Countries/Jurisdictions of Primary Concern – Italy
Italy’s economy is the eighth-largest in the world and the third-largest in the Eurozone. Its financial and industrial sectors are diversified. The proceeds of domestic organized crime groups, especially the Camorra, the ‘Ndrangheta, and the Cosa Nostra, compose the main source of laundered funds. Numerous reports by Italian non-governmental organizations identify domestic organized crime as Italy’s largest enterprise.
In 2015, the Bank of Italy (BOI) said that suspicious bank transactions increased 10 percent to a record high as the pervasive problems of organized crime, corruption, and tax evasion were exacerbated by a three-year economic slump. The financial downturn has given cash-rich mafia groups the opportunity to tighten their grip on the economy. As banks reduce lending, the criminal networks simultaneously boost their investments into various economic sectors.
Drug trafficking is a primary source of income for Italy’s organized crime groups, which benefit from Italy’s geographic position and links to foreign criminal organizations in Eastern Europe, China, South America, and Africa. Other major sources of laundered money are proceeds from tax evasion and value-added tax fraud, smuggling and sale of counterfeit goods, extortion, corruption, illegal gambling, and loan sharking. Based on limited evidence, the major sources of money for financing terrorism seem to be narcotics trafficking, petty crime, document counterfeiting, and smuggling and sale of legal and contraband goods. According to the most recent official estimate (2014), the total size of Italy’s black market is estimated to be 12.4 percent of GDP (approximately €210 billion or $229 billion). The actual share may be larger. A sizeable portion of this black market is for smuggled goods, with smuggled tobacco a major component. However, the largest use of the black market is for tax evasion by otherwise legitimate commerce. Money laundering and terrorism financing in Italy occur in both the formal and the informal financial systems, as well as offshore.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.:NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks; the post office; electronic money transfer institutions; agents in financial instruments and services; investment firms; asset management companies; insurance companies and intermediaries; agencies providing tax collection services; stock brokers; financial intermediaries; lawyers; notaries; accountants; auditors; loan brokers and collection agents; commercial advisors; trusts and company service providers; real estate brokers; entities that transport cash, securities, or valuables; entities that offer games and betting with cash prizes; and casinos
Number of STRs received and time frame: 71,758 in 2014
Number of CTRs received and time frame: 147,242,000: January 1 – June 30, 2014
STR covered entities: Banks; the post office; electronic money transfer institutions; agents in financial instruments and services; investment firms; asset management companies; insurance companies and intermediaries; agencies providing tax collection services; educational institutions of all levels; companies and state administrations in autonomous regions, provinces, municipalities, mountain communities and their associations; companies and institutions of the national public health system; the metropolitan city administrations; stock brokers; financial intermediaries; lawyers; notaries; accountants; auditors; loan brokers and collection agents; commercial advisors; trusts and company service providers; real estate brokers; entities that transport cash, securities, or valuables; auctioneers and dealers of precious metals, stones, antiques, and art; entities that offer games and betting with cash prizes; and casinos
money laundering criminal Prosecutions/convictions:
Prosecutions: Not available
Convictions: Not available
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Italy is a member of the FATF. Its most recent mutual evaluation can be found at: http://www.fatf-gafi.org/countries/d-i/italy/documents/mutualevaluationofitaly.html
Enforcement and implementation issues and comments:
The Government of Italy continues to combat the sources of money laundering and terrorism financing. The current government has undertaken a number of reforms to curb tax evasion and strengthen anti-corruption measures, and the government’s fight against organized crime is ongoing.
The Ministry of Economy and Finance is host to the Financial Security Directorate which establishes policy regarding financial transactions and AML efforts. The directorate published Italy’s National Terrorist Financing Risk Assessment in July 2014.
Law no. 186, criminalizing self-money laundering, was added to the Italian Penal Code and became effective on January 1, 2015. This new law defines self-money laundering as an operation aimed to conceal the illegal origin of the money, carried out by the same person who committed or participated in the predicate offense, and applies to “any person who having committed or participated in committing an intentional crime, employs, replaces, moves, within economic, financial, business or speculative assets, the money or others profits deriving from the commission of such crimes(s), in a way such to concretely hinder the identification of the criminal origin.”
The BOI continues to issue guidance on customer due diligence (CDD) measures, in order to support banks and financial intermediaries in the definition of their CDD policies in accordance with the risk-based approach. As of January 2014, regulations require the application of enhanced CDD measures for domestic politically exposed persons (PEPs), however, the obligation to identify domestic PEPs only applies to the financial sector.
The UIF, the financial intelligence unit, has worked to increase the number of suspicious transaction reports (STRs) filed by designated non-financial businesses and professions (DNFBPs), especially the public administration sector. These entities’ reports continue to make up only a small portion of submitted STRs, filing only around 1,000 in 2014. Italy has seen some progress in DNFBP participation, particularly from professionals, especially notaries. This is likely a direct result of action by the National Council of Notaries which, in cooperation with the UIF, published a set of STR guidelines for its members in 2015. Italy plans to continue to implement measures that will significantly increase the number of STRs from DNFBPs, particularly in the field of public administration.
In September 2014 the National Anticorruption Authority (ANAC) published a Memorandum of Understanding signed with the Guardia di Finanza (financial police) to increase transparency in public administration reporting. ANAC will send written requests to the Guardia di Finanza indicating the transactions that merit specific attention. The MOU also provides for additional review by the Society for Information and Communication Technology (SOGEI) under the Ministry of Economy and Finance. SOGEI reports to ANAC and Guardia di Finanza with its evaluations. All three parties agree to publish the results of this initiative through press releases or placement on their own, publically accessible, websites. On September 25, 2015 the Ministry of Interior released a decree clarifying the reporting responsibilities of the public administration sector to block money laundering and terrorist financing activities. It lays out the specific indicators of suspicious activity and the methods for filing a STR.
After a multi-year investigation, in 2015 Italian prosecutors announced they are seeking prosecution of hundreds of Chinese migrants, as well as the Bank of China’s Milan branch, in connection with a €4.5 billion (approximately $4.9 billion) money laundering investigation. The massive amount of money was transferred from Italy to China via smuggling, bank transfers, and money remitting services. The money was reportedly earned through the counterfeiting of goods, prostitution, tax evasion, and labor exploitation. A judge is scheduled to rule on the indictment in March 2016.
In 2015, the Italian Polizia di Stato (national police), a civilian police force responsible for investigating crimes under the jurisdiction of the Ministry of Interior, including narcotics trafficking and money laundering, and the Guardia di Finanza (financial police), the primary Italian law enforcement agency responsible for combating financial crime and smuggling, cooperated on a number of occasions with various U.S. authorities in investigations of money laundering, bankruptcy-related crimes, and terrorism financing. Italy has one terrorism case involving five individuals convicted for terrorism, where one of the individual was also convicted for terrorist financing.