Those are my coins! And still you’re asked about their provenance and to provide receipts! Why does that matter, and what does it have to do with money laundering?
Many people consider gold as a investment safe haven. It is physically compact, easy to transport, and can be traded practically anywhere. But this also means that it can be easily misused. Financial services provider frequently ask: Where did you purchase the gold, how long have you held it for, and why are you selling it now? The reason is not a specific suspicion, but a legally required standard check that ultimately exists to protect you too.
Plausible
Unclear
“I inherited the coins, and want to sell them due to the favourable market conditions.”
If you have documentation about the bequest, or they are stored in a manner that can be proven, such as a safety deposit box or safe, this fits together.
“I’ve had Euro 30,000 worth of gold sitting at home for years, and want to sell it now.”
If the answers are very general, or there is an unclear motive for selling, follow-up questions come, and in some cases documents are required as proof.
What is money laundering?
Funds and assets resulting from criminal offences like fraud, theft, and drug trafficking are made to look like legally earned wealth. To do so, its source is disguised, to allow it to be spent or invested without attracting suspicion at a later date. No-one should realise the money’s real origin.
Why is it important to act against money laundering?
Money laundering allows criminals to retain their profits and to continue to use them. A criminal offence becomes a permanent advantage, and may also finance further criminal acts. Criminal organisations grow and are able to increase their influence which harms the society we live in. There are laws intended to prevent this.
Let’s look at gold as an example:
The key question about the origin of the gold means: Explain how you obtained it that ties in with your lifestyle and is plausible for outsiders. The higher the amount, the greater the need for a plausible explanation and suitable supporting documents in some cases.
Ignoring the problem is not an option.
If no-one asks questions and media reports reveal that the gold was the proceeds of a burglary, the public asks: “Why didn’t the bank examine the situation in more detail?” Enquiries protect financial institutions, customers and the market.
What you can do:
Keep proof, such as contracts,invoices or supporting documents relating to bequests. Explain briefly and plausibly why exactly you want to sell the gold now. By doing so you are contributing to a clean and secure financial market.
Further information
Prevention of Money Laundering & Terrorist Financing: www.fma.gv.at > Supervision > Cross-sectoral topics > Prevention of Money Laundering & Terrorist Financing
Other editions:
Find out more:
A-Z of Finance: www.fma.gv.at > A-Z of Finance
Instagram: Let’s talk about money
Podcast: listen here!
Due diligence obligations:
Financial institutions’ legal obligation to identify their customers, understand the purpose of the business relationship, and to check whether payments fit that purpose.
Know Your Customer (KYC):
the obligation to know about customers, and keep information such as their address, job and assets up-to-date, to be able to detect anomalies.
Suspicious Transactions Report:
If a transaction is suspicious, the institution must report it to the Financial Intelligence Unit (Geldwäschemeldestelle) (FIU) housed at Criminal Intelligence Service Austria.
Financial Intelligence Unit (FIU):
Receives suspicious transaction reports, analyses them and may also order that a transaction is not allowed to be executed or must be deferred.