In Austria, as in most European countries, there is a legal obligation to disclose and confirm the source of your financial resources. For the state, such confirmation guarantees that money obtained exclusively through legal means will be used in various types of transactions. Thanks to this procedure, the country should remain “economically clean”.
Confirmation of the source of funds is carried out when buying or sometimes even renting real estate. Thus, to buy or rent a luxury property in Austria, you need not only to have enough money, but also to prove the legality of its receipt, which often poses a lot of problems. That is why we will describe this procedure in more detail below.
Which law applies to the confirmation of the source of funds?
- the general law is the Austrian Financial Markets Anti-Money Laundering Act (Finanzmarkt-Geldwäschegesetz (FM-GwG);
- for securities transactions, the Securities Supervision Act (Wertpapieraufsichtsgesetz – WAG) also applies;
- traders are subject to the Austrian Trade Act (Gewerbeordnung – GewO), which also contains provisions on money laundering.
Who must confirm the source of funds?
According to Austrian law, the Austrian Financial Markets Anti-Money Laundering Act, the source of funds must be confirmed by a person who:
- enters a permanent business relationship with a financial institution (in the classic case, a bank when opening a bank account);
- performs a transaction of at least EUR 15,000 that does not fall within the scope of a permanent business relationship.
- deposits funds (often in cash) to or withdraws them from a bank account, if the amount to be deposited or withdrawn is at least EUR 15,000;
*in practice, regarding points 2 and 3, banks may require proof of legitimacy of funds starting from EUR 5,000, depending on the bank’s policy and the client (how risky such a client is from the bank’s point of view)
- is suspected of money laundering or terrorist financing, or if there are doubts about the identification data already obtained. Pursuant to Section 47 of the Austrian Financial Markets Anti-Money Laundering Act, similar risk factors apply to third-country nationals who apply for Austrian residence or citizenship by purchasing real estate or government bonds or investing in companies in Austria.
Who carries out the verification?
Verification of the source of funds is carried out by regulatory authorities. Generally, such persons include credit, financial institutions (primarily banks) and service providers related to virtual currencies.
At what stage is the source of funds confirmed?
Pursuant to Article 7 of the Austrian Financial Markets Anti-Money Laundering Act, the identification and verification of the client’s identity and the origin of the funds used must be established prior to the establishment of business relations and before a certain type of transaction is made.
*in practice, such verification takes place before the transfer of more than EUR 5,000 to the bank’s account. To do this, the customer must first notify the bank of the planned transaction amount, provide supporting documents and explanations to the bank.
What documents are proof of the source of funds?
- salary certificates;
- notifications of income tax payment;
- contracts confirming the transfer of funds, for example, a purchase and sale agreement;
- payment receipts confirming the fact of purchase and sale;
- bank statements from the seller’s and buyer’s accounts;
- proof of cash payment from the bank.
*The list of documents is not exhaustive.
Procedure for confirming the source of funds
This procedure depends on the quality and quantity of evidence provided. Controlling authorities and banks have a wide range of discretionary powers in this regard. They may request additional documents and assess their relevance at their own discretion.
The documents relating to a future transaction are passed on to a bank officer. However, the latter does not decide on the merits, but only passes the documents to a special financial department that conducts a detailed KYC (know your client) check. It is this department that makes the final decision on whether to approve or deny the transaction. It may also request additional documents for verification. As a rule, this department does not give reasons for refusal, but only refuses to credit funds to the account of this bank. If the bank is satisfied with the documents, it will allow the funds to be credited to its account.
VigoImmobilien services for confirming the source of funds in Austria
It should be noted that the procedure for confirming the legitimacy of the source of funds is quite complex and requires special knowledge and experience in working with banks. Sometimes, even if the client has all the supporting documents, it is important to convince the bank that these documents are sufficient to allow the transaction.
VigoImmobilien team will be happy to assist you in confirming the source of funds.
We provide the following services:
- analysis of available evidence of the source of funds;
- proposals for providing other options for possible evidence;
- correspondence with regulatory authorities and banks;
- preparation for an interview with a regulatory authority or bank;
- other services that depend on each individual case.
For more detailed information and to order legal support for confirming the source of funds in Austria, please send us an e-mail at [email protected].
