange of Control Act.

252. According to general European law principles, EU regulations are directly applicable in European national systems (EU member countries, as Austria), without the need of transposing these regulations into domestic legislation. As such, EC regulations 881/2001 and 2580/2001 serve as statutory law in Austria.

253. Under EC regulation 881/2001, all funds other financial assets and economic resources belonging to, or owned or held by a natural or legal person, group or entity designated by the Sanctions Committee and listed in the annex of the regulation shall be frozen. Annex I is regularly and promptly updated by the Commission every time a change is made to the UN list by the Sanctions Committee.¹⁷

254. The United Nations Security Council has indicated that the freezing orders be made within three working days after the date on which the UN determination has been made. A specific, accelerated procedure is followed to that end in the EU, which begins as soon as the European Commission is informed of a new determination and results in the publication of Regulations approved by the European Commission, which enter into force, with direct applicability across the EU, on the day of their publication. The European Commission does not give prior notice to the individuals and entities it designates, as this would undermine the effectiveness of the asset freezing. This has been upheld by the EU’s Court of First Instance.

255. Regulation EC no. 2580/2001 (based on Common Positions 2001/930/CFSP and 2001/931/CFSP) established a freezing mechanism applicable against a designated list of persons/entities that are non EU-based entities or non EU residents or citizens (“EU externals”). Article 2 of this regulation contains the obligation to freeze funds, other financial assets and economic resources belonging to, or owned or held by, a natural or legal person, group or entity that is designated and listed (EU-externals), as well as the prohibition of making available to these persons/entities any funds, other financial assets and economic resources.

256. The list of persons, groups and entities to which this Regulation applies is established, reviewed and amended by decision of the Council, acting by unanimity. When determining if a person, group or entity should be targeted by freezing measures, the Council has to follow certain criteria stipulated in Articles 1(4), (5) and (6) of Common Position 2001/931/CFSP (Article 2). The Council decision is replaced every time the Council amends it. The current list of targeted persons can be found in Council Decision 2007/868/EC. The Council does not give prior notice to the persons it designates, as this would undermine the effectiveness of the asset freezing.

257. Financial institutions, other relevant institutions and authorities are required to directly implement Regulations 881/2001 and 2580/2001 by freezing the assets without delay of the designated persons and entities without prior notice. Upon freezing, financial institutions and others must notify the OeNB that they have frozen funds. In accordance with the EU regulations, OeNB is then to report this information to the Commission.

258. While the definition of “funds or other assets” contained in the EC Regulations is consistent with the same notion in SR.III, the direct applicability in Austria of these EU regulations presents some difficulties in regard to the freezing of other assets than funds held by financial institutions, such as real estate, businesses or undertakings, companies and vehicles. For these assets, in the Austrian legal framework, the freezing is practically applicable (and only to a limited extent) principally to the case of transactions that require registration (such in the case of immovable property, where the MoJ has issued instructions to the courts that maintain registers of immovable goods not to register transactions for goods that belong to listed individuals or companies). Therefore, the freezing measures as practically applicable in the Austrian framework are not in line with the broad terms envisaged by the interpretative note of SR.III, that define freeze as “prohibit the transfer, conversion, disposition or movement of funds or other assets on the basis of, and for the duration of the validity of, an action initiated by a competent authority or a court under a freezing mechanism.” Moreover these freezing mechanisms do not allow a freezing “without delay” (in the sense required by SRIII).

259. The situation is particularly problematic for assets other than funds, as these assets may remain in the disposition of the listed persons, unless the act of disposition requires a transaction or contract that is subject to registration (and in Austria, in practice, this only applies to immovable goods, where specific MoJ decisions exist). In the case of immovable goods (such as real estate) the assessors were told that these goods are frozen only to the extent that any contract constituting rights on these assets which is subject to court registration will not be granted such registration (registration is a condition to transfer the right of property over an immovable good; the MoJ has issued specific instructions to the courts in this regard). For any other right that is not subject to court registration (such as a lease, for example), the authorities maintain that the contract will be considered null and void under Article 879 of the AGBG.

260. It has to be noted that in an Austrian court case concerning an immovable good owned by a person listed under EC Regulation 881/2002, the court established there is no obligation for the courts that maintain registers of immovable property to annotate on the register that the immovable good is subject to freezing under the relevant EU regulations. In the absence of an obligation to annotate the freezing (as it would be the case for provisional measures or for confiscation), the information on a good subject to freezing is seriously hindered.

261. Although, as in the case of immovable goods, the freezing would technically stem from the direct applicability of the EC Regulations it is not clear how the freezing obligation is implemented in practice in the case of other economic resources, such as companies or businesses and undertakings or vehicles held by listed persons. With regard to companies, the authorities indicated that when the sale of shares is subject to registration in the register of companies (as in the case of limited liability companies, for example) the register could deny such registration, by analogy with the registration of immovable goods in the relevant register. However, there is no case law or authority-issued instructions to confirm that this would be possible/required.

262. In regard to the implementation of UNSCR 1373 concerning persons, groups and entities based or residents within the European Union (EU-internals) which meet the criteria set forth by Article 1, c of the Resolution, these are excluded from the directly applicable requirements for the freezing of assets envisaged by the EC Regulation 2580, as noted earlier. These persons are listed in an Annex to the Common Position 2001/931/CFSP, which does not set directly applicable requirements in a EU country. This Common Position only requires EC countries to subject these persons to increased police and judicial cooperation between the Member States. Common Position 2001/930/CFSP, which also does not set directly applicable requirements in a EU country, requires EC countries to adopt freezing measures for funds and other financial assets or economic resources related to EU internals.

263. The authorities consider that the legal mechanism to address freezing obligations in the case of EU internals for the implementation of UNSCR 1373 in Austria is via Official Announcements of the OeNB setting regulations which can be issued pursuant to Article 3 of the DevG, in order to restrict capital movements under certain conditions, such as for complying with international legal obligations or for the protection of the legal interests of Austria.

264. The last regulation¹⁸ was adopted by the OeNB on 25 September 2008 in order to incorporate Common Position 2007/871/CFSP into domestic law.

265. However, these regulations do not constitute freezing mechanisms in the terms required by UNSCR 1373 and SR.III. as their scope is more limited. The requirements envisaged by the OeNB regulations are only applicable to the list of transactions described by Article 4 of the DevG these are transactions undertaken by or affecting rights of non residents, or involving foreign property owned by a resident or otherwise involving foreign means of payments, foreign currency or foreign securities.

266. While the banks met by the assessors were aware of the limitations set forth by the DevG for non-resident transactions they seemed not aware that the purpose of these provisions was the “freezing” terrorists’ assets. The nonbanking financial institutions met by the assessors seemed unaware of the existence of such “freezing” obligations.

Freezing Actions Taken by Other Countries (c. III.3)

267. For the lists of persons and entities designated for freezing purposes through the EU regulations, Austria can freeze funds in accordance with UNSCRs 1267 and 1373 directly through the EU regulation mechanisms (with the limits described in the case of other assets than funds). For EU internals covered and designated by Common Position 2001/931 but not Regulation 2580/2001) Austria relies (with the limitations described earlier) on the Official Announcements issued by the OeNB.

268. For persons and entities who do not appear on any EU list, but for which Austria receives a direct freezing request from other jurisdictions, as well as circumstances where a freeze is necessary because of other information that indicates a possibility of financing of terrorism (e.g., information received through a STR), Austria has a judicial-based mechanism for seizure and confiscation of terrorist funds and, in addition, the power of the A-FIU to block an ongoing or postpone the execution of an imminent transaction reasonably suspected of serving ML or FT. Austria can also use, under the conditions and for the cases set forth in the DevG (described below) the freezing mechanisms envisaged by such law.

269. With respect to the obligation to act without delay, Austrian law provides for such actions to take place in exigent circumstances without a court order (in the case of seizure, which can be applied in first instance by the prosecutor or by the police). The authorities indicated that usually a request from a foreign authority to freeze assets, either with the mutual legal assistance channels or through the A-FIU can be taken swiftly (precedents were pointed out to the assessors). A 24-hour hot-line is established within the MoI for the adoption of urgent measures. However, since these are criminal procedure-related freezing, the prosecutor will need to have some evidence to substantiate the suspicions in order to maintain the assets frozen with a sequestration order by court. As noted earlier, confiscation or forfeiture is possible in principle without a conviction, but court-admissible evidence should be given to prove that property is at the disposal of a terrorist group or which has been provided or collected as a means of financing terrorism; also the court will have to establish a “terrorist group” offense, according to Article 278b (with the limitations illustrated in the case of the exemption provided by Article 278c, paragraph 3).

Extension of c. III.1-III.3 to funds or assets controlled by designated persons (c. III.4)

270. As previously mentioned, the assets subject to freezing are defined in very broad terms by the EU Regulations (for they include funds, other financial assets and economic resources); these assets are those “belonging to, or owned or held by” the designated persons/entities, “however acquired.” The language covers funds or other assets that are either directly or indirectly owned or controlled. While the EU Regulations are not explicit on the point of joint ownership, (rather implicitly recognizing that joint ownership is a form of ownership), the EU Best Practice of November 29, 2005 for the effective implementation of restrictive measures, which Austrian authorities are prepared to follow, provides that “funds and economic resources jointly owned by a designated person or entity and a non-designated one are in practice covered in their entirety. The nondesignated person or entity may subsequently request an authorization to use such funds and economic resources, which may include severing the joint ownership so that person’s share can be unfrozen.” More in general the Best Practice clarifies that “Holding or controlling should be construed as comprising all situations where, without having a title of ownership, a designated person or entity is able lawfully to dispose of or transfer funds or economic resources he, she or it does not own, without any need for prior approval by the legal owner.”

Communication to the Financial Sector (c. III.5)

271. The Council and the European Commission make their regulations and decisions public through the Official Journal of the European Union, which can be accessed by anyone on the website of the European Union. The authorities consider that publication in the official journal is sufficient notification to all for whom the legislation creates obligations and rights. For the same reason authorities consider that publication in the Official Gazette of the regulations of the OeNB and on it its website constitutes sufficient notification to the financial sector. Some of the financial institutions which have correspondent relationships with the United States stated that they also receive the OFAC lists. These, as well as other lists, are supplied directly by external data providers.

272. The Austrian authorities indicated that they provide sanctions-related information to the relevant institutions. This dissemination also includes information on changes concerning foreign “national terrorist lists” for example, the OFAC list provided by the diplomatic representations of third countries forwarded to the MoFA or MoF. However, the financial institutions interviewed by the missions did not seem particularly clear to indicate which lists came or went or whose responsibility is was to send them.

Guidance to Financial Institutions (c. III.6)

273. With respect to communication and guidance, Austria relies in large part on the EU regulations itself to guide financial institutions and others, since the EU regulations have direct applicability to all EU entities and persons including those in Austria and there is a related obligation of Austria’s citizens and residents to know and act in accordance with the law.

274. The authorities indicated that the MoF, the OeNB or the WKO also provide detailed sanctions-related information either on individual request (by telephone or in writing) or due to recent developments of high importance. However, when meeting with the private sector, the assessors were informed of difficulties is ascertaining the accuracy of false hits, in the absence of an official provider of information on the listed names.

275. In particular, although law enforcement officials check listed names against various databases, it does not appear there is a routine check of property ownership registers (for instance companies register) to determine whether a named individual or organization holds property in Austria and action taken to encumber property. The MoJ has issued guidance to the courts that maintain immovable goods registers not to grant registration to real estate transactions if one of the parties is in the EU lists.

De-Listing Requests and Unfreezing Funds of De-Listed Persons (c. III.7)

276. Relevant European regulations do not provide for a national autonomous decision regarding de-listing and unfreezing as a whole. Requests for de-listing have to be directed through the Federal Ministry for European and International Affairs (MoFA) and its representative in the relevant UN/EU body to the UN Sanctions Committee or the European Commission whichever is concerned.

277. Requests for de-listing from the list of persons and entities comprised by the UN sanctions against Al-Qaeda and the Taliban (the UN list) and the list of persons and entities comprised by the restrictive measures in EU Common Position 931/2001/CFSP (the EU list, which in Austria is implemented through Regulations) are to be directed to the OeNB as the designated competent authority.

278. Delisting matters may also be pursued before the Austrian and EU courts. In the case of refusal of a request of delisting, the applicant can decide to have the matter presented to a national Austrian court or to the European Court of Justice. If the challenge is to the legality of a designation under the regulations, the European Court of Justice can hear the complaint if made within two months after the designation. If the legality of a designation is lodged before a Austrian court, the court can present this question as a prejudicial question to the European Court of Justice.

279. Unfreezing in the case of mistaken identity may take place in the Austrian system in accordance with the EU Best Practices paper (“Effective Implementation of Financial Restrictive Measures targeting Terrorist Persons, Groups or Entities”), that is, a person may have his case considered by the OeNB which serves as the Austrian competent authority. The same procedure can be pursued following the AVG or by filing a case before an Austrian court.

280. Designations under the Regulations adopted by the OeNB pursuant to the Exchange of Control Act may be challenged under the AVG.

Unfreezing Procedures of Funds of Persons Inadvertently Affected by Freezing Mechanism (c. III.8)

281. The usual protections under Austrian law to the rights of bona fide third parties are applicable in the case of freezing under the EU lists or a seizure otherwise ordered in the Austrian system. Specifically, there is access to the courts in Austria to challenge aspects of a freeze that adversely affects a person or entity. The court could in turn seek the advice of the European Court of Justice. In addition, if the freeze is imposed through Regulation 881/2002 or 2580/2001, persons or entities may institute proceedings before the European Court of Justice which is invested with authority to review the legality of such freezes. EC regulation 881/2002 at Article 6 also protects the good faith actions of freezing entities except when a freeze is due to negligence.

282. A person or entity who was erroneously listed by a regulation of the OeNB or a person whose funds were wrongly frozen by a financial institution may also seek damages in accordance with the Austrian law of damages and - where applicable - the Public Liability Act (Amtshaftungsgesetz, AHG).

Access to frozen funds for expenses and other purposes (c. III.9)

283. UNSCR 1267 as amended by UNSCR 1452 is implemented in the EU through a new Article 2a in EC Regulation 881/2002—directly applicable in Austria. This provision authorizes access to funds that are frozen for basic expenses, certain fees or for extraordinary expenses. The OeNB is the designated competent authority to receive requests from affected persons for exemptions. If so, the request is also notified to the Al-Qaeda/Taliban sanctions Committee which, within, 48 hours may object to the exemption. The OeNB must also promptly notify the person that made the request, and any other person, body or entity known to be directly concerned, in writing, whether the request has been granted or not. If the request is granted the OeNB has also to inform other Member States.

284. A procedure is also envisioned in Articles 5 and 6 of EC Regulation 2580/2001 which relates to designations emanating from UNSCR 1373. Under Article 5 the OeNB as the designated competent authority may grant a specific authorization to unfreeze funds for essential human needs under such conditions as it deems appropriate. Article 6 establishes a broader power for competent authorities of EU Member States to grant specific authorizations—with the view to protect the interest of the Community and the interest of its citizens and residents—after consultations with the other Member States, the Council and the Commission of the EU.

Review of Freezing Decisions (c. III.10)

285. As mentioned earlier, the freezing mechanisms envisaged by the relevant EC regulations can be challenged at the European Court of Justice by any natural or legal person that is directly and individually affected by it under the general principle established by Article 230 of the Treaty establishing the European Community. Under this general principle any natural or legal person may institute proceedings against a decision addressed to that person or against a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former.

286. A number of appeals against freezing orders based on Council Regulations (EC) no. 2580/2001 and 881/2002 are currently pending in the European Court of Justice. The appeals focus on claims that the human rights of the designated individuals, groups and entities were not respected. As regards Council Regulation (EC) no. 2580/2001, the Court of First Instance held in three judgments in 2006 and 2007 (T-228/02, People’s Mujahedin of Iran (OMPI), T-47/03, Sison, T-327/03, Stichting Al Aqsa) that the Council had to provide a statement of reasons to the designated individuals, groups and entities concerned, so as to allow them to make their views known on it and to allow the court to conduct a review. These judgments are final. The Court of First Instance upheld this line of argument on 3 April 2008 in the cases T-229/02 and T-253/04, Kurdistan Workers’ Party (PKK) and Kongra-Gel, which concern Council decisions made in 2002 and 2004.

287. On September 3, 2008, the European Court of Justice issued a judgment in the Kadi and Al Barakaat International Foundation cases (C-402/05 P and C-415/05 P) that annulled the 2002 EU Council regulation that implements UNSCR 1267 and successor resolutions insofar as the regulation concerned the appellants. However, the Court in essence left the EU regulation in place for up to three months to permit the European Commission to remedy the violations found by the Court. The Court found violations of fundamental human rights, specifically, the right of defense and the right to an effective legal remedy.

288. In cases where EU internals are designated by regulation of the OeNB the general principles of Austrian administrative law will apply, in particular Article 26 to 29 of the Administrative Court Act 1985 (Verwaltungsgerichtshofgesetz, VwGG).

Freezing, Seizing and Confiscation in Other Circumstances (applying c. 3.1-3.4 and 3.6 in R.3, c. III.11)

289. See analysis under paragraphs above.

Protection of Rights of Third Parties (c. III.12)

290. The rights of bona fide third parties affected by a freezing under the EU lists, OeNB designations or a seizure otherwise ordered in the Austrian system are protected by the relevant EC-Regulation as well as by the general principles of Austrian law.

291. If the freeze is imposed through Regulation 881/2002 or 2580/2001, the bona fide third party may institute proceedings before the European Court of Justice which is invested with authority to review the legality of such freezes. EC regulation 881/2002 at Article 6 also protects the good faith actions of freezing entities except when a freeze is due to negligence. There is access to the courts in Austria to challenge aspects of a freeze that adversely affects a person or entity: if the freeze (in the sense explained above) has been undertaken pursuant to the OeNB regulation the bona fide third party can also challenge it general principles of Austrian administrative law. Additionally, it also is a principle of the Austrian law of damages, that a person generally can only be held liable when it acted at least with negligence (see Article 1295 et seq. ABGB).

292. Finally, Articles 20c and 26, paragraph 2 StGB provide the legal basis for abstention from forfeiture and confiscation, if the property concerned is legitimately claimed by a person not having participated in the offense or in the criminal organization and are for this consistent with the standards provided in Article 8 of the Terrorist Financing Convention.

Enforcing the Obligations under SR.III. (c. III.13)

293. Authorities are of the opinion that compliance with the relevant legislation is being generally monitored on a regular basis in the financial supervisory process, conducted by the FMA for the overall sector, the OeNB for the banks, and by external auditors, as part of their annual review. The authorities indicated that, the assessment of FT is an integrated part of the examination procedure of the OeNB and that the examination methodology includes procedures to verify if the bank is in compliance with all provisions with respect to FT.

294. Assessors could not confirm that compliance to the obligations under SR.III. are routinely monitored, and are of the view that further steps should be undertaken, especially in regard to the implementation of the DevG.

295. There is authority to impose sanctions for non compliance of the freezing obligations. The DevG stipulates that non-compliance with regulations of the European Community or relevant Austrian Federal Government Regulations concerning the freezing of funds is an offense punishable with a fine up to EUR 30,000 or a term of imprisonment of up to one year. Furthermore, the conclusion of a transaction which constitutes an offense of this Act is null and void. No sanctions have been issued so far for non compliance to this provision.

Additional Element (SR.III)—Implementation of Measures in Best Practices Paper for SR.III. (c. III.14)

296. The authorities indicated that they have implemented the best practice paper for SR.III. by way of the EU and domestic legislation described earlier in this section and that they fully cooperate with foreign jurisdictions.

Additional Element (SR.III)—Implementation of Procedures to Access Frozen Funds (c. III.15)

297. See discussion under criterion III.9

Legal Framework

299. The Austrian laws and regulations do not explicitly provide for the establishment of a Financial Intelligence Unit (FIU), but each of the ten laws and regulations covering the subjected entities refer to an authority that is competent for the reception of STRs in the case of ML or FT. The description of the competent authority varies for each reporting entity. The authority is the Federal Ministry of Interior for banks, insurance companies, investment companies, securities institutions, and most of the DNFBPs, with the exception of notaries and lawyers who have to report to the Federal office of criminal investigation (BKA), and accountants who have to report to the ML unit of the BKA. Despite these slight differences, the common understanding amongst the authorities and reporting entities, and actual practice, is that the STRs have to be reported to the Austrian Financial Investigation Unit (A-FIU) in the BKA. This is supported by the BKA website, the FMA circulars for financial institutions and the OENK guidance for notaries, and explanatory notes of some relevant laws. The A-FIU both receives all STRs and conducts criminal investigations on ML cases. The same law enforcement officers perform both tasks.

300. If information received by the A-FIU meets the requirements of an STR as defined in the laws, the A-FIU has to open an investigation. Pursuant to Article 1, paragraph 2 StPO “criminal proceedings start, as soon as police or public prosecution initiate investigations again a known or unknown person in order to clarify the suspicion of a criminal act.” The requirement to report a transaction when the financial institution suspects or has reasonable grounds to suspect that it serves the purpose of ML or FT falls into the scope of Article 1, paragraph 2 StPO. Consequently, the role of the A-FIU, regarding information it receives from reporting entities, is limited to establish that the information it receives qualifies as an STR. In 2007, out of the 1,085 information recorded as “STRs” in the A-FIU statistics, 197 cases were related to 419 letters or phishing emails, which did not meet the definition of an STR.

301. When the A-FIU receives STRs related to FT, it has to forward them to the BVT which is the competent authority for FT. As they both are law enforcement units, the A-FIU and the BVT need the opening of a case to exercise their powers (request of information from reporting entities, from other administrations, international cooperation, freezing of assets, special investigative techniques). Consequently, there is technically no dissemination of information by the A-FIU but investigations are conducted by the A-FIU or forwarded to another competent authority.

302. Pursuant to Article 49, paragraphs 1 and 3 StPO, the suspect/defendant has the right, to be informed about the nature of the suspicion raised against him (Article 50 StPO) and to have access to files (Articles 51-53 StPO). The right to access files also includes the right to inspect exhibits, as far as this is possible without disadvantage for the investigation. Pursuant to Article 100, paragraph 3 StPO, the BKA report to the Prosecutor’s Office shall include “the names of the persons who filed the criminal complaint, names of the victims and, if applicable, other informants.” Under Austrian criminal law, when the preliminary proceedings ends or the case is final, the suspect/defendant is authorized to view all files related to the investigation (Article 194 StPO). This includes the STR with the name of the reporting entity. The right of the suspect/defendant to view all files related to the investigation can be restricted or certain data can be made anonymous, when there is danger for the personal security of an involved participant. But the right to access files may be limited only until the conclusion of the preliminary proceedings and is inadmissible if the suspect is in detention. (Article 51, paragraphs 2 and 3 StPO).

303. Following complaints by credit and domestic financial institutions, as their employees often felt exposed to potential threats or hostile action because they fear that their identity may become disclosed, a joint action plan by the authorities (MoF, A-FIU, MoJ, FMA, BVT and Federal Chancellery) and the financial sector (represented by the WKO) was agreed early November 2008. It contains measures to promote the protection of reporting entities and their employees (awareness raising campaigns both among the law enforcement authorities, public prosecutors, judges and the private sector; ordinances by the MoJ and the Federal Chancellery, anonymity of STRs, information on protective mechanisms contained in the StPO etc). Accordingly, a MoJ ordinance of November 11, 2008 gives guidelines regarding the protection of employees or reporting credit and domestic financial institutions.

Establishment of FIU as National Centre (c. 26.1)

304. In order to determine to what extent all the three core FIU-functions (reception, analysis and dissemination) are within the A-FIU’s responsibility and how effectively they are implemented, it is worth analyzing in detail how these three functions are carried out in the Austrian system.

305. The obligation to report STRs is mentioned in each of the ten laws and regulations organizing the AML/CFT framework for the financial and non-financial institutions, but the authority competent to receive those STRs is slightly different depending on each law and regulation, as this appears in the following table.

Statistical Table 16.

Reporting Entities

Statistical Table 16.

Reporting Entities

Reporting entities	Legal basis	Competent authority
Banks	Article 41 (1) BWG	Federal Ministry of Interior (Article 6 SPG)
Insurance undertakings	Article 98f(1) VAG	Federal Ministry of Interior (Article 6 SPG)
Investment Companies	Article 25 (5) BörseG	Federal Ministry of Interior (Article 6 SPG)
Securities institutions	Article 6 WAG	Federal Ministry of Interior (Article 6 SPG)
Casinos	Article 25a GSpG	Federal Ministry of Interior (Article 6 SPG)
Insurance Intermediaries, Real Estate Agents, Dealers, Management Consultants	365u(1) GewO	Federal Ministry of Interior (Article 6 SPG)
Lawyers	Article 8c, RAO	Federal Ministry of Interior (Federal Office of Criminal Investigation)
Notaries	Article 36c(1) NO	Federal Ministry of Interior (Federal Office of Criminal Investigation)
Accountants	Article 39(1) WT-ARL; Article 22(1) BiBu-ARL	The Money Laundering Centre at the Federal Office of Criminal Investigation

View Table

Statistical Table 16.

Reporting Entities

Reporting entities	Legal basis	Competent authority
Banks	Article 41 (1) BWG	Federal Ministry of Interior (Article 6 SPG)
Insurance undertakings	Article 98f(1) VAG	Federal Ministry of Interior (Article 6 SPG)
Investment Companies	Article 25 (5) BörseG	Federal Ministry of Interior (Article 6 SPG)
Securities institutions	Article 6 WAG	Federal Ministry of Interior (Article 6 SPG)
Casinos	Article 25a GSpG	Federal Ministry of Interior (Article 6 SPG)
Insurance Intermediaries, Real Estate Agents, Dealers, Management Consultants	365u(1) GewO	Federal Ministry of Interior (Article 6 SPG)
Lawyers	Article 8c, RAO	Federal Ministry of Interior (Federal Office of Criminal Investigation)
Notaries	Article 36c(1) NO	Federal Ministry of Interior (Federal Office of Criminal Investigation)
Accountants	Article 39(1) WT-ARL; Article 22(1) BiBu-ARL	The Money Laundering Centre at the Federal Office of Criminal Investigation

306. According to the laws, all financial institutions and most of the DNFBPs have to report to the authority under the Article 6 of the Security Police Act (Sicherheitspolizeigesetz, SPG) which is the MoI. It is constituted of the General headquarters for public security and the Federal Office of Criminal Investigation (BKA), the latter being organized according to a specific law, the BKA-G. Pursuant to Article 4(2) of the BKA-G, the BKA is competent to investigate ML in relation to the BWG, the BörseG and the WAG. The BKA-G entered into force in 2002, and as of that time only these laws contained ML and FT provisions. Concerning the FT, the BVT is the competent authority inside the Ministry of Interior. This is why, according to a letter from the BKA to the BVT, FT-related STRs are automatically forwarded to the BVT.

307. The organizational chart of the BKA shows a unit responsible for ML in the Department 3 (Investigations, Organized Crime and General Crime) which counts six sections, including one dedicated to Economic and Financial Investigations. One of its five units is the bureau 3.4.2, specialized on money laundering, also known as the A-FIU (Austrian Financial Investigation Unit). A similar unit was named EDOK until 2002, when the function of receiving STRs was absorbed by the BKA.

308. Despite the slight differences in the legal framework, it is commonly understood by the reporting entities that all STRs have to be sent to the A-FIU, and this appears to be the actual practice. This is supported by the BKA website, the FMA circulars for financial institutions, the OENK guidance for notaries, and explanatory notes of some of the relevant laws. Consequently, the A-FIU acts as a national center for receiving STRs and other reports concerning suspected ML, and STRs concerning FT activities. Suspicious transaction reports are usually transmitted by email, fax, post or courier to the A-FIU. The A-FIU also receives reports based on the suspicion of a violation of the obligation to disclose fiduciary relationships pursuant to Article 40, paragraph 2 of the BWG. It also receives reports related to withdrawal requests on savings deposit with a balance of at least EUR 15 000 when the identity of the customer has not being ascertained.¹⁹ Based on Article 4(2) of the BKA-G, local police services are also required to inform the A-FIU about ongoing cases of ML. Finally, on the basis of the constitutional principle of cooperation between administrative authorities (Article 22 B-VG), the BKA is also the recipient of ML-related information from other administrations. There is no specific guidance or written directive regarding the application of this principle in relation to the work of the A-FIU, but the authorities consider that such guidance would be superfluous, as this principle is commonly understood and actual practice throughout the Austrian administration.

309. In 2007, the A-FIU received 2,247 information, including 1,599 reports from the professions subjected to reporting obligations. Out of those reports, 460 came from other law enforcement units, 514 were mandatory reports in relation to savings accounts and 1,085 were recorded as “STRs”, even if 197 cases were related to 419 letters or phishing emails, which did not meet the definition of an STR. The reports are received by an officer on duty in charge of the reception of the STRs. This function of officer on duty changes on a daily basis. Outside business hours, STRs are received by the SPOC (Single Point Of Contact) of the BKA.

310. With the exception of FT-related STRs from the reporting entities, the A-FIU is not responsible for receiving other FT-related information from other administrations, as the BVT is sole responsible for investigating FT. The distinction concerning the authority in charge of receiving information related to ML, on the one hand, and FT, on the other hand is evident in Article 17c (2) of the Customs Law (Zollrechts-Durchführungsgesetz, ZollR-DG), which, in connection with the performance of the control of cash brought in to/out of Austria, states that the customs authorities must pass the data to the competent authority, these being the A-FIU for ML and the Federal Agency for State Protection and Counter Terrorism (BVT) for FT, to the extent that this is necessary to perform their statutory tasks. In case the A-FIU receives FT-related information, it is forwarded to the BVT.

311. Concerning the analysis function of an FIU, the A-FIU being a law enforcement unit, it investigates complaints or STRs received under the scope of its competence and has to systematically start criminal proceedings in order to clarify the suspicion of a criminal act (Article 1, paragraph 2 of the StPO). Consequently, an investigation is open for each information received from a reporting entity when it meets the requirements of an STR (e.g., not one of the 419 letters or phishing emails). Consequently, the A-FIU has no analytical function. Indeed, a police investigation (Article 16 of the SPG) or a criminal investigation (Article 100 of the StPO) will be open based on the specificity of the report (e.g., a STR on a transaction that serves the purpose of ML or FT), and not on the evaluation of its utility or relevance.

312. As the A-FIU does not conduct analysis, it has also no dissemination function. After reception of information that meets the requirement of an STR, the first step is the opening of an investigation by the A-FIU and then the investigation is performed either by the BKA or the local police authorities for ML, and the BVT for FT, according to their respective responsibilities. As law enforcement authorities, they are all empowered to conduct investigative actions, such as surveillance, interrogations, wire-tapping, search of premises or issuing warrants of arrest.

313. Pursuant to Article 4(2) of the BKA-G, the BKA competence is “the fight against ML in relation to the BWG, BörseG and WAG”, and the BKA will consequently be in charge of investigations of ML-related STRs received on the basis of these laws. The circular allocating the functions inside the BKA makes clear that the A-FIU is the unit in charge concerning the information received by the BKA pursuant to section 41 of the BWG. The ML-related STRs based on the VAG, the GSpG and the GewO could theoretically be received and investigated by any police service, including, but not limited to, the BKA. Concerning the ML investigations that are on its single competence, the BKA is authorized to entrust local police services with investigations at any time.

314. As the BKA is not competent for FT, the cases regarding FT-related STRs are directly forwarded by the A-FIU to the BVT for investigation. This is made clear in the 16 June 2003 letter 10002/756-II/BK/3.42/03 from the BKA to the BVT which says that “Notification of suspicion of terrorist financing or of membership in a terrorist organization remains the direct responsibility of the BVT because of its original competence for such matters.” At the BVT’s request, the BKA can provide support to the investigation. The same circular requests the BVT to immediately inform the BKA (Money Laundering Notification Office, SPOC) if the grounds upon which an order has been issued cease to exist, as this is necessary in order to comply with the legal obligations for revoking an order.

315. The following table summarizes the responsibilities for receiving, analyzing and disseminating disclosures of STR and other relevant information concerning suspected ML or FT activities in Austria.

Statistical Table 17.

FIU Functions

Statistical Table 17.

FIU Functions

FIU Function	Competent Authority
Receiving STRs (ML/FT)	BKA (A-FIU)20
Receiving other relevant information - ML	BKA (A-FIU)
Receiving other relevant information - FT	BVT
Analyzing STRs and other relevant information	Not applicable
Disseminating STRs and other relevant information	Not applicable

View Table

Statistical Table 17.

FIU Functions

FIU Function	Competent Authority
Receiving STRs (ML/FT)	BKA (A-FIU)20
Receiving other relevant information - ML	BKA (A-FIU)
Receiving other relevant information - FT	BVT
Analyzing STRs and other relevant information	Not applicable
Disseminating STRs and other relevant information	Not applicable

Guidelines to Financial Institutions on Reporting STR (c. 26.2)

316. The A-FIU provides a specific reporting form for STRs which can be downloaded from the website of the Ministry of Interior (www.bmi.gv.at). This website also includes information on the procedures that have to be followed when reporting. The reporting entities have to check a box on the STR form to indicate if the suspicion is based on ML or FT. Upon the reception of the STR, an investigation will be opened by the A-FIU and if the FT box has been checked, the case will be automatically forwarded to the BVT. This is recognized by both agencies as an extremely quick and efficient process that enables the BVT to be in a position to take adequate measures. The A-FIU can also be contacted by reporting entities in order to receive guidance regarding reporting on a case by case basis. During business hours, the contact is through the unit 3.4.2 (A-FIU) and outside office hours, the reporting entities can contact the SPOC of the BKA. The reporting entities clearly identify the A-FIU as the unit to be contacted in case of a need for guidance regarding the manner and procedures of reporting. The A-FIU estimates being contacted more than 10 times a day by reporting entities concerning their reporting requirements. The reporting entities met by the assessors are fully aware of this possibility.

317. Additionally, the A-FIU provides information on reporting manners and procedures in informative meetings with reporting entities, either directly or organized by the reporting entities, the WKO, and the FMA.

Access to Information on Timely Basis by the FIU (c. 26.3)

318. Upon the reception of information by the A-FIU, no analytical function is performed on reports that meet the definition of a STR. A case is open and an investigation is started and conducted by the competent authority, either the BKA (including the A-FIU), the BVT or the local police with the powers set forth by the SPG and the StPO. FT investigations are always lead by the BVT itself or one of the LVTs. Local police authorities are consulted alternatively but they never lead FT investigations.

Additional Information from Reporting Parties (c. 26.4)

319. As investigations start immediately after the reception of STRs that meet legal requirements, all additional information is requested by the police authority in charge of the investigation, as part of the investigative process.

320. Once the investigation is open, the BKA is authorized to request directly all available and necessary information for ML and FT investigations from lawyers, notaries and accountants (see RAO, NO, WT-ARL and BiBu-ARL specify that it is the A-FIU) if released from the duty of secrecy by the client or if a judicial order is issued by the public prosecutor. Concerning casinos, gaming secrecy does not apply if released by the client or in the case of proceedings before civil courts and in connection with a criminal procedure subject to the StPO (Article 51 (2) GSpG). Concerning banks, insurance, investment and securities institutions, and other DNFBPs (see BWG, VAG, WAG, BörseG, and GewO), the relevant laws devolve the power to request information to the Federal Ministry of Interior, meaning that any department of the ministry, including the BVT is theoretically empowered to directly access financial information in the case of suspicion of ML or FT, based on its competence, without a court order. In practice, this power is exercised by the A-FIU. The authorities consider that the BVT would need a court order to request financial information from a reporting entity.

321. When related to a suspicion of ML or FT, the requested information is not subject to banking secrecy provisions. Persons and entities are obliged to provide the requested information to the relevant police authority. If the person or entity concerned refuses to provide information, sanctions may be imposed in accordance to Article 93, paragraph 2 StPO or a search warrant may be issued in accordance to Article 116, paragraph 6 StPO in order to enforce the obligation to disclose such information. Up to now there was only one case known regarding the refusal of answering a request, which was deferred by the reporting entity to the Independent Administrative Tribunal (Unabhängiger Verwaltungssenat, UVS). The UVS decided that the request by the BKA was legal and the information was subsequently transmitted to the BKA. In 2004 the BKA conducted 44 requests, 24 in 2005, 23 in 2006 and 105 in 2007, all towards banks. Even if police services other than the BKA could access financial information in case of a suspicion of ML or FT (except for lawyers, notaries and accountants), in practice all demands are centralized by the unit 3.4.2. of the BKA. As it is known as the A-FIU, it offers an identified point of contact for every financial and non-financial profession. In practice, the A-FIU acts as a single point of contact for requesting additional information from the reporting entities during ML and FT investigations.

Dissemination of Information (c. 26.5)

322. As mentioned earlier there is no dissemination function, as the reception of an STR on a transaction that serves the purpose of ML or FT, amounts to the beginning of a police or judicial investigation. When the reporting entities indicate that the STR is related to FT, the report is immediately forwarded to the BVT. In other cases the A-FIU decides, depending on its competence and on territorial competence of the local police if it continues the investigation or forwards it to another unit in the BKA or to a local police authority.

Statistical Table 18.

Authorities competent for investigating STRs

Statistical Table 18.

Authorities competent for investigating STRs

Investigating STRs	Competent Authority
ML-related suspected activities, in relation to the BWG, WAG, BörseG, GSpG	BKA (A-FIU)
Other ML-related suspected activities	Federal Police
FT-related suspected activities	BVT

View Table

Statistical Table 18.

Authorities competent for investigating STRs

Investigating STRs	Competent Authority
ML-related suspected activities, in relation to the BWG, WAG, BörseG, GSpG	BKA (A-FIU)
Other ML-related suspected activities	Federal Police
FT-related suspected activities	BVT

323. It must be noted that each competent authority can request another police authority to provide support to the investigation. Following their investigations, the BKA, the Federal Police or the BVT have to systematically inform the Prosecutor’s Office.

Operational Independence (c. 26.6)

324. The unit 3.4.2 (A-FIU) that receives STRs is part of the BKA, which in turn is subordinated to the MoI. The BKA has its own budget but there is no specific budget line for the staff and operations related to the reception of STRs.

325. Concerning the rules of nomination and the obligation to report, the A-FIU staff in charge of receiving and investigating STRs is subject to the general rules of the Austrian police. Inside unit 3.4.2, there is no distinction of responsibilities between staff in charge of the FIU function (receiving the STRs, including providing guidance to reporting parties) and staff in charge of the police or criminal investigations for money laundering. Indeed, each staff member performs tasks across the scope of competence of the unit 3.4.2.

Protection of Information Held by the FIU (c. 26.7)

326. The A-FIU maintains separate archives and its own file management, which access is protected. Only staff members of the A-FIU have access to the locked archives. The information received by the A-FIU is recorded in the general database of the BKA. But, access to information in this database is restricted and different access rights are provided. In general, except for the staff of the A-FIU, a positive request will be linked to a number and the information that a file is possessed by the A-FIU. But some of the high ranking officials of the BKA are provided with full access rights to the database.

327. Examples of STRs sent to the A-FIU that have leaked in the press or to suspected persons during an investigation have been mentioned by reporting entities. Reporting entities mentioned cases were the local police had disclosed an STR to suspected persons in order to justify an ongoing investigation. According to the authorities, information that leaked to the press were forwarded by the suspect’s lawyers and other involved persons in the cases.

Publication of Periodic Reports (c. 26.8)

328. Since 2004 the A-FIU publishes annual reports that are presented in a press conference. These annual reports can be retrieved from the website of the MoI (http://www.bmi.gv.at/publikationen/). These reports describe detected and new trends and typologies, as well as information on the legal framework. They also include statistics regarding, among others, the number of STRs and breakdown by reporting entities, the number of anonymous savings account related reports, the cooperation with other countries, the predicate offenses concerning the STRs that are not related to self-laundering, the number of criminal charges for ML and the number of convictions. It should be noted that these reports are mainly oriented toward the ML-related activities and do not address explicitly FT.

329. The BVT has included a section on terrorism financing in its annual report, which is available on the website of the MoI. In the report for 2008, three pages were dedicated to FT, including an overview of trends and statistics.

Membership of Egmont Group (c. 26.9)

330. Austria is a founding member of the Egmont Group (1995) and regularly attends its meetings. It was first represented by EDOK and is represented by the A-FIU of the BKA since 2004.

Egmont Principles of Exchange of Information among FIUs (c. 26.10)

331. As a member of the Egmont Group, the A-FIU applies the Egmont Principles of Exchange of Information among FIUs which were adopted in The Hague on June 13, 2001. In 2007, the A-FIU sent/received information on 383 cases via the Egmont secure website. Additional information on international cooperation is provided under the analysis for R.40.

Adequacy of Resources to FIU (c. 30.1)

332. It is difficult to assess the adequacy of resources of the FIU functions of the Money Laundering Unit within the BKA because those functions are fully merged with the investigative functions. The latter is the main activity of the unit as the A-FIU is the only team dedicated to investigate ML in Austria. The staff of the A-FIU consists of the head, one secretary and three teams (total of 10 detectives²¹). The current resources concerning the investigation of ML cases have to be assessed regarding R.27.

333. In the absence of analysis, the reception of STRs is not the most costly function, especially in Austria where the level of STRs is relatively low, and there is no automated electronic transfer of data from the reporting entities. Reports may be sent by email but are not automatically integrated in the A-FIU database. The fact that the Money Laundering Unit performs both some FIU functions and investigations, put a constraint on resources and do not enable the unit to raise awareness on ML/FT typologies to reporting entities. Indeed, the staff of the A-FIU is in charge of the reception of STRs, ML investigations and some investigations on the predicate offenses.

Integrity of FIU Authorities (c. 30.2)

334. Regarding confidentiality, Article 20, paragraph 3 of the B-VG obliges all police officers and civil servants to professional secrecy. A breach of this principle can result in disciplinary measures, such as fines and dismissal. No specific provision applies concerning the dealing of information contained in STRs.

335. The current staffing of the Money Laundering Unit is made of law enforcement officers that have been trained to be detectives. They possess specialized knowledge to investigate white collar crime, mutual legal assistance, investigative methods, and computer handling. They are law enforcement officers, trained in search of premises, arrests, wire-tapping, international legal assistance and execution of letters rogatory, interrogations or surveillance methods. These appear to be appropriate skills to conduct police and criminal investigations.

Training for FIU Staff (c. 30.3)

336. It is possible for staff members of the Money Laundering Unit of the BKA to attend “refresher courses” regularly offered by the training agency of the police forces/MoI. The authorities consider that experience has shown that “training on the job” proves to be successful. Training courses can also be attended at the Vienna University of Economics and Business Administration. Additionally, the unit participates in international projects and seminars (Interpol, Europol, Egmont Group, Council of Europe, EUROJUST, FATF-Typologies workshops). Moreover, the unit participates actively in exchange programs with FIUs and law enforcement authorities in neighboring countries (Liechtenstein, Switzerland, Hungary and Slovakia). These training appear adequate and relevant for law enforcement officers.

Statistics (applying R.32 to FIU)

337. The Austrian authorities maintain comprehensive statistics on suspicious transactions reports and other reports, received and disseminated.

Statistical Table 19.

STRs Received by the A-FIU²²

Statistical Table 19.

STRs Received by the A-FIU²²

	2004	2005	2006	2007
ML-Related STRs	373	467	692	1,085
FT-Related STRs	12	19	15	23
Reports on Anonymous Savings Accounts	1,206	1,009	1,174	514

View Table

Statistical Table 19.

STRs Received by the A-FIU²²

	2004	2005	2006	2007
ML-Related STRs	373	467	692	1,085
FT-Related STRs	12	19	15	23
Reports on Anonymous Savings Accounts	1,206	1,009	1,174	514

338. The following tables show a breakdown by type of financial institution, DNFBP, or other business or person making STRs, for both ML and FT:

Statistical Table 20.

ML-Related STRs

Statistical Table 20.

ML-Related STRs

	2004	2005	2006	2007
Financial institutions	360	426	658	1,045
Banks	349	417	651	1,039
Insurance	11	9	7	6
Others (Stock exchange, Securities)	0	0	0	0
DNFBPs	8	12	12	13
Casinos	2	1	0	1
Lawyers	1	4	4	1
Notaries	2	3	2	3
Accountants	0	0	1	1
Real Estate Agents	0	1	0	1
Dealers	3	1	3	4
TCSPs	0	2	2	2
Austrian administrations	5	29	12	27
Ministry of Finance	0	27	7	21
FMA	5	2	5	5
Customs	0	0	0	1
Total	373	467	692	1085

View Table

Statistical Table 20.

ML-Related STRs

	2004	2005	2006	2007
Financial institutions	360	426	658	1,045
Banks	349	417	651	1,039
Insurance	11	9	7	6
Others (Stock exchange, Securities)	0	0	0	0
DNFBPs	8	12	12	13
Casinos	2	1	0	1
Lawyers	1	4	4	1
Notaries	2	3	2	3
Accountants	0	0	1	1
Real Estate Agents	0	1	0	1
Dealers	3	1	3	4
TCSPs	0	2	2	2
Austrian administrations	5	29	12	27
Ministry of Finance	0	27	7	21
FMA	5	2	5	5
Customs	0	0	0	1
Total	373	467	692	1085

339. It has to be noted that the statistics of the A-FIU envisage STRs in a broad sense as it also includes exchange of information from other administrations that are not STRs by the standard definition.

Statistical Table 21.

FT-Related STRs

Statistical Table 21.

FT-Related STRs

	2004	2005	2006	2007
Banks	9	16	14	20
Money transmitters	3	3	1	3
Total	12	19	15	23

View Table

Statistical Table 21.

FT-Related STRs

	2004	2005	2006	2007
Banks	9	16	14	20
Money transmitters	3	3	1	3
Total	12	19	15	23

340. Concerning statistics on the breakdown of STRs analyzed and disseminated, every STR on a transaction that serves the purpose of ML or FT is investigated.

STRs resulting in investigation, prosecution or convictions for ML, FT or an underlying predicate offense (Additional element - c.32.3)

341. Every STR on a transaction that serves the purpose of ML or FT has to be investigated by the A-FIU, the BVT, or the local police services. According to the StPO, every investigation case has to be submitted to the Prosecutor’s Office.

342. It has to be mentioned that in the course of investigations, it is very often determined that the suspect is the primary offender (“self-launderer”) and has to be charged for the “predicate offense”, such as fraud, drug-related crimes, embezzlement, human trafficking, criminal organization, etc. In some STRs, the suspect turns out to be the victim of fraud, which leads to charges against real offenders. Cases submitted by the police to the prosecutor include therefore cases concerning the predicate offense itself. There is no information concerning the number of STRs resulting in convictions.

Statistical Table 22.

Cases submitted to the Prosecutor

Statistical Table 22.

Cases submitted to the Prosecutor

	2004	2005	2006	2007
Cases Submitted to the prosecutor re. ML by the Austrian Police	100	70	183	229
Cases Submitted to the prosecutor by the A-FIU, not Limited to ML	147	109	121	88

View Table

Statistical Table 22.

Cases submitted to the Prosecutor

	2004	2005	2006	2007
Cases Submitted to the prosecutor re. ML by the Austrian Police	100	70	183	229
Cases Submitted to the prosecutor by the A-FIU, not Limited to ML	147	109	121	88

Legal Framework

344. The legal framework is mainly constituted by the Criminal Code (StGB), the Code of Criminal Procedure (StPO) and by the Federal Act on the Organization of Security Administration and the Exercise of Security Police Services (Security Police Act, SPG, enacted in 1991 and amended in 2005).

345. Austrian law enforcement authorities have the responsibility and authority to ensure that ML and FT offenses are properly investigated. This responsibility is derived from Article 34, paragraph 1 of the StPO that requires that prosecutors prosecute ex officio all criminal acts which get to their knowledge and are not prosecuted only on demand of the victim or other interested parties (so called “Offizialprinzip”). ML and FT are therefore prosecuted mandatorily. This principle also implies that prosecutors must take all measures that are necessary to initiate criminal investigations. The Federal Criminal Police has general authority to conduct investigations on crimes and offenses set forth in the StGB, including for ML. In the case of ML the criminal investigations relating to the banking, investment and securities sectors are, stricto sensu, in the legal responsibility of the BKA where the A-FIU is located; in fact, pursuant to Article 4(2) of the BKA-G, the BKA is indicated as the competent authority to investigate ML in relation to the BWG, the BörseG and the WAG. However, according to the internal distribution of the workload within the BKA the A-FIU would be the authority in charge of ML investigations.

346. If financing of terrorism appears to be involved, the competent authority for criminal investigation is the Federal Agency for State Protection and Counter Terrorism (BVT).

Designation of Authorities ML/FT Investigations (c. 27.1)

347. The office of the public prosecutor has a general responsibility to prosecute all criminal acts, including ML and FT. This responsibility stems from the principle that requires prosecutors to prosecute ex officio all criminal acts which get to their knowledge. While the law does not specifically provide for the establishment of special sections in charge of financial crimes and organized crime within the public prosecutor’s office, the larger public prosecutor’s offices in the country have established groups of prosecutors who are only dealing with cases of organized crime and financial crimes (10 such prosecutors operate in Vienna).

348. For criminal investigations concerning ML and FT the responsibility is spread among the BKA, in which the A-FIU is established, the BVT and, ultimately, the Federal Criminal Police as a whole.

349. Stricto sensu, pursuant to Article 4, paragraph 2 of the BKA-G, the BKA has legal responsibility for criminal investigations of ML in relation to the BWG, the BörseG and the WAG, therefore with regard to the banking, securities and investment sectors. The A-FIU established within the BKA has the responsibility, nation-wide, to receive the STRs related to ML/FT that are filed by the whole range of reporting entities. The A-FIU also receives information on suspicious cases of ML that may come to the attention of other authorities (such as the Customs authorities). In these cases a criminal investigation is open. Criminal investigations on ML can then be undertaken by the A-FIU itself, “delegated” to local Federal Police (on the areas in which the BKA is legally responsible for investigating ML, mentioned above) or undertaken by the Local Federal Criminal Police territorially competent. If in STR or in the other ML-related information received, there are sufficient elements to indicate a particular predicate offense, the case is passed by the A-FIU to the competent law enforcement authority, either within the BKA itself or to the Federal Criminal Police. The BKA and the Federal Police report to the public prosecutor’s office.

350. The BKA is organized in 6 departments; department 3 (where the A-FIU is located) has the responsibility of investigations on “Organized Crime and general Crime.” There are 6 divisions in this Department: Organized Crime; Capital Crimes and sexual Offenses; Property Offenses; Economic and financial Investigations; Drug-Related Crime; and a central service for Combating Traffic in Human Beings and Illegal Immigration. The A-FIU is a sub-division of the Economic and Financial Investigations Division. Other subdivisions are responsible for fraud and counterfeiting; “white collar” crimes; environmental crimes; a subdivision is specifically dedicated to asset forfeiture (providing upon request assistance also to the financial investigators in the states’ headquarters of the federal Police). The A-FIU’s ML investigations are divided into three major areas: ML through the use of offshore; ML through frauds and ML related/associated to former Member States of the Union of Soviet Socialist Republics.

351. The BVT is a law enforcement authority, established within the MoI, Directorate General II for Public Security, legally responsible for investigation on cases related to FT, either originated from an STR (which is received by the A-FIU and forwarded to the BVT) or otherwise. Law enforcement authorities that come across a suspected case of FT must forward it to the BVT (this is the case, for example, when Customs authorities detect a suspicious cross-border transportation of cash which it is deemed to be related to FT, according to Article 17c, paragraph 2 of the Customs Code). The BVT has also 9 regional departments and reports to the public prosecutor’s office.

Ability to Postpone / Waive Arrest of Suspects or Seizure of Property (c. 27.2)

352. According to Article 99, paragraph 4 of the StPO the police has the authority to postpone investigations and the adoption of coercive measures if:

Additional Element—Ability to Use Special Investigative Techniques (c. 27.3)

353. The following special investigative techniques are permitted by the StPO or the SPG:

354. These techniques can be undertaken by the Criminal Police at their discretion or with the authorization of the public prosecutor’s office.

Additional Element—Use of Special Investigative Techniques for ML/FT Techniques (c. 27.4)

355. Special investigative techniques are mostly used in investigations into organized crime and terrorist crimes. The A-FIU pointed out the frequent use of interception of communications and surveillance of target persons during its investigations of ML cases.

Additional Element—Specialized Investigation Groups & Conducting Multi-National Cooperative Investigations (c. 27.5)

356. While the law does not specifically provide for the establishment of special sections in charge of financial crimes and organized crime within the public prosecutor’s office, the larger public prosecutor’s offices in the country have established groups of prosecutors who are only dealing with cases of organized crime and financial crimes. The authorities estimate that out of 300 prosecutors operating in Austria approximately 10 percent is specialized in ML and financial crime investigations. The BKA has a specialized division in charge of economic and financial investigation, in the context of which A-FIU is located as well as a division specifically in charge of tracing proceeds of crime for assets forfeiture. The BVT uses regularly financial investigations with the purpose of understanding the structure of the terrorist groups.

357. Cooperation in investigation, including in the use of special investigative techniques, is possible, at EU level, within joint investigative teams among law enforcement authorities of EU Member States.

Additional Elements—Review of ML & FT Trends by Law Enforcement Authorities (c. 27.6)

358. Regular information exchange takes place between relevant staff of the MoJ, Public Prosecutor’s Office, courts and the MoI (A-FIU and BVT). There are also regular meetings with the authorities involved in supervision and/or AML/CFT policy for financial institutions (MoF, OeNB, FMA).

Ability to Compel Production of and Searches for Documents and Information (c. 28.1)

359. According to the authorities, the A-FIU is the only law enforcement agency entitled to request directly all available and necessary information from persons and entities subject to reporting obligations without the need of a court order. But concerning banks, insurance, investment and securities institutions, and other DNFBPs (see BWG, VAG, WAG, BörseG, GSpG and GewO), this power is devolved to the MoI, meaning that the BVT is theoretically empowered to access directly financial information in the case of suspicion of FT without a court order.

360. Person and entities are obliged to disclose information to the A-FIU, as the information requested in the case of suspected ML/FT is not subject to banking/professional secrecy provisions.

361. Other law enforcement agencies investigating ML or FT, and the A-FIU need a court order when they have to compel the production of or search persons and premises for documents held by financial institutions/persons (with a “judicial admission” procedure, discussed later on).

362. Law enforcement agencies other than the A-FIU must be authorized with judicial admission in the circumstances set forth by Article 116 of the StPO to request information on bank accounts and bank operations This provision requires that the disclosure of information on bank accounts and bank operation is admitted “if it seems necessary to ascertain a criminal offense or a misdemeanor under the jurisdiction of the regional courts (that includes ML) and sets the principle of “judicial admission” for access to the information, which means that the office of the public prosecution must demand a court order and admission of the disclosure.

363. The conditions for admitting the order are quite restrictive. The prosecutor must show on the basis of other evidence (“ascertained facts”) that the business relation of a person with the credit or financial institution is actually “connected to committing a criminal act” and that “either the holder of the account himself/herself is suspected of having committed the act or it is presumed that a person suspected of having committed the act will operate or has operated a transaction via the account”, or that “the business relation will be used for the transaction of a financial benefit that was gained through criminal acts or gained for them (Article 20 StGB) or is subject to the disposition of a criminal organization or terrorist group or is provided or collected as a means of financing terrorism (Article 20b StGB).

364. According to paragraph 4 of Article 116, the order and admission of the disclosure of information have to contain:

365. Specifically, the court has to consider the issue of proportionality, that is,, whether the disclosure and expected results are justifiably proportionate to the presumed infringement upon the rights of disinterested third parties and whether there could be also a reasonable chance of achieving the same result by taking less intrusive measures.

366. In the case of DNFBPs protected by professional privilege (lawyers and notaries), the conditions set forth in Article 9(4) RAO and 37(4) NO), discussed under the DNFBPs section, will apply. The very broad notion of “legal advice” (also discussed in that section) may substantially limit the right of law enforcement agencies to obtain information.

367. The search of credit and domestic financial institutions according to Article 1, paragraph 2 of the BWG (as well as the search on persons that are protected by professional secrecy, and the search of their premises) always requires a judicial admission.

368. Seizure and sequestration of documents (including transactions records, identification data obtained through the CDD process, account files) can be obtained under the circumstances set forth by Articles 110 and 115 of the StPO: therefore only if these objects required for evidentiary purposes, or for securing civil right claims, confiscation of profits (Article 20 of the StGB), forfeiture (Article 20b of the StGB), confiscation (Article 26 of the StGB) or any other order relating to property rights provided for in the law. They are not admitted if the purpose is only ascertaining the commitment of a crime. They are ordered by the public prosecutor’s office or by the court. Sequestration of business correspondence falls under the circumstances set forth by these two provisions, unless in the case of closed correspondence that has not yet reached the recipient, in which case the more restrictive conditions established by Article 135 (sequestration of letters, which regulates the case of opening and retaining the telegrams, letters or other mail sent by or destined for “the accused”, which is only admissible for clarifying an intentional criminal act punished with a prison sentence exceeding one year and if the accused is imprisoned for such an act or if his production or arrest has been ordered regarding that act) would apply.

Power to Take Witnesses’ Statement (c. 28.2)

369. The competent authorities (office of the public prosecutor and the courts) have the powers to take witnesses’ statements for use in investigations and prosecutions (Articles 151-166 StPO). These provisions apply generally and are also available in ML or FT investigations and prosecutions.

370. Measures to protect witnesses which may be at risk in the circumstances of a criminal procedure include provisions to hear witnesses without their identity being disclosed, allowing pre-trial records of cross-examination of witnesses, conducting questioning by means of telecasting if a witness is unable to appear in court without exposing him/herself to a serious threat and conducting closed court hearings. The application of such measures is decided by the public prosecutor and/or the court (Articles 161 and 165 StPO).

Adequacy of Resources to Law Enforcement and Other AML/CFT Investigative or Prosecutorial Agencies (c. 30.1) and Integrity of Competent Authorities (c. 30.2)

Prosecutorial Agencies

371. The offices of public prosecution are autonomous agencies of the judicial administration which are separate from the courts. They safeguard the interests of the state in the adjudication of law. Among their most important tasks is to lead the preliminary investigation and to represent the public prosecution in penal proceedings. The Public Prosecution Act governs these tasks. In contrast to judges, public prosecutors are bound by the instructions of their superiors. Instructions from higher authorities concerning actions in a specific proceeding must be justified and issued to the public prosecutors in writing and becomes part of the file. At first-instance courts their responsibilities are vested in the public prosecutor, at the court of appeal in the senior public prosecutor and at the Supreme Court in the general procurator. The offices of senior public prosecutors and the General Procurator’s Office are each only subordinate to the MoJ. A general procurator does not have any authority to issue instructions to senior public prosecutors or public prosecutors. At present, there are about 300 public prosecutors in Austria.

372. Only judges or former judges, who continue to meet the requirements for being appointed as professional judges, may become public prosecutors. Just as the established posts for judges, the established posts for public prosecutors are also advertised publicly to applicants. The Federal President appoints public prosecutors upon proposal by the staff commission. However, for most established public prosecutor posts the President has delegated the right of appointment to the Federal Minister of Justice.

373. If a public prosecutor is found guilty of violating the professional and ethical obligations, he/she is responsible to a disciplinary commission set up with the MoJ. The sanctions which this commission may impose also include termination of the employment relationship. In addition, public prosecutors also have a penal-law liability. In terms of civil law, public prosecutors may only be held responsible by the state, similarly to judges, and not by the parties involved in a case, who may only bring an action against the state for official liability.

Criminal Police

374. As of December 1, 2008, the Police has a current staff of 26,984 policemen and 5,407 administrative staff. A recent report of the Audit Agency stated that the Police may not be staffed enough, a view which is shared by the Police. The Police is otherwise adequately structured and funded, and provided with sufficient and technical and other resources to fully perform their functions. Staff is required to maintain high professional standards, including confidentiality.

375. The number of officials working for the BVT could not be disclosed to the assessors for reasons of confidentiality; however the officials met by the assessors stated that the number of officials employed is sufficient, and that the agency is adequately funded, and provided with sufficient technical and other resources to fulfill its functions.

Training for Competent Authorities (c. 30.3)

376. Training is provided to administrative, investigative, prosecutorial, and judicial authorities. Training is provided to the judicial authorities in the frame of the annual further training program, organized by the MoJ. Especially concerning the topics ML and FT there have been held several training programs (authorities indicated that two to three seminars are organized every year by the MoJ concerning financial crimes); some of them in cooperation with other institutions, such as the MoI. Judges and public prosecutors are offered to partake in those trainings. An extensive training specifically on ML and FT was last organized in 2006 (Ottenstein). This one-week training course was attended by about 55 judges and public prosecutors.

377. Since 1998, the MoJ also encourages judges and public prosecutors to participate in international trainings dealing with combating ML and FT. A number of judges and public prosecutors attended those trainings (e.g., the conferences of EUROJUST on terrorism in 2004 and 2005 in The Hague).

378. The training department of the BKA organizes special training courses in regular intervals for police services on ML but also on predicate offenses such as human trafficking, narcotics trafficking, etc. The A-FIU is very active in providing training for the private sector as well as for other authorities. Upon request of local police services, specific training seminars are held by the A-FIU. The total number of training and awareness raising seminars offered to various target groups is listed in the A-FIU’s annual reports.

379. BVT employees working in the CFT area have access to further training opportunities on the national and international level. BVT aims at participating in as many international trainings and workshops as possible. In this context, the workshops organized by EUROPOL, Interpol, foreign partners, such as for example, the training courses of the German Federal Criminal Police Office and those organized by the intelligence can be mentioned.

380. The acquired experiences and information are then spread on by BVT to the LVTs in the framework of regular meetings, to ensure that also the investigators in the federal states are permanently provided with up-to-date knowledge and information.

Additional Element (Rec 30) - Special Training for Judges (c. 30.4)

381. See reference to training for judges under criterion 30.3.

Legal Framework

383. Austria applies EC Regulation 1889/2005 on controls of cash entering or leaving the community (EC cash control regulation) to cross-border transportation of currency and bearer negotiable instruments at its borders with non-EU countries, that is, Switzerland and Liechtenstein. The EC Regulation is directly applicable in Austria as an EU member. For EU-internal borders (i.e., borders with Germany, Hungary, Italy and Slovakia) Austria applies the Customs Law (ZollR-DG), with the notable exception of the borders with Jungholz and Mittelberg: both Jungholz and Mittelberg are Austrian enclaves in the territory of Germany which have been historically exempted from the application of the Austria ZollR-DG and which, as the authorities explained, are subject to German customs law, by international treaty.

384. The EC Regulation establishes an obligation to declare cash of a value of EUR 10,000 or more when entering or leaving the EU space. The ZollR-DG subjects to customs supervision cash and cash-equivalent means of payments which are brought in the “area of application” of the law (that is Austria with the exception of the above mentioned enclaves). In this case the ZollR-DG establishes an obligation to disclose upon request of the Customs authorities cash or equivalent of a value of EUR 10,000 or more. This obligation was introduced in 2004 and 2006.