Austria resists pressure to end saving

Date: 17/04/1997

By Leyla Linton

AUSTRIA is set to rebuff the European Commission's call for an end to its anonymous savings accounts, despite claims that they breach an EU directive designed to combat money laundering.

Vienna will send a letter to Internal Market Commissioner Mario Monti next week telling him that it does not intend to alter its policy on the popular savings accounts.

The Commission believes that the continued existence of the accounts is incompatible with EU law and decided two months ago to send Vienna a 'reasoned opinion', the second stage in infringement proceedings which could result in legal action in the European Court of Justice.

The Austrian government was given until 22 April to respond. Once the Commission receives its reply, it will consider what action to take - and there seemed little doubt this week that it would pursue the case. “It would be normal in such a clear-cut case to take Austria to the European Court of Justice,” said one official.

The anonymous accounts, which were introduced after the Napoleonic wars, have traditionally been hugely popular in Austria. More than 101 billion ecu is invested in them, even though they no longer offer tax advantages, with 25&percent; of interest deducted at source.

Austria says that 845 of these accounts have less than 7,257 ecu in them and insists they are not a useful tool for carrying out illegal financial transactions.

The Commission disagrees, pointing out that Austria has about 26 million accounts for only about 8 million citizens. It believes these accounts break EU rules adopted in 1991 which require banks to know who their customers are.

Austria has already complied with other parts of the legislation, which makes money laundering a crime in the Union and obliges banks to report suspicious transactions. It has also abolished anonymous securities accounts.

The issue has split the Austrian government and provided fuel for growing anti-EU sentiment in the country as it gears up for its first European parliamentary elections in October this year.

Support for the Union has waned since 66&percent; of Austrians voted in favour of membership in 1994, and the battle over savings accounts has already become the focus for Austrian discontent.

Critics point out that opening an anonymous account in Austria is easy. Would-be savers only have to supply the money and a password, and investments can only be withdrawn in cash.