Just as Austria was about to be suspended as a member of the Financial Action Task Force (FATF), the country has finally succumbed to pressure to abolish its anonymous savings "passbook" accounts, which can be used for money laundering purposes.
For many years the FATF has been concerned with the issue of anonymous passbooks in Austria and it has remained high on the agenda, finally coming to a head in February this year when the FATF advised that due to Austria’s continued failure to take action to eliminate the anonymous accounts, Austria would be suspended with effect from 15 June, unless certain specified conditions were unambiguously met by 20 May. Those conditions were that the Austrian government must issue a clear political statement that it will take all necessary steps to eliminate the system of anonymous passbooks in accordance with the 40 FATF recommendations by the end of June 2002 and that the government must introduce and support a bill into Parliament to prohibit the opening of new anonymous passbooks and to eliminate existing passbooks. In addition, the FATF insisted that Austria should take no other measures to undermine the fight against money laundering, such as tightening banking secrecy.
Now that Austria has elected to comply with the conditions set by the FATF, the organisation is expected to lift its threat to suspend Austria from membership. It has certainly been a tricky situation, with Austria being a founder member of the FATF and yet continually ignoring the FATF's anti-money laundering recommendations, thereby harming the organisation's credibility.
The furore over Austria's anonymous savings bank passbook system,
which was introduced over 50 years ago to protect the savings
of the population, stems from the country having an estimated
27 million passbooks containing around US$100bn. There is evidence
that these accounts were being bought and sold on the Internet,
raising serious doubts about the legitimacy of some of the buyers,
yet Austria has until now resisted pressure from the EU and the
FATF to abolish the accounts.
Austria's change of government last year has probably not helped the country find a solution to the problem. When Jorg Haider came to power, it was widely thought that he would use the issue to rally support by marketing it as further foreign interference in Austrian affairs. Nevertheless, the abolition of the anonymous accounts has not in fact proved to be as unpopular as anticipated. It was probably more a case of stubborness, and when it came to the prospect of a humiliating suspension from the FATF, it was wiser for Austria to back down quietly. The climbdown therefore heralds a change in Austrian private banking in so much as the government has introduced legislation which will end the right to open secret bank accounts from November and phase out existing anonymous accounts by June 2002.
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