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How are ‘money laundering’, ‘terrorism financing’ and ‘fraud’ legally defined in your jurisdiction?
‘Money laundering’ is the concealment of the illegal origins of income from certain criminal activities, referred to as prior criminal offences. The scope of ‘terrorist financing’ is more difficult to define than money laundering. It is understood to be providing assets (including legal assets) for the perpetration of a terrorist act. Similarly to the fight against financing terrorism, international standards also exist for combating proliferation financing, since the proliferation of weapons of mass destruction also poses a serious danger to international peace. The precise definitions are provided below:
- ‘Money laundering’ (Section 165 of the Criminal Code): A person commits money laundering when he or she hides or conceals the origin of assets that are the proceeds of specific felonies or certain offences punishable by imprisonment for more than one year, especially by making false statements in the context of transactions about the origin or true nature of these assets, property or other rights attached to them, the permission to control them, their transfers, or about their whereabouts (Section 165(1) of the Criminal Code). Money laundering is also committed by a person who knowingly takes possession of, stores, invests, administers, transforms, utilises or transfers to a third person any assets that are proceeds of one of the offences listed above (Section 165(2)) or of any assets over which a criminal organisation or a terrorist association has the power of disposition (Section 165(3)).
Assets are considered to be proceeds of a crime if the perpetrator has obtained the assets through an offence or has received them to commit an offence, or if the assets represent the value of the assets originally obtained or received (Section 165(4)).
The potential punishment is imprisonment for up to three years if the offence is committed in relation to a value exceeding €50,000; if the offence is committed as a member of a criminal organisation that has been formed for the purpose of laundering money on a continuing basis, imprisonment is for one to 10 years.
- ‘Terrorism financing’ (Section 278d of the Criminal Code): A person commits terrorism financing, if he she provides or collects funds intending that they be used, in whole or in part, to commit:
- the offence of hijacking an aircraft or intentional endangerment of the safety of aviation;
- the offence of kidnapping for ransom or to threaten to commit that offence;
- an attack against limb, life or liberty of an internationally protected person or an attack involving the use of force against a residence, office or means of transportation of an internationally protected person that is capable of endangering limb, or the freedom of that person, or any threat of such attack;
- the offence of intentionally creating a nuclear power or ionising radiation hazard, to threaten to commit that offence, unauthorised dealing with nuclear or radioactive material or radiation equipment, any other offence relating to the acquisition of nuclear or radioactive material or a threat to steal or rob in order to acquire nuclear or radioactive material in order to coerce another to do, tolerate or omit an act;
- a serious attack against limb or life of another at an international civil aviation airport, a destruction of or serious damage to such an airport or to an aircraft at such an airport, or a disruption of the services of the airport if the offence involves the use of a weapon or other devices that are capable of jeopardizing the security at the airport;
- an offence committed in one of the ways set out in Sections 185 or 186 of the Criminal Code against a ship or fixed platform, against a person on board a ship or on a fixed platform, against a cargo of a ship or a shipping installation;
- the carrying of an explosive or another lethal device in a public place, a government or public facility, public transport, supply systems, or the use of such devices for the purpose of causing the death or serious assaults of another or of causing extensive destruction of the place, facility, or systems if the destruction is capable of bringing about considerable economic damage; or
- an offence that seeks to bring about the death or serious assault of a civilian or another person in an armed conflict who is not actively participating in the hostilities if the offence, due to its nature or circumstances, is intended either to intimidate a segment of the population or to coerce a government or an international organisation to perform or not to perform an act.
The potential punishment is imprisonment for one to 10 years.
- ‘Fraud’ (Section 146 of the Criminal Code): A person commits fraud when he or she has the intention to gain an unlawful material benefit for him or herself, or a third person, and, by deceiving another person about material facts, causes the other person to carry out, tolerate or omit an act that causes a financial or other material loss to the other person or a third person. Fraud is therefore a felony where the victim causes, by his or her own action, toleration or omission, the damage to him/herself or to a third person.
The potential punishment for fraud is imprisonment for up to six months or a monetary fine not exceeding 360 penalty units. In case of an aggravated fraud (eg, by using a false or forged legal document or damages exceeding €5,000), the punishment is imprisonment for up to three years; in case of damages exceeding €300,000, imprisonment is for up to 10 years.
In Austria, there are separate legal provisions for aggravated fraud, commercial fraud and insurance fraud.
Principal and secondary offences
What are the principal and secondary offences in relation to money laundering, terrorism financing and fraud?
The Austrian legal system does not distinguish between primary and secondary offences. However, as described in more detail above, there is a principal offence, such as fraud, and if this offence is committed with means that are driven by a higher criminal mind (eg, by counterfeiting legal documents), the range of the applicable fine or sentence is increased. This kind of fraud is called ‘qualified fraud’. The same principle of a higher qualification of the crime applies if the damage caused by it or the object of the crime has a higher financial value. The increase of the punishment is significant: while simple fraud can be sanctioned by a monetary fine, severe fraud is sanctioned by imprisonment of up to 10 years.
How are predicate offences defined?
Although there is no explicit legal definition of ‘predicate offence’, there is a common understanding of its meaning. In connection with anti-money laundering, the predicate offences are explicitly listed in Section 165 of the Criminal Code. Predicate offences are felonies (intentional offences that are punishable by imprisonment for life or by imprisonment for more than three years), offences against someone’s property punishable by imprisonment for more than one year, counterfeiting legal documents, counterfeiting specially protected legal documents, counterfeiting public authentication marks, suppressing legal documents, relocating boundary markers, resisting the authority of the state, founding or participating in a criminal association, providing false testimony, providing false testimony to an administrative authority, counterfeiting evidence, suppressing evidence, active and passive bribery, misdemeanours against IP law provisions if committed to generate a steady flow of income, or misdemeanours under financial laws relating to smuggling or the evasion of income or expenditure taxes.
De minimis rules
What de minimis rules apply to money laundering, terrorism financing and fraud offences?
There is no general de minimis rule for money laundering, financing terrorism and fraud offences. However, either the prosecution authority or the criminal court has the right to terminate a proceeding due to its minor nature. The suspect’s guilt, consequences of the offence and the suspect’s behaviour after committing the offence with regard to a potential compensation must be evaluated to assess whether the negative impact is of minor nature. In addition, a penalty must not be imposed solely to deter the suspect or the general public.