Austrian Watchdog Warns Banks Against Bitcoin

The FMA, Austria’s financial regulator, has sent a letter to banks in the country, warning them to ensure adherence to AML rules when it comes to digital currency dealings.

Austria’s Financial Market Authority (FMA) has issued a series of recommendations to banks in the country, suggesting that all crypto-related transactions must be viewed with suspicion and handled with caution, in order to ensure compliance with anti-money laundering (AML) laws.

Bloomberg reported that the regulator sent a letter to lenders earlier this year, as confirmed by an FMA spokesman, which advised Austrian banks to circumvent the “heightened risk” associated with cryptocurrencies by ensuring complete compliance with AML rules.

“Given virtual currencies’ high degree of anonymity, the risks of money laundering and terrorism financing is elevated,” the letter said. It went on to add that banks must “pay special attention and take additional measures if needed to recognize such transactions, validate them and review the origin of the funds.”

The aim of the FMA’s recommendations is to ensure that no funds enter the system without being screened as per AML laws. The responsibility, therefore, lies with the lenders, to carefully scrutinize all clients, and ensure they are satisfied with clients’ crypto-related businesses/dealings.

As per Bloomberg, the recommendations suggest that banks should:

  • “examine whether exchanges with which their clients are doing business are regulated or voluntarily observe rules against money laundering;
  • ask clients who receive proceeds from cryptocurrency transactions to provide evidence of how and at what price they obtained the virtual coins;
  • end customer relationships if it’s not possible to make the recommended checks.”

The anonymity of digital currencies, combined with the unregulated nature of the crypto market, has sounded alarm bells for central banks and financial authorities worldwide. Regulatory frameworks are being proposed, drafted, and implemented by countries including France, Germany, Russia, India, and Malaysia.

Ewald Nowotny, Austrian central bank governor and member of the European Central Bank’s governing council, has been a vocal critic of Bitcoin. Last month, Nowotny called for the imposition of stricter checks on Bitcoin, claiming it lacked transparency and was the ideal tool for criminal activities such as money laundering.

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