Austria is about to undergo a major audit by the Financial Action Task Force (FATF), a Paris-based international institution that monitors countries’ actions in the fight against the financing of terrorism and money laundering. And things are not looking good for the Alpine Republic.

A list from the Ministry of Justice on money laundering proceedings reveals how slow Austria is in implementing measures and even investigating money laundering cases, according to a Die Presse report. 

Last year, 1,509 investigations were carried out (101 of which were against unknown perpetrators), and in only 157 cases went to trial. A similar ratio has been reflected in previous years. 

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The number of unreported money laundering cases is likely significantly higher, as investigations are usually only carried out through victim or bank reports.

The International Monetary Fund recently made it clear in its report on Austria that the country needs to get better at combating money laundering.

“While measures to combat money laundering are being strengthened, there is still a risk that foreign corruption money will be laundered,” the report said.

Why is it so easy to launder money here?

It’s a combination of factors. The most common method for money laundering here is buying an expensive property in Austria with dirty foreign money and then selling it again. This is made easy in Austria. 

The country’s expensive property market ensures that very high amounts of money can be “made legal” in one fast transaction. Russian aristocrats have been doing it for decades.

And the money’s origin, even if it appears to come from “thousands of Panamanian companies”, is “hardly ever checked”, Die Presse explained. 

“Despite substantiated applications and provable criminal offences, crucial aspects, particularly regarding the origin of the funds, were simply ignored,” lawyer Pilar Mayer-Koukol from Paulitsch Law told the report, criticising the lack of action by Austrian authorities. 

Investigations are slow, and Austrian laws make it easy for criminals to enjoy their stolen money, according to lawyer Gregor Müller, who was interviewed for a separate Die Presse report. He represents a Russian client whose company was hollowed out by a director. The man then bought a luxury property in Vienna, sold it later and left with millions of euros. 

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Müller’s client now wants to join the money laundering proceedings as an interested party in Austria to get some of that money back, but Austrian prosecutors refuse to let him. According to them, the Russian client cannot be a party in the money laundering case because he was not harmed by the purchase of the property or by the money laundering. The crime that he was a victim of, the theft, happened in Russia, not in Austria.

This logic means that if offences took place abroad, but money was laundered in Austria, victims have no chance of compensation because Austrian law sees them only as victims of a crime in a foreign land. 

Müller said this “unlawful interpretation of the law” contradicts European principles for efficiently combating money laundering. He points to countries like Germany or Switzerland, where victims are protected and can claim compensation in criminal proceedings. 

What does the government say?

Not much. Justice Minister Alma Zadic (Greens) was asked about the lack of protection for victims, but said only that “the Victim Protection Directive has been fully implemented in Austria”, without giving further details. 

Austria did recently adopt some measures to counter money laundering, including “the promotion and intensification of public-private partnership initiatives as well as the improvement and intensification of risk-based supervision.”

The October 2023 strategy also included plans to increase cooperation between different administrative bodies and automate processes to improve the reporting system for suspicious activity, according to the document. But many of the measures cited in the report, such as “further intensification of inter-ministerial cooperation and collaboration” are very broad. And there are no mention of investment values or cash earmarked for improvements.

The Financial Action Task Force (FATF) ‘s next audit is scheduled for autumn this year and should last until February 2026.