Proof of Source of Funds in Austria
Citizens in Austria have recently been confronted with the so-called proof of source of funds (also: proof of source). This proof of source of funds is required by banks, brokers and exchanges on which Bitcoin and cryptocurrencies can be traded, regarding certain transactions in Austria.
While such a proof requirement does not apply to every single movement of assets, it does apply to financial movements involving 10,000 euros or more. We have already explained when the obligation to provide evidence generally applies. Please also refer to our notes on the limit.
In some cases, transactions involving less than 10,000 euros are also affected. In the case of the proof of source of funds, the legislator is primarily concerned with finding out the origin of the financial resources. The amount of the funds used is merely a kind of “sideshow” here and serves legally as a pragmatic demarcation.
What Must Be Expected in Austria With Regard to the Proof of Source of Funds?
In concrete terms, people in Austria are likely to face various scenarios.
First and foremost, Austrian banks will require the depositing person to provide proof when making cash deposits. Among other things, a cash limit will apply, but other limits will also apply. The person concerned can provide proof of the source of the funds to a bank in various ways. You have already received information on the means of evidence that can be used for this purpose.
However, the legislator obliges not only banks, but also other entities, to inquire about the origin of financial resources.
Think of all commercial entities where financial transactions can ultimately be made with money and assets: Brokers in the field of stock trading, precious metals dealers regarding gold and silver, as well as exchanges where Bitcoin and other cryptocurrencies can be bought and sold. Even the tax office may require a proof of the source of funds in Austria.
On the one hand, you basically meet the obligation to provide proof by concrete evidence regarding individual asset movements. On the other hand, the “overall financial impression” of a person also counts.
Is it Possible to Oppose Requirement of the Proof of Source of Wealth in Austria?
Many people feel that the requirement to prove the origin of the funds they use places them under surveillance and under suspicion of money laundering for no reason. We can understand this feeling. After all, blameless individuals do not actually have to proactively prove their innocence – this is the principle of the rule of law.
It is therefore legitimate to ask whether this approach by banks, stock exchanges and brokers is at all legally compliant under Austrian law.
How does one defend oneself in case of doubt against the provision of proof of the source of wealth in Austria? Those who wish to defend themselves can politely communicate their own discomfort to the responsible office requesting the proof of source of funds.
However, this is not to be expected that the proof of source of funds will be waived. However, it cannot hurt to communicate one’s own feeling.
Legal Action Against the Proof of Source – And Then What?
Legally, you can certainly defend yourself against the proof of source of funds. The interesting question in this respect, however, is to what extent it is worth defending yourself in the end.
Imagine that you actually manage to legally avoid having to provide proof of the source of your wealth. This would lead to the requesting agency rejecting you as a customer – they would simply not want to maintain a contractual relationship with you.
Thus, you would be excluded from further transactions by the bank, for example, or by precious metal dealers.
Legal Basis in Austria Regarding Proof of Origin of Funds
The proof of source of funds is no coincidence. Western jurisdictions such as Austria have always had legislative provisions to prevent and combat money laundering and terrorist financing.
In 2015, the European legislator enacted the so-called “AML5 Directive“, which has the unwieldy name of
You can find a link to the complete text of the directive in our FAQ section under “Legal basis”. On the basis of this directive, the national legislators – including Austria – have incorporated these requirements into their own national laws.
With regard to the legislator in Austria, the
“Bundesgesetz zur Verhinderung der Geldwäscherei und Terrorismusfinanzierung im Finanzmarkt (Finanzmarkt-Geldwäschegesetz)”
was enacted. In short form, this law is simply called “FM-GwG” in Austria.
A Look at the Austrian FM-GwG to Understand the Obligation to Provide Evidence
It is worth taking a look at this FM-GwG. Section 3 of the Act contains the so-called “Due Diligence Obligations towards Customers”. § 5 to § 12 FM-GwG of this section provide further details.
For example, § 6 (1) No. 4 FM-GwG states that customer due diligence obligations include the following:
“Obtaining and verifying information on the source of the funds used; such information may include, but is not limited to, the professional or business activities, income or business results, or the general financial circumstances of the customer and its beneficial owners;”
So the laws in Austria require obligated entities to verify the source of the funds used. Here, the obligation to provide evidence is recognizably legally defined for you. It even gives examples, such as “financial circumstances of the customer”.
The one-time provision of the proof of source of wealth is not enough in Austria!
Certainly, it is not very burdensome to provide proof of the source of funds once for a specific asset movement. However, the legislator in Austria stipulates that the obligation to provide proof goes far beyond this.
This is because § 6 (1) No. 6 FM-GwG states that the obligated entity – i.e. the bank, broker or exchange on which Bitcoin and other cryptocurrencies are traded – shall conduct continuous monitoring of the person concerned.
Specifically, this means: You probably won’t be asked about the source of your funds just once. Submitting a proof of source of funds “once and for all” will therefore not be possible.
In Austria, therefore, it is stipulated by law that the obligated bodies must demand proof from customers on a permanent basis.