Opinion of the European Central Bank of 18 July 2002 at the request of the Austrian Ministry of Finance on a draft Federal act amending the Austrian Banking Act, Austrian Gambling Act and the Austrian Capital Markets Acts (CON/2002/19)
Date: 2002-07-18
Institutions: European Central Bank
Subjects: Austria, fight against crime, financial stability, national law, payment system, terrorism

EN

OPINION OF THE EUROPEAN CENTRAL BANK

of 18 July 2002

at the request of the Austrian Ministry of Finance

on a draft Federal act amending the Austrian Banking Act, Austrian Gambling Act and the

Austrian Capital Markets Acts

(CON/2002/19)

1. 

On 14 June 2002 the European Central Bank received a request from the Austrian Ministry of

Finance  for  an  opinion  on  a  draft  Federal  act  amending  the  Austrian  Banking  Act,  Austrian

Gambling Act and the Austrian Capital Markets Acts (hereinafter referred to as the 'draft act'). 

2. 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article 105(4)  of  the  Treaty

establishing the European Community and the second, fifth and sixth indents of Article 2(1) of

Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank
by  national  authorities  regarding  draft  legislative  provisions1,  as  the  draft  act  concerns,  inter
alia, means of payments and may affect the stability of financial institutions and  markets  and

the efficiency of payment systems. In accordance with the first sentence of Article 17.5 of the

Rules  of  Procedure  of  the  European  Central  Bank,  the  Governing  Council  of  the  ECB  has

adopted this opinion.

3. 

The draft act implements the Special Recommendations on Terrorist Financing of the Financial

Action  Task  Force  on  Money  Laundering  of  31  October  2001  (hereinafter  referred  to  as  the

'FATF  Special  Recommendations'),  which  are  part  of  the  international  efforts  to  combat

terrorism.  The  draft  act  concentrates  on  Special  Recommendations  IV,  VI  and  VII,  the

implementation of which falls within the powers of the Austrian Ministry of Finance. The draft

act,  inter  alia,  includes  provisions  regarding  the  reporting  of  transactions  suspected  of  being

related  to terrorism  and  determines that  in  case  of  wire  transfers and  other  cash  transfers,  the

originator information must be verified at every step along  the  wire  transfer  chain and  during

money  transfers.  Furthermore,  the  draft  act  implements  Council  Directive  91/308/EEC  of

10 June 1991  on  the  prevention  of  the  use  of  the  financial  system  for  the  purpose  of  money
laundering2,  as  amended  by  Directive  2001/97/EC  of  the  European  Parliament  and  of  the

1 
2 

OJ L 189, 3.7.1998, p. 42.
OJ L 166, 28.6.1991, p. 77.

                                                     
Council3. The Austrian consulting authority is not under an obligation to formally consult the
ECB  on  its  implementation  of  Directive  91/308/EEC,  as  Member  States  are  not  required  to

consult  the  ECB  concerning  the  transposition  of  Community  Directives  into  national  laws

(Article 1(2) of Decision 98/415/EC). This opinion, therefore, focuses on the implementation of

the FATF Special Recommendations referred to above. 

4. 

First,  the  ECB  would  like  to  recall  the  commitment  of  the  Eurosystem  to  contribute  to  the

adoption, implementation and execution of measures preventing the use of the financial system

for  terrorist  activities,  as  expressed  in  the  Governing  Council's  public  statement  of

1 October 2001. In order to maintain public confidence in the integrity of the financial system, it

is  of  the  utmost  importance  that  financial  systems  do  not  benefit  persons  and  organisations

associated  with  terrorist  activities.  As  a  consequence,  the  ECB  welcomes  the  intention  of  the

draft  act  of  combating  the  financing  of  terrorism  more  efficiently.  In  this  context,  the  ECB

would like to put forward some specific comments on the provisions of the draft act.

5. 

The draft act adds a new paragraph 10 to Article 40 of the Austrian Banking Act. According to

the  explanatory  notes,  this  provision  implements  FATF  Special  Recommendation  VII,  which

states that  originator  information  must  be  retained  at  every  step  along  the  wire  transfer  chain

and during money transfers. Paragraph 10 provides that in the case of wire transfers and other

cash transfers, credit and financial institutions must verify the name, address and, if appropriate,

the  account  number  of  the  originator  on  acceptance  of  the  instruction,  and  must  forward  this

information to the next receiving institution during the completion of the instruction, so that the

information on the originator can be verified at every step in the wire transfer or transfer chain.

The ECB notes that this provision could affect payments systems, as the amended Article 40 of

the  Austrian  Banking  Act,  in  case  funds  are  transferred  via  a  payment  system,  requires  the

payment system to transmit all relevant information. 

With  a  view  to  fostering  the  adoption  of  measures  to  combat  terrorist  activities,  the  ECB

supports and promotes any initiatives for harmonisation in  the  area of  payment  messaging,  in

particular  with  a  view  to  making  the  inclusion  of  certain  fields  in  a  payment  message

mandatory. However, the task of payment systems operators is to ensure the secure transmission

of information contained in a payment message. The information provided by the participants is

checked before processing, but is limited to checking that the relevant mandatory fields in the

payment  message  are  properly  filled  in.  The  contents  are  not  verified.  Payment  systems

operators need to rely in this respect on the information provided to them by the originator of

the  payment.  The  ECB  understands  that  the  provisions  of  the  draft  act  do  not  imply  any

requirement  for  payment  system  operators  to  ensure  that  the  originator  information  is

meaningful.  The  ECB  welcomes  this  approach  since  such  an  obligation  on  payment  systems

operators would not improve current procedures imposed by the banking supervisory and anti-

3 

OJ L 344, 28.12.2001, p. 76.

2

                                                     
money  laundering  authorities  on  banks  and  non-bank  financial  institutions  and  other  entities

under  the  FATF  Special  Recommendations.  In  addition  the  impact  that  such  a  requirement

could have on the smooth functioning and efficiency of the payment systems would need to be

carefully considered. 

6. 

In addition, it should be borne in mind that at present originator and recipient information can

be transmitted directly from the sending bank to the receiving bank. As mentioned above, the

presence of mandatory originator and recipient information can be checked automatically by a

payment system before a payment message is accepted for processing. During the transmission

and processing of a payment, the originator and recipient information does not necessarily have

to be forwarded to the settlement part of the payment system. Whether all or only  part  of the

data  included  in  a  payment  message  are  forwarded  to  this  part  depends  on  the  nature  of  the

payment system. Therefore, the provision requiring the originator to be identified at every step

in  the  wire  transfer  or  transfer  chain  should  be  understood  as  not  necessarily  involving  the

settlement of the payment itself. 

7. 

The amendments to  Article  41(1) included  in the draft  act  impose  reporting  obligations  when

the originator information for wire transfer orders or other money orders amounting to at least

EUR  2  000  forwarded  by  another  credit  or  financial  institution  has  not  been  included  or  is

incomplete.  If  the  originator  information  is  merely  incomplete  and  there  is  no  suspicion  of

money  laundering  or  terrorist  financing,  the  order  may  nevertheless  be  forwarded  and  at  the

same  time,  the  competent  authority  is  informed.  The  ECB  understands  that  the  reporting

obligations contained in the draft act apply to credit institutions and financial institutions only,

to  the  exclusion  of  payment  systems  operators.  The  ECB  is  in  agreement  with  this  approach

since it believes that payment systems operators should not be subjected to any requirement to

report missing information to the competent authorities. The payment system operator is not the

beneficiary  of  the  payment  but  only  in  charge  of  processing  the  transfer  order  between

participants.  Moreover,  a  requirement  at  the  level  of  the  payment  system  operator  would

duplicate  the  notifications  already  received  by  the  competent  authorities  from  credit  and

financial institutions.

8. 

The ECB understands that the FATF plans to re-examine Recommendation VII in the months to

come, in order to make it more specific and facilitate its implementation. There is currently no

threshold in Recommendation VII and this will probably be one of the issues to be discussed.

Since harmonised implementation is important, the Austrian consulting authority might consider

waiting  for  the  results  of  the  FATF’s  re-examination  before  incorporating  any  threshold  in

implementing the Recommendation.

9. 

The ECB welcomes the addition of sentences 21 and 22 to Article 1(1) of the Austrian Banking

Act. By these provisions (i) over-the-counter purchases of foreign instruments (inter alia notes

and  coins)  and over-the-counter  sales  of foreign  notes and  coins  as  well  as  traveller  cheques;

and (ii) the transfer of cash amounts by transporting them from the originator to the receiver, or

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by  receiving  the  cash  amount  from  the  originator  and  paying  the  receiver  in  cash,  except  for

interbank transactions are regulated as banking business requiring a licence.

10.  The  ECB  confirms  that  it  has  no  objection  to  the  competent  national  authorities  making  this

opinion publicly available at their discretion.

Done at Frankfurt am Main on 18 July 2002.

The President of the ECB

[signed]

Willem F. DUISENBERG

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