Background information about UBO register act (WiEReG)

The provisions of the Austrian UBO Act are a result of the progressive fight against the problem of money laundering, whereby the Austrian UBO Act represents the national implementation of the 4th European directive against money laundering and terrorist financing.

Money laundering

The term "money laundering" refers to the transfer of illegally acquired assets, including illegally generated cash, into the legal financial and economic cycle. This is intended to obscure its origin in order to be able to generate revenues on a legal basis with the now "clean" assets.

The term "money laundering" refers to the transfer of illegally acquired assets, including illegally generated cash, into the legal financial and economic cycle. This is intended to obscure its origin in order to be able to generate revenues on a legal basis with the now "clean" assets.

On the one hand, the simple possibility of money-laundering the assets generated from illegal sources into the legal money cycle principally increases the attractiveness of illegal activities to the detriment of an economy. On the other hand, the simple opportunity for money laundering also leads to a distortion of competition, as people with proceeds of "washed" money, if they act as "clean" investors, are financially stronger than their competitors. Especially in countries with less well-developed control mechanisms in view of introduction of illegally acquired funds, this creates the danger of large-scale infiltration of legal economic structures by organized crime.

The International Monetary Fund estimates that between 2 % and 5 % of global gross domestic product stems from illegal sources. In addition to corruption, money laundering is considered as one of the main obstacles to the sustainable growth of economies.

Although anti-money laundering initiatives have received increasing international attention in recent years and decades, money laundering remains an enormous problem in our globally connected and progressively complex economy.

European initiatives against money laundering

The European Union is also aware of the negative consequences for development and cohesion of its Member States from introducing illegal funds. As a result, numerous anti-money laundering directives and regulations have been and are being developed at level of the European Union, which form an increasingly strict corset of regulations and provisions. Although initiatives to combat money laundering and the financing of terrorism are of course absolutely worthy of support and are unfortunately also necessary, the increasing regulation is leading to an ever-increasing bureaucratic burden for legal entities operating in the European Union, which has to be viewed critically.

In addition to various other regulatory measures (eg Regulation (EU) 2015/847 on the transfer of information in the context of transfers of funds), the so-called money laundering guidelines are intended to ensure uniform standards and effective measures against money laundering and terrorist financing within the European Union.

The so-called 1st EU Money Laundering Directive (EU Directive 91/308) was adopted in 1991 on the recommendation of an international anti-money laundering task force as part of a comprehensive package of measures. It has in the meantime been replaced by other EU directives, namely the so-called 2nd EU Money Laundering Directive (EU Directive 2001/97) and the 3rd EU Money Laundering Directive (EU Directive 2005/60), which lead to the 4th EU Money Laundering Directive (EU Directive 2015/849). In this 4th EU Money Laundering Directive, the individual Member States were obliged, inter alia, to introduce national registers of ultimate beneficial owners (UBOs) of companies, which became implemented in Austria by the introduction of the Austrian UBO Act (WiEReG).

In the meantime, the European Commission, the European Parliament and the Council agreed in December 2017 on the framework conditions of the so-called 5th Money Laundering Directive, which will be adopted shortly and which should amend the 4th Anti-Money Laundering Directive. The amendment focuses, above all, on strengthening the regulation of online money transactions, but also on the register of ultimate beneficial owners by, for example, defining how the individual national registers should be interconnected. In addition, for certain corporate structures, the share thresholds for the creation of beneficial ownership should fall from 25% to 10%.