The anti-money laundering system serves to prevent the proceeds of criminal activity from being channelled into legitimate activities, in order to preserve stability, integrity, correct functioning, and competition in the financial markets and in the broader economy and society. At the same time, the preventive system is a significant weapon for the suppression of crime itself, insofar as it impedes the reinvestment and concealment of these proceeds. Thanks to its ability to detect and reconstruct criminal conduct, the anti-money laundering apparatus is also used to combat the financing of terrorism and the proliferation of weapons of mass destruction.
Italian legislation has developed in line with international standards and European directives. The legislative framework for money laundering consists of Legislative Decree 231/2007, which transposed the relevant European directives (2005/60/EC, (EU) 2015/849 and (EU) 2018/843) and of Legislative Decree 109/2007 for combating the financing of terrorism and the activities of countries that threaten international peace and security. These legislative texts were recently amended by Legislative Decree 125/2019, which contained some corrective measures and provisions for transposing the Fifth Anti-Money Laundering Directive (2018/843). Further amendments to the system for cash use were introduced by Decree Law 124/2019, converted with amendments into Law 157/2019.
In compliance with EU law, Legislative Decree 231/2007 adopted a definition of money laundering that includes self-money laundering, namely the investment of illicit profits in economic or financial assets by the perpetrators or accomplices of a predicate offence (Article 2). However, Italy's criminal law system long considered self-laundering as a mere post-factum to the original crime and so not punishable in itself. Law 186/2014 (Article 3, paragraph 3) finally introduced a specific crime into Italian criminal law (see Article 648-ter of the Penal Code).
The system for preventing money laundering is based on cooperation between operators and the administrative, investigative and judicial authorities.
A cornerstone of the system is a risk-based approach, which should inform the actions of the authorities and the behaviour of the obliged entities. Assessing the risks of money laundering and financing of terrorism makes it possible to tailor the measures adopted for combating them, thereby favouring a better allocation of resources.
Italy’s legislative framework includes a structured procedure for assessing threats of money laundering and financing of terrorism, identifying the weaknesses of the system for combating and preventing them and consequently identifying the sectors most exposed to such risks. The assessment is carried out by the Financial Security Committee on a three-yearly basis, with the help of the UIF and the other competent authorities, taking account of the regular report produced by the European Commission on the risks weighing on the domestic market and linked to cross-border activities
The intensity of the safeguards adopted by the operators is proportionate to the risks detected in the national analysis and in the course of their activities. Furthermore, the operators have to fulfil specific obligations: customer due diligence, carried out using a number of measures (identification and checks on the identity of customers and beneficial owners, acquisition of information on the nature and scope of the relationship, and constant checks on the relationship with customers); keep the data and records acquired to be able to reconstruct financial flows; and identify and report suspicious transactions to Italy’s Financial Intelligence Unit.
In line with international standards and EU provisions, Italian legislation contains some provisions designed to strengthen the transparency on the beneficial ownership of legal persons and trusts by creating a centralized system for registering beneficial ownership in specific sections of the Company Register. Further preventive measures, typical of the Italian legislative framework and designed to impede behaviour at high risk of money laundering, are the limits on the use of cash and bearer securities, and the obligations to channel the relative transactions through supervised intermediaries.
Operators at the entry points to the legal channels and in a key position for intercepting possible cases of money laundering and financing of terrorism are called upon to cooperate with the authorities by swiftly identifying any transactions that might be traceable to criminal activities. The range of entities subject to reporting obligations has been extended over time and now includes several homogeneous categories of subjects. The first traditional group of entities comprises banking, financial and insurance intermediaries and other financial operators. In addition, there are various categories of professionals (notaries, lawyers, accountants, auditors and auditing firms) and non-financial operators (providers of business and trust services; subjects dealing in antiques and art or who act as intermediaries in the trading of such items, also when this is carried out by art galleries or auction houses when the sums involved, even when split up or in connected transactions, are equal to or more than €10,000; subjects that keep or trade works of art or that act as intermediaries to trade them, if this activity is carried out in free ports and the value of the transaction, even if split, or of connected transactions, is equal to or more than €10,000; credit recovery, custody and transport of cash, securities and valuables; professional gold traders, subjects engaging in civil mediation, estate agencies, also including intermediaries for leasing properties and, in that case, limited to transactions in which the monthly rental is equal to or more than €10,000.
In line with the changes in the international situation, obliged entities now include providers of virtual currency and digital portfolio services. There are also specific provisions for gaming services providers (physical and online, networks and casinos) and, pursuant to Legislative Decree 92/2017, cash-for-gold operators. Specifically, the decree on cash-for-gold businesses, which came into force on 5 July 2017, lays down provisions to guarantee the full traceability of sales and exchanges of used precious items, and also makes it obligatory for the operators to identify their customers, keep the data acquired and report suspicious transactions.
General government is now no longer formally included among the obliged entities, although some offices are required to communicate data and information on suspicious transactions to the UIF, based on the instructions recently set out by the Unit.
Legislative Decree 231/2007 defines the institutional architecture for money laundering and combating the financing of terrorism, maintaining the distinction between political functions and technical authorities and capitalizing on institutional cooperation at domestic and international level.
The Minister of Economy and Finance is responsible for policies for the prevention of money laundering and financing of terrorism. In order to implement these policies, the Ministry of Economy and Finance fosters cooperation between the UIF, the sectoral supervisory authorities, professional bodies and the police forces, and also between public and private sector bodies. The Ministry liaises with the European institutions and international organizations, contributes to the work on limiting the use of cash and exercises its powers of sanction, acquiring useful elements from obliged entities, also via inspections. The Financial Security Committee (FSC), established by Decree Law 369/2001 (converted into Law 431/2001) at the Ministry of Economy and Finance, whose regulatory framework is contained in Legislative Decree 109/2007, draws up the national-level analysis on the risks of money laundering and financing of terrorism and the strategies for combating them. It exercises specific powers as regards combating the financing of terrorism and the activities of countries that threaten international peace and security.
Among the technical authorities, a central role is assigned to the Financial Intelligence Unit for Italy (UIF), established within the Bank of Italy in conditions of autonomy and independence (Article 6). The UIF collects information on potential cases of money laundering and financing of terrorism, mainly in the form of reports of suspicious transactions filed by financial intermediaries, professionals and non-financial operators. It conducts a financial analysis of these data using the sources and powers assigned to it, and assesses the results with a view to transmitting them to the Special Foreign Exchange Unit of the Finance Police (NSPV) and the Anti-Mafia Investigation Department (DIA), which are the competent authorities for investigations.
As part of the in-depth financial analyses carried out on the reports received, the UIF acquires information from entities subject to reporting obligations. It uses the data it already has, makes use of sources managed by the Bank of Italy and by other administrations and accessible under legislation and according to specific agreements, and exchanges information with foreign FIUs. After it has carried out its analyses, the UIF can also acquire investigative data under certain conditions. The financial analysis carried out by the UIF, distinct from investigative analyses, consists of a series of activities designed to enrich the wealth of information for each report, such as identifying objective subjects and links, reconstructing financial flows, including transnational ones, and selecting cases with a greater risk level.
The Unit also receives the aggregated data reports submitted monthly by financial intermediaries and, following the new measures introduced in 2017, communications on transactions at risk of money laundering or financing of terrorism, identified using objective criteria. The introduction of these threshold-based automatic information flows, similar to those already envisaged in several other European and non-European countries, provides an important new tool for further analyses and for guiding analyses for prevention purposes.
As well as operational analysis for further examining individual cases of suspected money laundering or financing of terrorism, the UIF carries out strategic analyses, identifying cases, trends and systemic vulnerabilities. To this end, it uses information from in depth analyses of STRs, from aggregate data analysis and from any other important data available to the Unit.
The UIF issues instructions on the data and information that must be contained in STRs and in communications, on the relative timeframes and on how to safeguard the confidentiality of the reporting agent. In addition, in order to make it easier for obliged entities to identify suspicious transactions, the UIF now directly issues anomaly indicators and sends out specific models or formats that illustrate anomalous behaviour.
The Unit is the linchpin for international exchanges of information on combating money laundering and the financing of terrorism via the activation of the network of corresponding foreign authorities, the Financial Intelligence Units (FIUs), by making use of the dedicated channels and by signing specific memorandums of understanding where necessary.
The UIF also has powers of inspection, intended to check compliance with the obligations to report suspicious transactions to and communicate with the UIF or to acquire specific data and information.
The sectoral supervisory authorities (Bank of Italy, IVASS, Consob) oversee the issuance of regulations in their respective areas of jurisdiction on matters such as customer due diligence, data recording, organization, procedures and internal checks. They also check compliance with the obligations laid down by law on the part of supervised entities, and exercise powers of sanction. The administrations and bodies concerned govern the checks on the compliance with the obligations on the part of entities not subject to controls by the sectoral supervisory authorities.
The current regulatory framework optimizes the role of self-regulatory bodies that, as they are exponential bodies of professional groups, promote and monitor compliance with the anti-money laundering obligations on the part of professionals enrolled in their lists and registers. They draw up technical rules for certain areas, are responsible for training their members and apply disciplinary sanctions in the event of serious and repeated violations.
In their respective spheres of competence, the Anti-Mafia Investigation Department (DIA) and the Special Foreign Exchange Unit of the Finance Police (NSPV) investigate the suspicious transaction reports that the UIF analyses and then transmits to them. The UIF can also disseminate its analyses to the intelligence agencies for the security of the Republic, in the event of cases of specific interest, and promptly informs the NSPV and the DIA.
The NSPV also carries out checks on the compliance with anti-money laundering measures of non-supervised obliged entities; in agreement with the sectoral supervisory authorities, it checks on specific categories of subjects and can cooperate with the UIF if the latter requests an intervention.
The legislation governs cooperation at national level, establishing a principle for creating information synergies among the authorities working in the system for combating and preventing to make it easier to detect facts and situations, knowledge of which can be used to prevent the use of the financial and economic systems for money laundering or the financing of terrorism (Article 12, paragraph 1). The provisions on national cooperation were recently amended by Legislative Decree 125/2019.
It also includes communication procedures, via the investigative bodies, for the benefit of the National Anti-Mafia Directorate – DNA - (Article 8), which promptly receives the data on subjects that are reported and connected to see if they are involved in any ongoing judicial proceedings. The DNA can ask the UIF for any information or analyses that are of interest and gives the Unit feedback on how useful the information received was. Specific Memorandums of Understanding, signed with the DNA, govern how such forms of cooperation are implemented.
There are extensive information exchanges between the UIF and the investigative and judicial bodies that contribute to investigations into money laundering, any related predicate offences and for combating terrorism.
In order to make cooperation more effective and timely, on 20 November 2017, the UIF activated a Portal for exchanging information with the judicial authorities and the investigative bodies, in respect of the confidentiality and security constraints. The Portal ensures the complete dematerialization of the requests made to the UIF and of the responses provided. The UIF can use the Portal to request information from the NSPV and the DIA, pursuant to Article 13(1) of the AML decree.
The UIF's institutional setting within the Bank of Italy encourages cooperation with the supervisory authorities, which is created through continuous information exchanges, also as part of inspections, and the sharing of analyses and studies. Specific measures set out explicit notification requirements for the benefit of the UIF on the part of the supervisory authorities.
The information exchanges between the UIF and foreign FIUs, which take place through dedicated and protected channels, make it possible to trace transnational financial flows of illicit origin and make international judicial cooperation easy and productive.
Compliance with obligations is governed by a complex system of criminal and administrative sanctions. The sanctions system was fully amended by Legislative Decree 90/2017 and further altered by Legislative Decree 125/2019, in line with the European provisions establishing the adoption of sanction systems based on effective, proportionate and dissuasive measures against natural persons, legal persons directly responsible for the violation, and management, direction or control bodies that, through negligent behaviour or failure to act, have facilitated or made possible a violation. Criminal sanctions are now envisaged solely for cases of serious misconduct committed by means of fraud or counterfeiting and cases of violations of the ban on communicating the reporting of suspicious transactions. Financial sanctions are envisaged for serious, repeated, systematic and multiple violations, but also for breaches that do not fit this description. The fines are higher for the former, ranging from a minimum to a maximum set by the law, while smaller, pre-set amounts apply to the latter. The seriousness of the violations is decided according to specifically indicated criteria. There are particular provisions for violations of reporting obligations that have been of financial benefit for the person responsible.
The new system has some provisions referring to obliged entities as a whole and others that are more severe for supervised entities. In keeping with banking and financial regulations, in addition to the liability of the legal person, the new provisions introduced personal liability for members of corporate bodies in specific cases and the possibility of applying an ancillary administrative sanction to them in the form of a temporary ban on them carrying out their role or holding their position. The responsibility for failure to report suspicious transactions in the case of banking and financial intermediaries and trust companies can also be assigned to the staff involved.
As regards determining competence in matters relating to failure to report suspicious transactions, parallel competences have been reserved for the Ministry of Economy and Finance and the supervisory authorities, depending on whether the violation was committed by a natural or legal person. For serious, repeated, systematic and multiple violations, an order imposing sanctions may be published.