Austrian law expressly recognises and protects a bank's duty of confidentiality (sometimes referred to as 'bank secrecy') with respect to information received by or relating to its customers. This duty is primarily governed by s 38(1) to (4) (scope and exceptions) and s 101 (criminal liability) of the Banking Act (BWG) and supplemented by several provisions of a procedural nature such as the Revenues Penal Code and the Criminal Procedure Code.
Section 38(5) of the BWG, a provision of constitutional law, affords special protection to the provisions of s 38(1) to (4) of the BWG by stipulating that an amendment of these provisions requires - similar to an amendment of a provision of constitutional law - a quorum of at least 50% and a majority of two-thirds of the deputies to the National Counsel (Nationalrat, the more powerful of Austria's two Houses of Parliament).1
Since 1 January 1994, the provisions on bank secrecy were partly amended, in particular with regard to money laundering, as Austrian law and banking practice initially permitted the opening of anonymous accounts in certain cases. In order to avoid the abuse of the Austrian banking system for the purpose of money laundering, Austrian banks in 1989 agreed on the wording of a uniform declaration, according to which each bank voluntarily undertook a number of duties to prevent such abuse.2 These duties were expanded by another declaration on additional duties of diligence in 1992, the compliance with which still was voluntary.
Due to increasing national and international political pressure, as well as the fact that Austria became a full member of the EEA in 1994 and of the EU in 1995, most of the duties contained in the above-mentioned two declarations were implemented into s 39ff of the BWG.3 Furthermore, money laundering was rendered a criminal offence. By amendment of s 40 of the BWG, with effect from 1 November 2000, the potential to open anonymous accounts was finally abolished: BWG, s 40(1), no 1. This was supplemented by a new s 40(6), according to which no payments may be made on existing savings accounts unless the identity of the holder was registered by the bank. As of 30 June 2002, savings accounts of still unidentified holders need to be particularly labelled by the bank and no payments into and no withdrawals from such accounts are permissible unless the holder has been identified.
As of 1 January 2002, the amount as of which banks are under a duty to register the identity of their customer in connection with cash transactions not within an ongoing business relationship between bank and client was changed from ATS 200,000 to **€15,000. As of 31 October 2000, this duty to register also applies to payments into and, as of 30 June 2002, to withdrawals from saving accounts in cases where the amount paid in or withdrawn exceeds **€15,000.4 Since 1 October 1998, the duty to register the identity of a customer has also existed if there is reasonable suspicion that the client is engaged in transactions which serve the purpose of money laundering: BWG, s 40(1), no 3.
The bank's duty of confidentiality
Section 38(1) of the BWG reads:
'The credit institutions, their shareholders, organ members, employees, as well as persons otherwise becoming active for the credit institutions, are prohibited from disclosing or exploiting secrets which were entrusted to, or to which access was made available for, them on the basis of the business relationship with clients or on the basis of s 75 (3)5 hereof exclusively (Bank Secrecy). If, in the conduct of their official activities, organs of public authorities or of the Austrian National Bank, receive information which is subject to the Bank Secrecy, they shall maintain the Bank Secrecy as an official secret from which they may be released only in one of the cases set forth in s 38 (2). The duty of confidentiality applies without limit as to time.'
The provisions contained in BWG, s 38 contain elements of private as well as public administrative law.6 The expressly stipulated confidentiality obligation on the part of public authorities which gain access to information which is subject to bank secrecy or the supervision of the banks' compliance with the provisions on bank secrecy within the framework of the general supervision of banks certainly constitute elements of public administrative law. On the other hand, BWG, s 38 also defines the scope of a duty of private law which forms part of every contractual relationship between a bank and its customers. Views are split on whether or not the duties imposed by the statutory bank secrecy can be contracted away in whole or in part.7
The elements contained in the above s 38(1) of the BWG can be described as follows:
- BWG, s 1(1) defines as a credit institution (hereafter bank) whoever is authorised to conduct banking transactions (explicitly enumerated and defined in s 1(1) of the BWG) on the basis of the BWG or any other provision of federal law. Views are split on whether the bank secrecy also applies to institutions which conduct banking transactions without authorisation, ie which have not received the necessary banking license.8 The Austrian National Bank is not subject to the bank secrecy provisions of the BWG, but to its own provisions. Finance institutions, ie institutions authorised to conduct specific finance transactions as defined in BWG, s 1(2) without qualifying as credit institutions, as well as contract insurance businesses, are principally also not subject to the bank secrecy.9
- It is the prevailing view that the term 'shareholders' as used in s 38 of the BWG means all shareholders of a bank, including shareholders of banks which are publicly traded.10 'Organ members' are the holders of offices which are provided for in the applicable corporate law. A trustee in bankruptcy is deemed an organ member of the bank.
'Persons otherwise becoming active for the banks' are physical and other persons which are not integrated into the banks' internal organisation, including their outside counsel, other experts as well as other banks employed for the accomplishment of banking transactions.11
Physical persons may be simultaneously shareholders, organ members, employees of, or persons otherwise becoming active for, the same bank.
- 'Secrets' are facts, proceedings and conditions of factual or legal nature which are known to a limited group of persons only and to which other interested persons cannot gain access at all or can gain access with difficulty only. Further, an objective interest to keep the facts in question secret is required, but regularly presumed on the part of the clients.12
- 'Clients' are persons that deal with the banks in the context of banking transactions. It is not necessary that such transactions actually close.13 Since bank secrecy is unlimited in time, it continues to exist after termination of the contractual relationship, and even after the death (or liquidation) of the client. If a bank gains access to a secret relating to a client in a manner other than through the business relationship, there is no duty of confidentiality upon the bank pursuant to bank secrecy.14 Non-clients, and therefore not directly entitled to bank secrecy, are third parties with respect to which the banks receive confidential information from clients. The banks are nevertheless obliged towards their clients not to disclose secrets relating to third parties which they learn from clients.15
- 'Disclosing' a bank secret generally means making it known (or allowing it to become known by refraining from taking reasonable action to prevent disclosure) to somebody who did not know it before. There is quite a dispute about the scope of those persons to whom bank secrets may be disclosed on the ground that such persons would also be subject to bank secrecy with respect to the relevant information (for example, other bank employees etc). One view holds that a bank secret may only be disclosed to those others within the same organisation (bank) with reasonable grounds for learning about the secret in question, such grounds depending on the relevant internal organisation.16 The opposite view advocates that bank secrets may be freely passed on within the same organisation (bank) provided only that the recipients of the information themselves are strictly bound by bank secrecy as well.17 Another controversial question is whether bank secrecy shall prevail over the (bank's) supervisory board's or the shareholders' right to information.18
- 'Exploiting' a bank secret is generally interpreted as an economic exploitation of a bank secret to the detriment of the bank's client in question.19 One of the leading commentaries holds that a bank is entitled to use clients' secrets for its own business dispositions, provided such use does not adversely affect the clients in question, further for its own dispositions towards the clients even if that affected them adversely and, finally, for its usual counselling of other clients, provided that the secret is thereby not indirectly disclosed or that the clients in question are not otherwise adversely affected.20
- Bank secrets disclosed to courts or other public authorities become official secrets21 and generally must not be disclosed to other courts or public authorities or exploited by the latter as a basis for the initiation of proceedings of any kind. To this extent the (transformed) bank secrecy prevails over the general duty of public authorities to mutual assistance.22 Furthermore, official secrecy is lifted once a trial has commenced.23
Customer's remedies for breach of confidence
If a breach of bank secrecy is threatened, whether for the first time or continuing, the client will be entitled to injunctive relief and, in rare cases, also to removal (Beseitigung) of the breach, for example, by causing a bank to reclaim passed on information which still enjoys the character of a secret. For a client's claim to an injunction or to removal no fault is required on the part of the person against whom such remedy is sought.24
A client who suffers damages through a violation of bank secrecy is entitled to reimbursement in accordance with the general principles of tort law. The client will generally be entitled to reimbursement of pecuniary damages which have been caused by such violation through the fault of a tortfeasor. If the party in breach is a bank (or one of those for whom a bank is liable), pecuniary damages will include lost profit; if the tortfeasor is one of the other persons subject to bank secrecy, this will often but not always be the case.25
It is the prevailing view that the right to damages may be contracted away in respect of a tortfeasor's lower levels of fault (at least for slight negligence) and that provisions to that effect contained in the bank's general conditions are valid if such conditions have become a part of the contractual relationship between the bank and the client.26 A bank will be liable for all its agents and other personnel, whether employed or not, which inflict damage upon clients through a (faulty) breach of bank secrecy. On the other hand, such agents and other personnel will also be protected by the above disclaimer as to lower degrees of negligence.27
If breaches of bank secrecy cause damage to third parties (other clients or non-clients), the Austrian Supreme Court (OGH) held in a recent decision that third parties (in this case another client) are not entitled to damages towards the bank in cases where it breaches bank secrecy towards another client.28
Termination of business relationship
A client who is the victim of a violation of bank secrecy by a bank or a tortfeasor whose actions are attributed to such bank will be entitled to terminate the contractual relationship with the bank with immediate effect.29
A physical person who discloses or exploits facts which are subject to bank secrecy with the malicious intent to enrich himself or a third party or to affect another adversely is subject to criminal punishment (imprisonment for up to one year or fines), but shall only be prosecuted upon application of the person whose interest in confidentiality was impaired: BWG, s 101. Public officials in breach of bank secrecy may be subject to (even more serious) criminal punishment for the offence constituted by a breach of the official secret.
Action by bank regulatory authorities
The bank regulatory authority, the Financial Market Authority (Finanzmarktaufsichtsbehhörde, FMA)30 has to intervene in cases of breaches of the bank secrecy attributable to a bank: BWG, s 70(4). The most severe consequence is the withdrawal of the bank's banking licence.31
Exceptions to the general duty of non-disclosure
Section 38(2) of the BWG provides for nine exceptions to bank secrecy. It is the general consensus that this list is not exhaustive.32 The following text describes those exceptions set forth in BWG, s 38(2) as well as those which are based on other provisions or principles of law.
There is no bank secrecy if the client 'expressly consents in writing' to the disclosure or exploitation of a secret: BWG, s 38(2), no 5. A valid consent must be clearly formulated in writing and signed by the client. If a secret relates to non-clients, the waiver has nevertheless to be issued by the client who passed the secret on to the bank. It is not clear how precisely the waived secrets have to be defined in the declaration of consent. The OGH has held that a reasonably defined waiver, by signing the application form for the opening of a bank account which contains a corresponding clause, was valid.33 A general waiver of bank secrecy without limit as to time (in particular, the future) or scope could be qualified as invalid.34 The general conditions currently used by banks do not provide for such a sweeping waiver of bank secrecy. It is not clear whether a waiver of bank secrecy can be revoked at any time.35
Litigation between bank and client
There is no bank secrecy if the disclosure is 'necessary for the resolution of legal issues arising out of the relationship between banks and clients' (BWG, s 38(2), no 7). This exception relates to litigation between the bank and its client only.
General information on customer's economic situation
There is no bank secrecy for 'generally phrased information on the economic situation of a business', as usually given by banks, unless the former expressly objects thereto (BWG, s 38(2), no 6); this exception only applies to business clients as opposed to private customers. The bank will have to balance the interests of the clients and those of the recipients of the bank's information. It may only give a general picture of their clients' state of affairs without directly or indirectly disclosing exact data.
Balancing of interest
This exception is not set out in statutory law. It has been argued in the literature that probably no bank secrecy exists if, upon a balancing of the client's interest in confidentiality with conflicting interests of the bank or third parties, the bank's or such third parties' interests appear to be significantly overriding.36 After all, the expressly codified exceptions to bank secrecy are provisions on special conflicts of interest situations in which the law stipulates that other interests prevail over bank secrecy. Therefore, the balancing of interests in cases not statutorily provided for must result in a clear preponderance of those interests which conflict with bank secrecy. Accordingly, the OGH, in confirming this view, held in one decision that in principle a bank is not bound to bank secrecy if an overriding interest in the disclosure exists.37
Typical cases are those where the bank or its employees would incur (criminal) punishment by non-disclosure of bank secrets, or civil litigation in cases with third parties who themselves are under the bank's duty of confidentiality.
Payment of another's debt, surety
There is probably no bank secrecy if the bank is asked by a surety or a person who actually has posted or is contemplating posting security for an obligation by a bank's client towards such bank for information on such debtor's financial state.38
The OGH held in various decisions that bank secrecy had to be lifted for third parties who have paid a client's debt to the bank, for which debt such third parties were personally liable or have posted other security. Such third parties are assignees of the (bank) creditor's rights by operation of law. Such third parties are further entitled, inter alia, to delivery of all other security posted for the debt in question and of such other documents or information (namely the underlying credit agreements, other suretyship agreements, drafts and the correspondence executed by the other sureties or the debtor and relating to the debtor's credit account, but not the internal memoranda and correspondence signed by the bank) as are necessary for the payers to pursue their right of recourse against the debtor and against others who have posted security for such debt.39 The OGH also expanded this exception to the pledgee's right of information about the pledgor's financial state in order to evaluate whether or not to claim for an additional pledge by the pledgor.40
There is no bank secrecy in Austrian penal courts in connection with initiated judicial criminal proceedings nor to Austrian fiscal penal authorities (Finanzstrafbehörden) in connection with initiated penal proceedings because of intentional fiscal offences (vorsätzliche Finanzvergehen) except for fiscal irregularities (ie fiscal offences of a lesser degree, Finanzordnungswidrigkeiten). The above provision, which is contained in BWG, s 38(2), no 1, forms the core of the exceptions to bank secrecy by virtue of compulsion of law.
Criminal proceedings are proceedings with respect to such crimes or offences (including certain crimes and offences of a fiscal nature) as shall be conducted by the regular court system. Fiscal offences are certain offences provided for in the Revenues Penal Act (for example, tax fraud and smuggling) and other fiscal offences defined as such in other statutes. Fiscal offences are only offences against the federal tax system; they may be subject to judicial criminal punishment or to administrative (fiscal) penal punishment. Fiscal penal authorities are administrative agencies.
Whether or not courts or fiscal penal authorities may request the disclosure of bank secrets depends mainly on whether or not a relevant proceeding is deemed 'initiated' and whether or not there is (sufficient) 'connection' between the proceeding and the requested disclosure. A resolution of these issues must take the generally advocated principle into consideration that the exception to bank secrecy in connection with criminal and certain administrative penal proceedings shall not enable the prosecution to gather information for potential crimes or offences ('fishing expeditions'), but only to corroborate (or dispel) well-founded and reasonably defined suspicions of such crimes or offences.41
'Initiated' criminal proceedings
Under Austrian law, a criminal proceeding is normally conducted in three stages. The initial stage is the preliminary inquiry (Vorerhebung) conducted under the guidance of the public prosecution, which in turn employs police or courts for the actual inquiry. The next phase is the preliminary investigation (Voruntersuchung) in which a judge is in charge. This is followed by the trial as the last stage. A preliminary investigation can be directed against one or more identified persons only, whereas a preliminary inquiry may also be directed against unknown perpetrators.
Whether a criminal proceeding should be deemed initiated upon the commencement of preliminary inquiries or only upon the opening of a formal preliminary investigation was resolved by a decision of the OGH,42 which held that the taking of any measures against known or unknown perpetrators in the course of criminal proceedings, including the stage of preliminary inquiries, constituted the initiation of criminal proceedings.
'Initiated' fiscal penal proceedings Fiscal penal proceedings are formally initiated by a decree pursuant to the Revenues Penal Code (FinStrG), ss 82, 83, subject to appeal. The suspect must receive notice of such initiation. A fiscal penal proceeding is to be initiated if there is suspicion of a fiscal offence unless the offence can probably not be proven, suspected facts do not constitute a fiscal offence or the suspect has not committed the offence or cannot be prosecuted or punished for it.
There is a sufficient connection between proceedings and bank secrets if there is an objectively ascertainable relevance for the requested information to the proceedings in question. This is a question of degree and there are only a few court decisions on the point.43 It is, however, the prevailing view that such relevance may also exist for the bank secrets of one party in relation to a crime or fiscal offence of a third party in which the former did not participate.44
Search and seizure
In the context of fiscal penal proceedings, s 89(4) of the FinStrG provides that such evidence which is in the custody of banks and which concerns secrets within the meaning of the BWG, s 38(1) may only be seized if it is 'directly connected' with the intentional fiscal offence(s) (not just fiscal irregularities) for which bank secrecy is (already) lifted pursuant to the BWG, s 38(2), no 1.
This limitation applies not only for the benefit of the party whose suspected fiscal offence formed the basis of the initial search order, but also for the benefit of third parties. The direct connection between the originally suspected fiscal offence and one on the part of such third party which comes into the open in the course of a search and seizure is probably only present if it turns out that the third party is a direct accessory to the original suspect's fiscal offence. A closely related but formally separate fiscal offence, a crime or other contravention of law certainly, will probably not suffice.45
If the bank formally alleges that information was seized in violation of bank secrecy, such information must be sealed and a formal decision on the legality of the seizure must be issued, which is subject to appeal.
Finally, s 98(4) of the FinStrG provides that evidence seized in violation of the above must not be used for the rendering of the decision (punishment order) to the detriment of the accused or of an accessory. This provision is interpreted to mean (in addition) that the fiscal authorities must not use such evidence in an initiated proceeding and no court or other public authority may use it to commence proceedings whatsoever against those involved.46
There is probably one exception to the above: the fiscal authorities which receive such privileged information may use it for an assessment (or reassessment) of the original suspect's taxes.47
The corollary to s 89(4) of the FinStrG is s 145a of the Criminal Procedure Code (StPO). Under this provision banks (and persons acting for banks) are under a duty to hand over all documents concerning the type and scope of the business relationship with the client as well as business transactions and other business operations related thereto to the authorities if, based upon specific facts, it must be assumed that the business relationship of a client with a bank is connected to the rendering of a criminal act (crimes or offences). Such context must also be assumed if the business relationship is used for the transfer of an economic benefit which was derived from or received for a criminal act or which is under the disposition of a criminal organisation. Under the same prerequisites, persons acting for banks are under a duty to testify as witnesses on such business operations. The existence of this duty of a bank (or persons acting for a bank) must be ascertained by way of a decision of the judge presiding over the preliminary investigation, which needs to contain the facts giving rise to the connection between the business relationship and the subject matter of the preliminary investigation as well as a description of the documents to be handed over by the bank. Section 145(2) of the StPO affords the bank the right to request a sealing of the seized documents. In such a case, a panel of three judges resolves on whether the documents may be searched or whether they must be returned to the bank. Their ruling cannot be appealed. In case of a seizure of objects beyond the limitations set by s 145a of the StPO, a criminal judgment rendered on the basis of such evidence could be appealed as void.
Bank secrecy and foreign legal proceedings
In the absence of applicable treaties, legal assistance to foreign authorities is governed by the Act on Extradition and Legal Assistance in Matters of Criminal Law (ARHG). Pursuant to the ARHG, s 50, legal assistance may be granted by or through Austrian courts to foreign courts, foreign public prosecutors and foreign prison authorities, provided there is reciprocity. Legal assistance shall not be granted if, inter alia:
- the offence on which the request for legal assistance is based is:
- not subject to judicial criminal punishment under Austrian law,
- of political nature,
- of military nature, or
- a violation of revenues, monopolies, or customs laws, or a breach of exchange control, rationing, import or export control laws;
- the request is made by a country the criminal procedure and enforcement system of which does not meet certain human rights standards;
- the special requirements under Austrian law for certain measures (in particular, seizure and opening of mail or wire-tapping) are not met;
- the legal assistance would lead to a breach of Austrian law providing for duties of confidentiality which shall be maintained in regard to penal courts as well; or
- the compliance with the request for legal assistance would be contrary to the public policy or other essential interests of the Republic of Austria.
It is the prevailing view48 that legal assistance shall be granted on the basis of the ARHG if its conditions are met and the special requirements and limits under which bank secrecy may be lifted in purely domestic proceedings are fulfilled.
Austria is also a party to the European Convention on Mutual Assistance in Criminal Matters of 20 April 1959 (the European Mutual Assistance Convention). The main requirements for and exceptions to Austria's duty to render legal assistance under it are:
- Legal assistance will only be granted for offences which are subject to judicial criminal punishment in the requesting country and in Austria (art 1(1) and Austrian Reservation thereto).
- Legal assistance will not be granted in respect of political or fiscal offences (Austrian Reservation to art 2a).
- Legal assistance will not be granted if it impairs Austria's sovereignty, security, ordre public or other essential interests (art 2b; Austria has made a Reservation to art 2b declaring that it understood as 'other essential interests', in particular, respecting the duties of confidentiality provided for by Austrian law).
- 'Austria will only comply with requests for search or seizure if such search or seizure is in accordance with Austrian law' (Austrian Reservation to art 5(1)).
In 1983, Austria, by ratifying the Additional Protocol to the European Mutual Assistance Convention (the Additional Protocol), waived the exception as to fiscal offences for violations of revenues, tax and customs laws. Upon ratification of the Additional Protocol, Austria made a declaration in which it stated that it would grant legal assistance in criminal proceedings relating to revenues, tax and customs laws subject to the condition that, in accordance with the duties of confidentiality provided for by Austrian law, information and evidence received by way of legal assistance will only be used in the criminal proceeding for which legal assistance was requested and in revenues, tax, or customs proceedings directly connected to such proceeding.
In an additional unilateral Declaration, Austria withdrew the Reservation it made to art 2a with respect to those parties to the European Mutual Assistance Convention which had not become parties to the Additional Protocol, and announced that it would henceforth apply art 2a of the European Mutual Assistance Convention in accordance with domestic law, ie the ARHG.49
Consequently, there now seems to be two groups of parties to the European Mutual Assistance Convention: those who are parties to the Additional Protocol and to whom legal assistance will be granted in criminal proceedings of a fiscal nature; and those who are not parties to the Additional Protocol and to who such assistance will, in the absence of further bilateral treaties, not be granted. We believe that the above-mentioned special requirements and limits under which bank secrecy may be lifted in a domestic proceeding will apply likewise to the grant of legal assistance under the Convention (to either group), this in view of the above Reservation to art 2b and the declaration on duties of confidentiality made in connection with the ratification of the Additional Protocol.50, 51
On 29 May 2000, the Council of the European Union established the Convention on Mutual Assistance in Criminal Matters between the member states of the EU (2000/C 197/01) which aims at supplementing the provisions and facilitating the application between the EU member states of, inter alia, the European Mutual Assistance Convention and the Additional Protocol. Under its art 3, mutual assistance shall also be afforded in proceedings brought by the administrative authorities in respect of acts, which are punishable under the national law of the requesting or requested member state, or both, by virtue of being infringements of the rules of law, and where the decision (by administrative authorities) may give rise to proceedings before a court having jurisdiction in particular criminal matters. In addition, mutual assistance shall also be afforded in connection with proceedings which relate to offences or infringements for which a legal person may be held liable in the requesting member state. Further, on 16 October 2001 the Council of the European Union established the Protocol to the Convention on Mutual Assistance in Criminal Matters between the member states of the EU (2001/C 326/01), which shall form an integral part of said convention. It details member states' duties with regard to requests for information by other member states on bank accounts, banking transactions and for the monitoring of banking transactions. According to its art 7, a member state shall not invoke banking secrecy as a reason for refusing any co-operation regarding a request for mutual assistance from another member state. To date (September 2002), both this Convention and this Protocol have not been adopted by Austria.
In addition to the above, Austria has entered into a number of bilateral treaties, some of which supplement the European Mutual Assistance Convention. A good example is the Treaty between Austria and the Federal Republic of Germany Supplementing the European Convention for Mutual Assistance in Criminal Matters and Facilitating its Application, dated 31 January 1972, which expands the scope of the European Mutual Assistance Convention. In particular, the covered offences include proceedings for violations of revenues, tax, customs and monopolies laws. Further, the police authorities of either country shall render, and may request, mutual assistance as well.
Indeed, the Administrative Court has held with regard to the predecessor provision of s 38 of the BWG, s 23 of the Credit System Act (KWG, the predecessor code of the BWG, which was replaced by the BWG as of 1 January 1994), and the OGH has held that s 38 of the BWG, did not prevent an Austrian administrative agency from granting legal assistance to a German authority in fiscal matters.52 Upon compliance with such requests, the Austrian authorities had to act in accordance with Austrian law and thus had the same rights as if they were themselves the investigating authorities in a purely domestic proceeding. This older decision was severely criticised by one author,53 who believed that the lifting of bank secrecy in fiscal matters violated an essential interest of Austria contained in art 2b of the Convention, in particular, in view of the Reservation made to art 2b and to the Declaration referred to above. Therefore, Austria should deny legal assistance in all fiscal matters if such assistance led to a revelation of bank secrets. However, most other54 commentators agreed with the court's ruling on the legality of such legal assistance and emphasised that care should be taken that the requirements for the limits to the disclosure and use of bank secrets were indeed fulfilled and respected upon the rendering of legal assistance involving bank secrets. The latter decision confirmed this view.
Austrian authorities will not render legal assistance to foreign authorities in civil matters if such assistance is contrary to bank secrecy. Austria will render legal assistance in criminal matters in accordance with applicable treaties or the ARHG even if that requires a lifting of bank secrecy, provided the requirements for and the limits to a lifting of bank secrecy in a purely domestic situation are fulfilled and respected. If provided for in applicable treaties, such (foreign) criminal matters may include fiscal offences and both requesting authorities and authorities rendering legal assistance may be administrative agencies as well.
Money launderingThere is no bank secrecy in cases in which there is a duty to disclosure under s 41(1) and (2) of the BWG (BWG, s 38(2), no 2), ie in connection with a founded suspicion of money laundering. Basically, s 41 provides as follows:
- If there is reasonable suspicion (i) that a transaction which has already occurred, is in progress or is about to occur serves the purpose of money laundering, or (ii) that a client has violated its duty to disclose fiduciary relationships pursuant to BWG, s 40(2), banks (including financial institutions) shall without delay inform the relevant authority (to be determined according to the Austrian Security Police Act) thereof and shall, until the case has been solved, stop any further execution of the transaction unless there is danger that a delay in the transaction would complicate or obstruct the investigation of the case.
- Banks shall without undue delay inform the authority of all requests by customers to pay out saving deposits if such requests were made after 30 June 2002 and the identity of the account holder has not yet been established according to s 40(1) of the BWG (see Introduction above) and the payment shall be made from a saving deposit with a balance of at least **€15,000. Such payouts may only be effected seven days after the customer's request.
- Banks (including financial institutions) shall, upon request, provide the authority with all information which the latter deems necessary to prevent or prosecute money laundering.
- The authority is entitled to request that a transaction already in progress or about to occur with respect to which there is reasonable suspicion that it may serve the purpose of money laundering shall not be carried out or shall be provisionally delayed and that requests by customers to pay out funds may only be carried out by the bank with the authority's approval.
- The banks (including financial institutions) shall keep secret towards their clients and third parties all proceedings designed to implement these provisions.
In order to fulfil these duties, banks are under an obligation to request disclosure of the identity of their clients (i) when entering into a continuous business relationship, (ii) in all other transactions involving a total amount of at least **€15,000 (irrespective of whether the transaction is carried out in a single operation or in several operations which are obviously closely linked to each other), (iii) if there is founded suspicion that the client (even unknowingly) participates in transactions that serve the purpose of money laundering or (iv) if, after 31 October 2000, payments to saving accounts and, as of 30 June 2002, withdrawals from saving accounts are carried out and the amount paid in or withdrawn exceeds **€15,000: BWG, s 40(1). Further, banks shall request the customer to declare whether it intends to execute the continuous business relationship or the other transaction for its own or for someone else's account and the customer shall comply with that request. If the customer declares to act for someone else's account it must disclose the trustor's identity to the bank: BWG, s 40(2).
There is no bank secrecy with respect to requests for information on a person's claims against banks (as guarnishees) which were attached in enforcement proceedings.55
There is no bank secrecy in a guardianship court where the client is a minor or a ward: BWG, s 38(2), no 4. This provision complements the guardianship court's right and duty regularly to examine whether a minor's or a ward's property and funds held in trust for the minor or the ward are invested as statutorily prescribed. A request for information made by the guardianship court requires concrete evidence with respect to the relevance of the information as to the funds of the minor or the ward.
Inventories of estates by the probate court
There is no bank secrecy towards the probate court and its aides, ie notaries public fulfilling court functions during probate proceedings, in the case of a client's death, namely in connection with compiling of inventories or other determination of the assets and obligations which belong to the estate of a deceased person: BWG, s 38(2), no 3. Again, a request for information made by the probate court requires concrete evidence of the assets or liabilities forming part of the estate. Even though the exception pursuant to s 38(2), no 3 principally applies to requests for information by Austrian probate courts in Austrian probate proceedings only, requests by (competent) foreign probate courts in foreign probate proceedings must be deemed to be Austrian probate proceedings and must therefore be complied with by the Austrian probate court in accordance with the laws of Austria, if the foreign court has its jurisdiction within a member state of the Hague Convention on Civil Procedure or any other (bilateral) international convention.56
Tax liabilities of deceased persons
There is no bank secrecy in respect of the banks' duty according to s 25(1) of the Inheritance and Gift Tax Act to 'give notice to the fiscal authorities of assets belonging to or deposited with them for the disposition of a deceased person' (ie assets which were held in deposit or administered for the deceased in the course of the banks' business) within one month from the death becoming known to the banks: BWG, s 38(2), no 8.