## _cr1643 ## Source details **Canonical URL:** [_cr1643](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr1643.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr1643.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr1643.pdf.json) --- ### Overview - On-site visit: January 14 to 30, 2015. - Purpose: Summary of Italy’s anti-money laundering and combating the financing of terrorism (AML/CFT) measures as at the on-site visit; assessment of compliance with FATF 40 Recommendations and system effectiveness; recommendations to strengthen the system. ### Key findings — overall - Italy has a mature and sophisticated AML/CFT regime with a well-developed legal and institutional framework, but faces significant ML risk principally from tax crimes and organized crime activities (corruption, drug trafficking, loan sharking). - Authorities have good understanding of ML/TF risks; FSC-led coordination and a 2014 NRA inform policy; a nationally coordinated AML/CFT strategy fully informed by the NRA was still under development. - LEAs access, use, and develop quality financial intelligence; can undertake large/complex financial investigations and have confiscated very large amounts of proceeds. - Current ML/TF results not fully commensurate with scale of ML risks due to: - Insufficient focus on standalone ML cases and cases generated by foreign predicate offenses and/or involving legal persons, - Length of judicial process. - TF risk relatively low domestically; TFS implemented effectively; PF actively mitigated though further private-sector outreach recommended. - FIs generally understand ML threats; larger banks strongest in mitigation. DNFBPs overall less attuned; secondary legislation for DNFBPs largely absent. - CDD embedded in financial sector; over-reliance on banks’ due diligence in agency arrangements; beneficial ownership identification processes inconsistent. - Supervisors use RBA to varying degrees; supervisory tools and cross-border cooperation (notably for EU‑passported PI agents) need improvement. - Sanctions regimes for ML and non-compliance require strengthening. - Beneficial ownership information generally accessible in timely fashion but reliability varies; companies misused to some extent, particularly by organized crime. ### Risks and general situation — key statistics - Area: about 294,140 square kilometers. - Population: about 60 million; immigrants approximately 7.5 percent of the population. - Financial sector assets: approximately 240 percent of GDP. - Banks hold over 85 percent of total financial sector assets. - At end-2014: 684 banks (including BancoPosta) with total assets of about €3.5 trillion. - Estimates of annual proceeds from predicate crimes: range from 1.7–12 percent of GDP; most estimates point to the upper end of the range. - 2014 estimated illegal proceeds range: €27.5–194.4 billion. - Main proceeds-generating crimes (share of total proceeds): - (i) tax and excise evasion: around 75 percent; - (ii) drug trafficking and loan sharking: around 15 percent; - (iii) corruption, fraud, counterfeiting, environmental crime, robbery, smuggling, extortion, and illegal gambling: around 10 percent. - Cash use: 2010 estimate—cash accounted for about 90 percent of all micropayments. - Remittances: remittances from Italy grew at an annual rate of 13 percent since 2005, totaling €6.8 billion in 2012 (40 percent destined to China). - Remittance sector at end-2014: 41 domestic payment institutions; 16 provided remittance services; network: 21 branches and 1,400 agent agreements; over 240 EU payment institutions notified intention to provide services in Italy; Italian providers process only 10 percent of remittances. ### Overall level of effectiveness and technical compliance - Effectiveness (selected IO ratings): - IO.1 Risk, policy and coordination: Substantial - IO.2 International cooperation: Substantial - IO.3 Supervision: Moderate - IO.4 Preventive measures: Moderate - IO.5 Legal persons and arrangements: Substantial - IO.6 Financial intelligence: Substantial - IO.7 ML investigation and prosecution: Substantial - IO.8 Confiscation: Substantial - IO.9 TF investigation and prosecution: Substantial - IO.10 TF preventive measures and financial sanctions: Moderate - IO.11 PF financial sanctions: Substantial - Technical compliance (selected ratings): - R.1 LC; R.2 LC - R.3 LC; R.4 C - R.5 C; R.6 LC; R.7 PC; R.8 LC - R.9 C; R.10 LC; R.11 C; R.12 LC; R.13 PC; R.14 C - R.24 LC; R.25 LC - R.26 LC; R.27 LC; R.28 LC; R.29 LC; R.30 C; R.31 C - R.36 C; R.37 LC; R.38 LC; R.39 C; R.40 LC ### Assessment of risks, coordination and policy setting (IO.1 highlights) - NRA: - Italy’s first NRA issued July 2014 following a seven-month exercise; methodology finalized December 2013; NRA covers ML/TF threats, vulnerabilities, sectors and reporting entities under BoI and other supervisors. - NRA quality: good; TF component less sophisticated than ML component. - Identified highest-risk sectors: banks, electronic money institutions and payment institutions; electronic gaming, gold buyers, real estate agents, gambling, notaries, and lawyers. - Coordination: - FSC is key coordination vehicle; operational national AML/CFT coordination under FSC is quite good. - Despite awareness of risks, supervisors have not fully adapted tools/operational practices to reflect identified risks. - UIF: - Could improve policies and focus resources more on high-risk areas. - LEAs and prosecutors: - Skills to dismantle ML networks; focus mainly on predicate offenses and related third-party ML and asset confiscation at expense of standalone ML and foreign predicate cases. - Criminalization of self-laundering: - Law criminalizing self-laundering entered into force January 1, 2015 (article 648 ter 1 CC—law of December 15, 2014). ### Financial intelligence, ML investigations, and confiscation (IO.6–8) - STRs received by UIF (annual totals): - Total STRs: 2009 21,066; 2010 37,321; 2011 49,075; 2012 67,047; 2013 64,601; 2014 71,758. - Money laundering STRs: 2009 20,660; 2010 37,047; 2011 48,836; 2012 66,855; 2013 64,415; 2014 71,661. - Terrorism Financing STRs: 2009 366; 2010 222; 2011 205; 2012 171; 2013 131; 2014 93. - Proliferation STRs: 2009 40; 2010 52; 2011 34; 2012 21; 2013 55; 2014 4. - UIF processing and disseminations: - STRs analyzed: 2009 18,838; 2010 26,963; 2011 30,596; 2012 60,078; 2013 92,415; 2014 75,858. - STRs dismissed: 2009 4,024; 2010 3,560; 2011 1,271; 2012 3,271; 2013 7,494; 2014 16,263. - UIF disseminated technical notes included STRs: 2009 14,814; 2010 23,403; 2011 29,325; 2012 56,807; 2013 84,921; 2014 59,595. - UIF suspended transactions 2009–2014: 238 transactions; total value €313.80 million. - UIF inputs and databases accessible: - Administrative: tax registry; commercial register (Infocamere off-site and Cerved on-site); Central tax reports database (CEBIL); local administrators database. - Financial: Central electronic archive for CDD; Central database of bank accounts; Central credit register; TARGET2 wire transfer data; database on restituted funds in case of incomplete CDD. - Commercial/open-source: World-check; Orbis. - LEA use of UIF intelligence: - GdF pre-investigation STRs analyzed: 2010 22,728; 2011 21,621; 2012 17,245; 2013 85,483; 2014 85,581. - LEA investigations with positive action/outcome: 2010 4,654; 2011 3,619; 2012 4,030; 2013 6,753; 2014 8,355. - New legal proceedings/investigations: 2010 666; 2011 396; 2012 578; 2013 604; 2014 588. - Confiscation and seizures (consolidated figures): - Consolidated TOTAL seizures (€, MILLIONS): 2010 3531.1; 2011 802.7; 2012 1320.3; 2013 5484.6; 2014 4675.4. - Consolidated TOTAL confiscations (€, MILLIONS): 2010 229.9; 2011 1023.7; 2012 1799.3; 2013 2941.2; 2014 NA. - ANBSC portfolio as of January 2015: 1,491 companies; 8,713 real estate. - FUG transfers to State budget (2009 to September 30, 2014): €905,037,225. - Cross-border cash declarations (annual totals and seizures): - Declaration threshold: €10,000 (inter‑ and intra‑European). - Cross-border declaration stats (selected): - 2010 — Total declarations: 24,378; Value of declarations: 4,429,788,278; Amount seized: 82,702,051. - 2011 — Total declarations: 28,730; Value of declarations: 5,836,552,604; Amount seized: 37,533,000. - 2012 — Total declarations: 32,627; Value of declarations: 8,128,583,176; Amount seized: 43,673,236. - 2013 — Total declarations: 32,888; Value of declarations: 6,691,459,418; Amount seized: 45,773,162. - 2014 — Total declarations: 30,888; Value of declarations: 6,652,739,233; Amount seized: 9,247,998. - Observations: seizures/confiscations domestically substantial and concentrated in high-risk regions (Calabria, Campania, Sicily). Total assets confiscated in Italy vary between some 12.3 percent to 1.7 percent of estimated total proceeds (estimated total proceeds range between €27 and €194 billion). ### ML investigation and prosecution (IO.7 highlights) - ML investigations by GdF (annual totals): 2010 477; 2011 449; 2012 651; 2013 619; 2014 736. - Persons investigated by GdF for ML (648 bis and 648 ter): 2010 1,131; 2011 1,053; 2012 1,307; 2013 1,352; 2014 1,483. - Persons arrested by GdF for ML investigations: 2010 145; 2011 118; 2012 113; 2013 167; 2014 132. - ML prosecutions (select): - 648 bis—number of cases: 2010 1,375; 2011 1,292; 2012 1,285. - 648 ter—number of cases: 2010 43; 2011 49; 2012 77. - Total ML cases prosecuted: 2010 1,486; 2011 1,411; 2012 1,436. - ML convictions (select): - 648 bis—cases: 2010 1,080; 2011 1,060; 2012 880; 2013 941. - 648 ter—cases: 2010 12; 2011 11; 2012 15; 2013 20. - Total ML convictions: 2010 1,119; 2011 1,098; 2012 920; 2013 996. - Self-laundering: - Self-laundering criminalized effective January 1, 2015 (article 648 ter1 CC). - At assessment time no concluded self-laundering prosecutions; authorities reported GdF developed 28 investigations for self-laundering (14 persons arrested) during the first six months of 2015 with one case before the Court of Rome. ### Terrorist financing and proliferation financing (IO.9–11) - TF risk profile: - Overall TF risk assessed as relatively low domestically. - Most significant emerging risk: support of Italian residents travelling to conflict zones abroad to assist foreign terrorist groups; small, primarily self-funded cells. - TF investigations/prosecutions: - Over last five years there have been convictions for terrorist activities but no prosecutions for TF identified in the on-site period. - PERSONS CONVICTED BY FINAL SENTENCE (270 BIS CC): 2008 13; 2009 12; 2010 3; 2011 3; 2012 5. - Targeted Financial Sanctions (TFS) and PF: - Italy implements TFS via EU framework and national measures (LD 109/2007; MD 203/2010). - Italy has nominated 80 individuals and 16 entities to UNSCR 1267 Al Qaeda Sanctions Committee; nominated 16 individuals and 1 entity to EU CP 931 Committee. - Frozen assets pursuant to UNSCR 1267: approximately $110,000 related to 53 transactions/accounts and 38 persons/entities to date. - PF (Iran/North Korea) — assets frozen (USD): 2009 0; 2010 0; 2011 0; 2012 238,712; 2013 3,561,933,562; 2014 3,562,400,332. - PF (EUR): 2009 466,424; 2010 6,554,521; 2011 4,382,474; 2012 8,139,540; 2013 8,591,076; 2014 7,878,188. - PF STRs: since 2009, 206 PF STRs submitted, all by banks. - NPOs: - Non-profit sector: over 300,000 entities (Non Incorporated Associations 201,044; Incorporated Associations 68,349; Foundations 6,220; Social Cooperatives 11,264; Other forms 14,354; Total 301,191). - NRA: NPO sector low TF risk overall; MLSP not fully integrated into FSC/coordination; no targeted, interagency coordinated NPO supervision mechanism; limited outreach and TF guidance for NPOs. - Recommended TF/PF actions: additional outreach to FIs/DNFBPs; active notification system for new listings; integrate CASA and FSC activities; targeted RBA oversight of higher-risk NPOs. ### Preventive measures and supervision (R.9–23 highlights) - CDD and recordkeeping: - CDD application: required when establishing a relationship; occasional transactions ≥ €15,000; suspicion of ML/TF; doubts on previously obtained identification (Article 15 AML Law). - BoI CDD regulations and IVASS regulations provide detailed guidance; BoI regulation section 5 lists reliable independent records. - Beneficial ownership threshold: 25 percent plus one share considered “sufficient” for companies per Technical Annex. - Delayed verification allowed in limited low-risk circumstances (delay not to exceed 30 days). - PEPs: - Foreign PEPs covered by primary law; domestic PEPs not addressed in primary law but BoI and IVASS extended requirements to domestic PEPs for supervised FIs; DNFBPs largely not required to extend domestic PEP coverage. - Wire transfers: - Italy bound by EU Regulation 1781/2006 pending EU-level action; gaps relative to revised FATF R.16 (beneficiary information) exist. - Reliance on third parties: - Allowed under Article 29 AML Law; reliance on third parties in EU or “equivalent” jurisdictions permitted; country-risk assessment concerns noted. - Supervisory framework: - BoI supervises banks and AML/CFT of all banks; CONSOB oversees capital market licensees and conducts AML/CFT inspections for capital market licensees on behalf of BoI; IVASS supervises insurance; GdF supervises a wide range of DNFBPs. - BoI developing a new RBA methodology; RAS used but does not generate an ML/TF risk ranking across institutions. - On-site inspections (BoI 2010–2014): banks inspections annually range (e.g., 2014 banks institutions 667; inspections 213). - Agents and EU passporting: - Payment institutions: at end-2014 41 domestic PIs; over 240 EU PIs notified to provide services in Italy. - Agents operating under EU passporting: over 1,7,500 agents and 22,500 stores operating in Italy of which only 1,000 registered by OAM (source text preserved format). - Weak ongoing cooperation between OAM, GdF and home country supervisors; supervisory gaps for passported agents. - Sanctions and enforcement: - BoI sanctions to legal persons under AML Law (2012–2014): 2012 Number 1; Amount 10,000. 2013 Number 3; Amount 158,300. 2014 Number 11; Amount 477,000. - BoI sanctions to natural persons under CLB (2012–2014): 2012 Number 36; Amount 4,800,000. 2013 Number 33; Amount 9,500,000. 2014 Number 26; Amount 10,200,000. - MEF sanctions for failure to file STRs (2011–2014) — totals per year: 2011 €17,563,247; 2012 €22,351,906; 2013 €18,537,138; 2014 €8,412,527. - IVASS initiated processes to impose pecuniary sanctions on six institutions during 2011–2014; time to impose sanctions can be up to two years. - STR reporting patterns (UIF 2012–2014): - Financial Intermediaries: 2012 64,677; 2013 61,765; 2014 68,220. - Banks and BancoPosta: 2012 58,929; 2013 53,745; 2014 59,048. - Notaries: 2012 1,876; 2013 1,824; 2014 2,186. - Accountants/book keepers: 2012 90; 2013 98; 2014 148. - Lawyers: 2012 14; 2013 35; 2014 27. - Casinos and betting operators: 2012 283; 2013 774; 2014 1,053. - Total STRs: 2012 67,047; 2013 64,601; 2014 71,758. - UIF 2014: unexplained cash transactions account for about 30 percent of STRs by number but 13 percent by value. - Timeliness of STRs: 2013 65 percent filed within two months; 2014 72 percent filed within two months. - Supervisory recommendations: - Improve supervisory tools and data collection to assess inherent risk at individual institutions. - Strengthen sanctions, align sanctions with institution size and capacity, reduce delay in imposing sanctions (IVASS example). - Clarify BoI ability to apply CLB sanctions to banks under ECB prudential supervision. ### Transparency of legal persons and beneficial ownership (IO.5) - Business registers and access: - Italy participates in European Business Register; Business Register (Infocamere) provides online access; basic legal ownership information generally accurate and timely. - Infocamere usage: public authorities ~50,000 users consulting ~15 million times per year; commercial distributors ~80 consulting ~50 million times per year; private users ~220,000 consulting ~13 million times per year. - Beneficial ownership: - Beneficial ownership information generally accessible to competent authorities but less reliable than basic information; identification of beneficial owners may require cross-checks. - Quantitative indicators: 0.62 percent of Italian legal persons partly owned by foreign legal persons; 0.47 percent partly owned by foreign legal arrangements; total number of such legal persons: 17,618; employment associated: 1.3 million; estimated turnover: 458 billion. - NRA findings: SRL is most frequently misused form; SRLs account for 46.7 percent of legal persons (or shares therein) confiscated from organized crime. - Notaries and DNFBPs: - Notaries: approximately 4,600; authenticate and hold documents; undertake about three million acts annually (only a proportion captured under AML Law). - Notaries issued CDD guidelines (CNN 2014) but CNN guidelines contain statements potentially minimizing certain representation risks; further guidance recommended. - STRs filed due to inability to identify beneficial owner increased from 1 percent of STRs in 2012 to 14 percent in 2014. - Trusts and foreign legal arrangements: - Italy party to Hague Convention of July 1, 1985 on recognition of trusts; foreign trusts established under foreign law and managed in Italy by FIs and DNFBPs. - Trust companies in Italy: about 310 trust companies; 282 static fiduciaries; less than ten dynamic fiduciaries. - NRA rates vulnerability of trusts: “very significant”; specific risk of misuse of trusts: “high risk”. - Recommendations for legal persons: - Improve notaries’ CDD and beneficial owner verification; strengthen oversight of notaries’ compliance. - Consider centralizing beneficial ownership info or broadening Business Register scope to facilitate access. - Apply proportionate and dissuasive sanctions for failure to comply with information requirements. - Conduct formal assessment of ML/TF risks of legal persons beyond organized crime (e.g., corruption). ### International cooperation (IO.2 and R.36–40) - MLA and extradition: - DNA processed MLA requests related to ML/preventive measures: 24 in 2013; 29 in 2014; 3 in Jan–Feb 2015. Main counterparts: Switzerland 16; Netherlands 10; Germany 6; Spain 5. - GdF processed 957 requests 2013–2015: 361 active; 596 passive. - UIF international requests (total requests by year): 2009 79; 2010 126; 2011 172; 2012 217; 2013 450; 2014 660. - UIF requests to foreign FIUs to comply with judicial authority requests by year (2009–2014): 60; 89; 128; 137; 124; 146. - Instruments not yet transposed/ratified (identified gaps): - Italy has not transposed/ratified certain EU instruments (e.g., Council Framework Decision June 13, 2002 on JITs; Framework Decisions 2003/577/JHA, 2005/212/JHA, 2006/783/JHA) and has not ratified May 29, 2000 agreement on judicial MLA between EU member states. - In practice, absence has not prevented effective cooperation; legislative proposal submitted to Parliament to allow JITs. - UIF cooperation: - UIF in Egmont Group; effective at seeking/providing information spontaneously and upon request; uses FIU.NET and “known/unknown” automatic exchanges; bilateral MOUs (24 MOUs). - Limitation: UIF lacks direct access to law enforcement databases and cannot disseminate technical reports beyond GdF-NSPV and DIA without legal amendment. - Recommended international cooperation improvements: - Collect more granular statistics and introduce case management system for MLA/extradition. - Ratify/transpose additional EU instruments to expedite cooperation. - Increase spontaneous exchanges and timely responses to foreign requests for beneficial ownership and asset tracing. ### Priority actions (selected and excerpted) - Increase LEA focus on ML investigations/prosecutions for: - self-laundering, - standalone ML, - ML generated by foreign predicate offenses, - abuse of legal persons. - Authorize UIF to access LEA information and additional administrative databases (e.g., land registry); finalize UIF “Warehouse” data-mining IT tool. - Enable UIF to disseminate selected analysis beyond DIA and GdF‑NSPV to other LEAs and agencies; require recipient agencies to provide regular feedback on quality of intelligence. - Establish national coordination among LEAs and Customs to identify travel routes/means used by cash couriers; Customs to proactively inform UIF of suspicious declarations. - Collect and maintain granular statistics on financial investigations and international cooperation. - Regulatory/supervisory authorities to: - Work with financial sector and DNFBPs to improve beneficial ownership identification and reporting of tax‑crime typologies. - Issue secondary legislation or enforceable guidance for all DNFBP sectors; engage in outreach. - Improve supervisory tools, data quality, and risk-based methodologies; strengthen sanctions for noncompliance. - OAM to strengthen cooperation with home country supervisors of PI agents operating in Italy under an EU passport. ### Selected annex data (preserved figures) - DIA seizures/confiscations (selection): - DIA Seizure total (2013): Total 1252 (€, MILLIONS). - DIA Confiscation total (2013): Total 2763.7 (€, MILLIONS). - GdF seizing related to investigations (examples): - 2014 GdF totals (selected categories, €, MILLIONS): - MONEY LAUNDERING article 648 bis CC — Total amount 544.36. - article 648 ter CC — Total amount 130.76. - article 416 bis CC — Total amount 3,209.25. - Corruption — Total amount 350.34. - Tax crimes — Total amount 430.21. - Annex VI cross-border transport violations and amounts seized (2013): - Customs Agency: Number of violations 5,143; Amounts seized 45,773,162. - Guardia di Finanza: Number of violations 250; Amounts seized 923,403. - Total: Number of violations 5,393; Amounts seized 46,696,565. ### Concluding appraisal — operational balance - Strengths: - Comprehensive legal framework; specialized LEAs and Anti‑Mafia preventive/confiscation toolkit; effective UIF producing quality analysis; substantial confiscation and asset recovery domestically; robust supervisory architecture for banks. - Main shortcomings: - Supervisory and operational tools not fully adapted to NRA results; secondary legislation/guidance lacking for most DNFBPs; sanctions for noncompliance sometimes insufficiently dissuasive or slow to apply; limited UIF access to LEA databases and limited dissemination scope; issues with supervision of EU‑passported PI agents and agent networks; gaps in timely freezing/active notification for TFS. - Overall effectiveness conclusion (selected): - Italy achieves substantial levels of effectiveness in many IOs (notably IO.2, IO.5–IO.9, IO.11) and moderate effectiveness in certain preventive and supervisory IOs (IO.3, IO.4, IO.10); targeted improvements are required to align outcomes with high domestic ML risks, especially tax evasion and organized crime infiltration. *Source: IMF staff report content unit _cr1643 (Detailed Assessment Report — on-site visit January 14–30, 2015) contained in the provided document.* ### EXECUTIVE SUMMARY ___________________________________________________________________________ 7 ### EXECUTIVE SUMMARY ### Overview - This report provides a summary of the anti-money laundering and combating the financing of terrorism (AML/CFT) measures in place in Italy as at the date of the on-site visit (January 14 to 30, 2015). - It analyzes the level of compliance with the Financial Action Task Force (FATF) 40 Recommendations and the level of effectiveness of Italy’s AML/CFT system, and provides recommendations on how the system could be strengthened. ### Key Findings - Italy has a mature and sophisticated AML/CFT regime, with a correspondingly well-developed legal and institutional framework. It is nonetheless confronted with a significant risk of money laundering (ML) stemming principally from tax crimes and activities most often associated with organized crime, such as corruption, drug trafficking, and loan sharking. - All the main authorities have a good understanding of the ML and terrorist financing (TF) risks, and generally good policy cooperation and coordination. Italy is now developing a nationally coordinated AML/CFT strategy informed by its 2014 national risk assessment (NRA). - Law enforcement agencies (LEAs) access, use, and develop good quality financial intelligence. The authorities are able to successfully undertake large and complex financial investigations and prosecutions, and have confiscated very large amounts of proceeds of crime. - Current results are not fully commensurate with the scale of ML risks. This is partly due to the insufficient focus on standalone ML cases and other cases, generated by foreign predicate and/or involving legal persons offenses, as well as to the length of the judicial process. - The risk of TF in Italy appears to be relatively low, and Italy has effectively implemented targeted financial sanctions (TFS). It also actively mitigates the proliferation financing (PF) risk, but additional outreach to the private sector would be beneficial. - Financial institutions (FIs) generally have a good understanding of ML threats that they face, and the larger banks appear to be strongest in their mitigation efforts. The nonfinancial sector, with some exceptions, is far less attuned to ML/TF risk, and is hampered by the absence of detailed secondary legislation. - Customer due diligence (CDD) measures are well embedded in the financial sector, but there appears to be an over-reliance on the due diligence undertaken by the banks when accepting business through agency arrangements, and the processes for identifying beneficial owners are not consistent. Reporting by the nonfinancial sector is generally poor, especially among the lawyers and accountants, but on the rise. - Financial sector supervisors have been using a risk-based approach (RBA) to varying degrees, but their supervisory tools could be improved. Cooperation among domestic supervisory authorities, and with home country supervisors notably needs to be enhanced in regards to agents acting on behalf of remittance companies that have benefited from the EU passporting arrangements. - While the framework governing the supervision of EU payment institutions (PIs) operating in Italy under the EU framework is in place, there is very limited cooperation between Organismo Agenti e Mediatori (OAM) and the home country supervisor of the EU PI in the context of on-going supervision of these persons. - The sanctions regimes for ML and non-compliance with preventive measures need to be strengthened. - Information on beneficial ownership of legal persons is generally accessible in a timely fashion, but cross-checking is necessary to ensure its reliability. Companies are misused to some extent, in particular by organized crime groups, and foreign legal arrangements operating in Italy pose a minor but growing challenge. ### Risks and General Situation - Italy has a strong legal and institutional framework to fight ML and TF, but faces a particularly high amount of illegal proceeds—as acknowledged in the national risk assessment (NRA)—most of which are domestically generated. - Available estimates vary widely, ranging from 1.7-12 percent of GDP, with most pointing to the upper end of the range. - The main proceeds-generating crimes are: - (i) tax and excise evasion (around 75 percent of total proceeds); - (ii) drug trafficking and loan sharking (around 15 percent of the total); and - (iii) corruption, fraud, counterfeiting, environmental crime, robbery, smuggling extortion, and illegal gambling (around 10 percent of the total). - Categories of crime (ii) and (iii) are most closely associated with the activities of organized crime, a historically pervasive problem in Italy. - The channel most vulnerable to ML activity appears to be the banks due to their dominance of the financial sector, the range of products they offer, the transaction volumes they handle, and the interconnectedness of the banking sector with the international financial system. - Lawyers, notaries, and accountants are in some cases involved in creating and managing structures that lack transparency and used to launder money. - The high use of cash and relatively large informal economy very significantly increases the risk that illicit proceeds may be rechanneled into the regulated formal economy. - The risk of TF appears to be relatively low. While domestic extremist groups exist, they are very fragmented and do not, at present, seem to pose a significant risk. The risk is mainly connected to independent individuals who are devoted to Jihad, operating through small cells that are primarily self-funded. ### Overall Level of Effectiveness and Technical Compliance - Since the last assessment in 2005, Italy's level of technical compliance has markedly improved in several areas—notably in preventive measures and supervision of financial institutions—but not in some others—such as sanctions for noncompliance with preventive measures. - Italy has a strong legal and institutional framework for combating ML, TF, and PF. - Measures are particularly strong regarding the assessment of risks, law enforcement, confiscation, targeted financial sanctions, preventive measures for and the supervision of FIs, and transparency of legal persons and arrangements, but less so regarding sanctions for ML and non-compliance, and preventive measures for designated nonfinancial businesses and professions (DNFBPs). - In terms of effectiveness, Italy achieves substantial results in: - risk assessment and national policies, - international cooperation, - collection and use of financial intelligence, - ML and TF investigation, prosecution, confiscation, and - transparency of legal persons and arrangements. - Only moderate improvements are needed in these areas. More significant improvements are needed in the other areas as indicated below. ### Assessment of Risks, Coordination and Policy Setting (Chapter 2—IO.1; R.1, R.2, R.33) - Italy has a good understanding of its ML/TF risks, and generally good policy cooperation and coordination to address these risks. It completed a robust NRA in 2014. - Operationally, national AML/CFT coordination under the auspices of the Financial Security Committee (FSC) is quite good. - Although Italian authorities have for some time been applying an RBA to varying degrees based on their individual understanding of risk, and several initiatives have been launched in the wake of the NRA, Italy has not yet developed a nationally coordinated AML/CFT strategy that is fully informed by the ML/TF risks in the NRA. - Notwithstanding their awareness of ML/TF risks, supervisors have not fully adapted their tools and operational practices to reflect the identified risks. - The Financial Intelligence Unit (Unità di Informazione Finanziaria–UIF) could further improve its policies and activities, and better use its resources to focus more on high-risk areas. - Although LEAs and prosecutors have the skills to take down ML networks, current efforts are mainly aimed at sanctioning the predicate offenses and some related third-party ML offenses, and confiscating related assets at the expense of standalone ML cases and those generated by foreign predicate offenses. - The lack of criminalization of self-laundering until *Source: EXECUTIVE SUMMARY (on-site visit January 14 to 30, 2015) contained in the provided document.* ### 20. January 1, 2015 meant that the AML framework could not be used to its fullest extent. ### _cr1643 - 20. January 1, 2015 meant that the AML framework could not be used to its fullest extent. ### Key findings — AML/CFT framework and institutional coordination - The FSC has proven a useful platform for coordinating action for the prevention of the use of the financial system and of the economy for ML/TF and PF purposes; it is updating its assessment of TF risk in response to the global rise in the threat of terrorism and must ensure policies and activities are aligned and prioritized according to identified risks. - The NRA results have been shared with FIs and DNFBPs; FIs (and particularly banks) generally have a good understanding of ML risks in Italy; DNFBP understanding of ML/TF risks is mixed and overall weaker than the financial sector. - The lack of criminalization of self-laundering until January 1, 2015 limited the AML framework’s utility, notably regarding tax evasion; the recent criminalization should have a positive effect on international cooperation. ### Financial intelligence, money laundering, and confiscation (IOs 6–8; R.3, R.4, R.29–32) - LEAs have comprehensive powers and collect/use wide-ranging intelligence; overlap of LEA responsibilities creates potential duplication, especially in early stages of investigations. - The UIF receives STRs and other information and has access to administrative and financial information; the UIF produces good analysis for GdF and DIA but lacks access to LEA information and certain administrative information (e.g., the land registry) that could enrich its analysis. - LEAs and prosecutors can undertake large and complex financial investigations and have disabled criminal enterprises in high-profile cases. - Criminal and Anti-Mafia Codes provide a comprehensive framework for seizing and confiscating proceeds of crime. - Current efforts focus mainly on sanctioning predicate offenses and related ML activities and confiscating related assets, at the expense of standalone ML cases and those generated by foreign predicate offenses. - The criminal judicial system is complex and procedures are lengthy; combined with case complexity and insufficient resources, this may undermine judicial effectiveness. Repeat offending suggests sanctions are not sufficiently dissuasive. - Recommendation: Collect more granular statistics on investigations, prosecutions and convictions to better gauge performance. ### Terrorist financing and proliferation financing (IOs 9–11; R.5–8) - Authorities demonstrate a good understanding of TF risk; the most significant emerging risk is potential support of Italian self-financed residents travelling to conflict zones abroad to assist foreign terrorist groups. - Anti-terrorism investigations focus on detecting and disrupting cells and include parallel financial investigations; in the last five years there have been some convictions for terrorist activities, but none of the investigations found evidence of TF activities. - Italy has effectively implemented TFS; it uses a passive notification system for FIs and DNFBPs (UIF provides a link to the EU list on its website). - The main ministry in charge of NPOs (Ministry of Labor and Social Policies (MLSP)) is not integrated into FSC work; thus a key sector is excluded from national coordination for TFS. - Italy actively mitigates PF risk through TFS and controls on dual-use goods, with focus on risks emanating from Iran and awareness of risks from North Korea. - Recommendation: Additional outreach to the financial and nonfinancial sectors and improved interagency coordination for NPO supervision. ### Preventive measures and supervision (R.9–23; R.26-28, R.34–35) - FIs generally understand ML threats and support NRA conclusions; banks are potentially most vulnerable but larger banks have stronger defenses; appreciation of TF risk is much less developed; DNFBPs are far less attuned to risk. - CDD measures are well embedded in the financial sector, but some sectors (insurance, asset managers, payment institutions) over-rely on due diligence undertaken by banks via agency arrangements. - Identification of beneficial ownership is generally appreciated but inconsistent in detailed processes, especially tracking the 25 percent threshold through complex ownership chains. - Reporting by DNFBPs is generally poor, especially among lawyers and accountants. - Remittances: major concern over remittance services provided by agents operating under EU passporting arrangements; investigations revealed large scale abuses of cash reporting requirements. Italy helped address issues within the EU’s 4th Money Laundering Directive, but domestic supervisory cooperation and cooperation with home country supervisors need enhancement. - Supervisory authorities (BoI, IVASS, MEF) understand ML/TF risk but need improved supervisory tools and better, timely, consistent data on inherent risk at individual institutions. - A new risk-based supervisory methodology under development by the BoI is an improvement but has limitations. - Sanctions: room to strengthen arrangements, better align sanctions with institution size and financial capacity, and reduce time to impose sanctions on insurance licensees. - Recommendation: Determine whether the BoI can apply sanctions available under the CLB to banks under ECB prudential supervision. ### Transparency of legal persons and arrangements (IO.5; R.24–25) - Italian legal persons are used to a relatively large extent in ML schemes; most schemes are organized domestically with relatively simple corporate structures. - Authorities understand misuse of legal persons by organized crime groups; GdF has good understanding of misuse in the context of tax offenses. - Basic information on legal persons is readily available; beneficial ownership information is generally accessible to competent authorities but less so than basic information and not consistently reliable. - Process to identify ultimate beneficial owner can be improved, including strengthened due diligence by notaries. - Foreign legal arrangements pose a growing threat; Italian trustees increasingly provide trust services under other jurisdictions’ legislation, including for domestic ML schemes. Domestic legal arrangements do not appear to pose a significant ML or TF risk. - Enforcement of existing obligations is weak; sanctions for failure to comply with identification requirements are available but not used to full extent. ### International cooperation (IO.2; R.36–40) - Italy has a sound legal framework and a network of bilateral and multilateral agreements; authorities provide constructive and timely information or assistance when requested, including evidence, financial intelligence, and supervisory information related to ML, TF, and associated predicate offenses. - Italy assists with requests to locate and extradite criminals and to identify, freeze, seize, and confiscate assets. - The lack of criminalization of self-laundering until December 31, 2014, and delays in referring requests undermined the scope/level of assistance; criminalization should have a positive effect. - Recommendation: Collect more comprehensive statistics and introduce a case management system to better gauge performance on international cooperation. ### Priority actions (excerpt of recommendations) - LEAs should increase efforts on ML investigations and prosecutions focusing on self-laundering, standalone ML, foreign predicate offenses, and abuse of legal persons; strengthen sanctions. - Authorize the UIF to access law enforcement information and additional administrative databases (e.g., real estate), and to disseminate analysis beyond DIA and GdF to other LEAs and agencies; GdF and DIA should provide better feedback to the UIF. - Establish a national coordination mechanism among LEAs and customs to identify travel routes, flights, ships, and concealment methods used by cash couriers; customs should enhance targeting of proceeds of crime (including tax offenses) transported by cash couriers and share suspicious cases with the UIF. - Collect and maintain more granular statistics on financial investigations and international cooperation to better measure performance. - Regulatory and supervisory authorities should: - Work with financial sector and DNFBPs to improve understanding and implementation of beneficial ownership identification requirements. - Work with the financial sector to improve understanding of typologies of tax crimes and reporting of related suspicious transactions. - Issue secondary legislation or encourage enforceable guidance to ensure coverage of all DNFBP sectors and engage in outreach. - Financial sector supervisors and GdF should improve supervisory tools using good quality and consistent data on inherent risks and risk management practices; strengthen sanctions for noncompliance. - The OAM should strengthen cooperation with home country supervisors of PI agents operating in Italy under an EU passport. ### Effectiveness and Technical Compliance (selected ratings) - Effectiveness Ratings (summarized): - IO.1 Risk, policy and coordination: Sub - IO.2 International cooperation: Sub - IO.3 Supervision: Mod - IO.4 Preventive measures: Mod - IO.5 Legal persons and arrangements: Sub - IO.6 Financial intelligence: Sub - IO.7 ML investigation and prosecution: Sub - IO.8 Confiscation: Sub - IO.9 TF investigation and prosecution: Sub - IO.10 TF preventive measures and financial sanctions: Mod - IO.11 PF financial sanctions: Sub - Technical Compliance (selected): - R.1 LC; R.2 LC - R.3 LC; R.4 C - R.5 C; R.6 LC; R.7 PC; R.8 LC - R.9 C; R.10 LC; R.11 C; R.12 LC; R.13 PC; R.14 C - R.24 LC; R.25 LC - R.26 LC; R.27 LC; R.28 LC; R.29 LC; R.30 C; R.31 C - R.36 C; R.37 LC; R.38 LC; R.39 C; R.40 LC ### ML/TF risks and country context (selected facts and statistics) - Area: about 294,140 square kilometers. - Population: currently about 60 million with approximately 7.5 percent of the population being immigrants. - Italy is part of the Schengen Area and has been a member of the Eurozone since 1999. - Governance: bicameral parliament divided between the Senato (315 seats) and Camera dei Deputati (630 seats). - Constitution adopted on December 22, 1947 and came into force on January 1, 1948. - No official estimate of annual proceeds from predicate crimes; available estimates range from 1.7–12 percent of GDP, with most pointing to the upper end of the range. - In 2014, estimated illegal proceeds range from €27.5–194.4 billion. - Main proceeds-generating crimes divided into three tiers: - i. Tax and excise evasion (around 75 percent of total proceeds of crime). Income tax evasion and VAT fraud are the biggest sources. - ii. Drug trafficking and loan sharking (collectively around 15 percent of the total). - iii. Corruption and bribery, fraud, counterfeiting and piracy of products, environmental crime, robbery or theft, smuggling, extortion, and illegal gambling (collectively accounting for 10 percent of the total). *Source: Detailed Assessment Report (on-site visit January 14–30, 2015) contained in the provided IMF report content.* ### 45. According to the authorities’ NRA, most of the crimes in tiers ii. and iii. are closely linked to ### ML/TF Risk Assessment and AML/CFT Framework — Italy (paragraphs 45–62) ### Organized crime and predicate offences - According to the authorities’ NRA, most crimes in tiers ii. and iii. are closely linked to the activities of organized crime. - Italy historically suffers from a high rate of organized criminal activity linked to Mafia-type structures: Camorra, N’drangheta, Sacra Corona Unita, Cosa Nostra, and Stidda. - Organized crime characteristics and trends: - Predominant in the South but has spread throughout the country and trans-nationally. - Growing presence of foreign organized crime groups in certain parts of the country, notably central Italy. - Groups have become less visible and more entrepreneurial, infiltrating the legitimate economy. - Possible shift of investment strategies from large urban areas to smaller municipalities and peripheral areas to hide and infiltrate or corrupt public administrations. - Authorities characterize organized crime as the dominant and most worrisome tool in criminal conduct. - Organized crime is connected to all main predicate crimes in Italy; some crimes are almost exclusively conducted in an organized crime context (notably drug trafficking, extortion, loan sharking, and illicit trafficking in waste materials). ### Money laundering (ML) and vulnerable channels - Main vulnerabilities: - Banks and BancoPosta are the most vulnerable channels due to dominance of the financial sector, range of products, transaction volumes, and interconnectedness with the international financial system. - Increasing use of electronic money instruments is an emerging concern due to vulnerabilities in some preventive measures. - Lawyers, notaries, and accountants are in some cases involved in creating and managing non-transparent structures used to launder money. - Certain types of trust companies may also be of high risk. - Cash and informal economy: - The NRA notes the high use of cash and relatively large informal economy very significantly increases the risk that illicit proceeds may be rechanneled into the regulated formal economy. - It has been estimated that in 2010 cash accounted for about 90 percent of all micropayments. - International exposure: - Openness of the economy and volume of international visitors expose Italy to international ML activity, but the extent is unclear. - Main destinations for outwards flows are: Switzerland, Luxembourg, and Monaco (in particular with respect to proceeds of tax crimes), as well as France, Germany, San Marino, and Spain. - In 2009 the Italian tax amnesty (Asset Repatriation Program) yielded more than €80 billion; 70 percent of the repatriated or regularized assets were originally invested in Switzerland. ### Terrorist financing (TF) - Overall TF risk assessed as relatively low. - Domestic extremist groups are fragmented and do not presently seem to pose a significant terrorism or TF risk. - Main TF risk connected to independent individuals devoted to Jihad, encouraged by online anti-Western and anti-Semitic propaganda, operating in small, primarily self-funded cells. - Charities and other NPOs do not appear to be used to a significant extent to raise funds for terror in or from Italy. ### Legal and institutional developments - Criminalization of self-laundering: - Italy passed a law criminalizing self-laundering which came into force on January 1, 2015. - Article reference: self-laundering criminalized (article 648 ter 1 of CC—law of December 15, 2014, entered into force on January 1, 2015). - Some authorities believe this will increase ML cases; it is too soon to assess practical effects. - Re-criminalization of “false corporate accounting” noted as significant given extent of tax crimes. - Seizing and confiscation: - Italy has a comprehensive framework for seizing and confiscating assets linked to crime, including ordinary confiscation, confiscation per equivalent, confiscation for disproportion, and preventive measures under the Anti-Mafia Code. - Tax compliance program: - A voluntary tax compliance program is in effect from January until September 2015; it does not appear to be an obstacle to AML/CFT framework implementation including the ML offense. ### Criminal justice system and enforcement challenges - The criminal judicial system is complex and procedures are lengthy; combined with insufficient resources and complexity of ML cases, this appears to undermine efficacy. - Repeat offenders committing ML and predicate offenses suggest sanctions may not be sufficiently dissuasive. - The assessment team prioritized understanding: - Tax evasion (income tax evasion and VAT fraud) as the single most important source of proceeds of crime, including linkages to the informal economy and organized crime. - Pervasive organized crime and its ML methods and linkages with informal economy, tax evasion, and corruption. - Corruption as a significant concern for proceeds generation and potential impact on AML/CFT framework functioning, including areas most affected (notably public procurement and infrastructure work). ### Materiality and structural elements - Financial sector size and importance: - Italy’s financial sector assets total approximately 240 percent of GDP. - The financial system is dominated by banks that hold over 85 percent of the total financial sector assets. - Banks are crucial for financing SMEs, which account for almost 70 percent of business value added. - Supervision and inclusion: - Compliance with international standards for banking and securities supervision is high; supervisory practices are strong and sophisticated (IMF 2013 FSAP). - Level of financial inclusion is relatively high. - Structural elements for AML/CFT appear present: political and institutional stability, accountability, rule of law, and a professional independent judicial system, though Italy ranks relatively low on governance indicators compared to other large high-income countries. - Corruption: - Corruption is a significant problem relative to other large high-income countries and has been a policy priority; a new anti-corruption law was enacted in 2012 to strengthen preventive measures and accountability. - Public procurement is identified as particularly vulnerable to corruption. - The National Anti-Corruption Authority (ANAC) was charged in 2014 with supervision of public contracts and given special powers, including extraordinary and temporary management of contractors. ### Key AML/CFT institutions and responsibilities - Ministry of Finance and Economy (MEF): policy to prevent ML/TF, chairs Financial Security Committee (FSC), can levy AML/CFT administrative sanctions. - Interior Ministry: public order and security policies; coordinates five national police forces; oversees preventive activities by Polizia di Stato. - Ministry of Justice: organization of justice/courts, management of notarial archives and judicial records monitoring chartered professions, role in international cooperation. - Bank of Italy (BoI): supervises banks, e-money institutions, payment institutions, Bancoposta, financial intermediaries, Cassa Depositi e Prestiti SPA; supervises investment firms and asset management companies jointly with CONSOB; under SSM ECB supervises significant banks, BoI supervises remaining banks and AML/CFT supervision of all banks. - CONSOB: regulates Italian financial markets and protects investing public; enforces transparency and compliance in market conduct. - IVASS: supervisor of insurance and reinsurance undertakings and related entities. - Unità di Informazione Finanziaria (UIF): administrative FIU established within BoI, operational since January 1, 2008, national center for receipt and analysis of suspicious transaction reports and dissemination to LEAs. - Guardia di Finanza (GdF): military-status body under MEF, responsible for financial crime, corruption, tax evasion and avoidance, smuggling; AML/CFT supervisory responsibilities for bureaux de change, payment institutions’ agents and DNFBPs. - Carabinieri: military corps with police duties; Specialized Operational Group (R.O.S.) coordinates organized crime and terrorism investigations. - Anti-Mafia Investigation Department (DIA): fights Mafia-type organizations; inter-force investigative body with special investigative powers. - Anti-Mafia National Department (DNA): judicial coordinating body enforcing anti-mafia legislation; comprises National Anti-Mafia Prosecutor and 20 deputy prosecutors; works closely with DIA. *Source: Excerpts from IMF assessment text (paragraphs 45–62).* ### 63. Other agencies that play a role in AML/CFT include the National Anti-Corruption Agency ### _cr1643 - 63. Other agencies that play a role in AML/CFT include the National Anti-Corruption Agency ### Institutional framework and inter-agency coordination - Other agencies that play a role in AML/CFT include the National Anti-Corruption Agency (ANAC), Ministry of Foreign Affairs and International Cooperation, Inland Revenue Agency (Agenzia delle Entrate), Customs Agency, Ministry of Economic Development (MISE), and the Ministry of Labor. - The FSC, under the auspices of the MEF, is the key vehicle for the coordination of national AML/CFT policies. - Judicial authorities must transmit to the FSC any information deemed as useful for its mandate. - The AML Law prescribes detailed rules for the exchange of information and collaboration among concerned agencies: - Relevant agencies are required to cooperate and coordinate. - Memoranda of Understanding (MOUs) must be signed between them. - The AML Law provides for the derogation of professional secrecy for the exchange of information between the supervisory authorities and the UIF. - Specific coordination examples from the source: - Coordination between the BoI and the UIF is governed by a 2009 memorandum of understanding: the BoI reports to the UIF suspicious transactions and any other information found in the performance of its supervisory activities that may be relevant to it; the UIF reports to BoI any information that may be relevant to its remit. - The BoI also cooperates with judicial authorities and LEAs, reporting any irregularities which appear to be criminal offenses, and supplies judicial authorities with information requested in the framework of investigations or proceedings involving violations subject to criminal sanctions. - The BoI cooperates with CONSOB through a 2011 MOU. ### Risk-based approach, threats, and national coordination (NRA) - Italian authorities have been applying an RBA to varying degrees based on their individual understanding of risk. - Over the past decades, structures have been established to address key ML threats (examples given): the DIA and DNA for combating organized crime, the GdF for financial crime. - Unique and best practice measures cited: - Use of anti-mafia preventive measures against other crimes, including ML. - Confiscation measures originally conceived for ML and organized crimes applied to tax crimes. - Specific powers to ANAC such as extraordinary and temporary management of contractors. - A highly-restrictive regime on the use of cash. - Italy has a strong institutional framework for combating ML and TF. LEAs and prosecutors pursue the recovery of proceeds of crime as a clear policy objective. - Italy has not yet developed a nationally coordinated AML/CFT strategy fully informed by the ML/TF risks in the NRA, but the FSC is currently working on it. - The NRA was finalized and published shortly before the on-site; its results are beginning to shape national AML/CFT strategy. - Early follow-up actions from the NRA: - Guidelines developed for notaries. - Work begun on developing similar guidelines for accountants. - The BoI launched a supervisory initiative targeted at EU branches of PIs and EMIs established in Italy identified as a major ML/TF vulnerability by the NRA. - It is too soon to tell whether the current allocation of resources to AML/CFT is in line with the results of the NRA. ### National Risk Assessment (NRA) — scope and quality - The principal NRA facts: - Italy’s first NRA was issued in July 2014 following a seven-month long exercise led by the FSC. The Working Group started its activities in March 2013; the draft methodology was finalized and approved. - The NRA refers to ML/TF risks associated with activities of reporting entities under the supervision of the BoI and other supervisors, indicators and typologies developed by the UIF, trends and information provided by the judiciary and LEAs, and reports by academics and regional and international organizations. - The NRA analyzes ML/TF threats and vulnerabilities (but not consequences) at the national level on the basis of an agreed upon methodology that generally covers the range of issues addressed in the FATF guidance on conducting national ML/TF risk assessments. - The assessment identifies and assesses new and emerging risks reflected in the latest FATF standard including domestic politically exposed persons (PEPs) and tax evasion. - Quality and limitations: - The NRA is of good quality, has involved close coordination among concerned agencies, the private sector and academia, and uses multiple sources of information. - Data gaps exist (examples): comprehensive statistics on ML/TF investigations, and international cooperation; the methodology establishes how to deal with such gaps so as not to undermine the robustness of the assessment. - Background information used to reach conclusions seems credible, factual, and up to date. - Coverage: - The risk assessment focused on laundering of proceeds of crime committed in Italy and abroad, predicate offenses, and sectors affected by ML. - It includes an assessment of preventive measures in FIs and DNFBPs, cross-border controls, legal persons and trusts, investigative measures, and repressive measures. - Identified highest-risk sectors: banks, electronic money institutions and payment institutions; and electronic gaming, gold buyers, real estate agents, and gambling, notaries, and lawyers. - The TF component is less sophisticated than the ML component due to differences in available underlying information and data, but is of good quality and has yielded reasonable findings. ### Overview of the financial sector and DNFBPs (composition as at end-2014) - Financial sector concentration and size: - Banks account for almost 85 percent of total financial sector assets. - At end-2014, there were 684 banks (including BancoPosta) with total assets of about €3.5 trillion. - The top five banking groups (comprising 40 banks) held 47 percent of total banking assets. - Insurance sector: - At end-2014 a total of 134 Italian-incorporated insurance undertakings were authorized, of which 64 provided life insurance products. - Foreign institutions control 48 of the Italian insurers, accounting for 24 percent of total premiums. - Five institutions account for approximately 65 percent of life premiums. - Investment and asset management: - At end-2014, 936 firms were authorized to provide investment and other financial services, including: - 89 investment firms (with €8 billion under management); - 147 asset management companies with €770.5 billion under management; - 700 non-bank financial intermediaries, mainly involved in leasing, factoring and consumer credit. - Banks own almost all the asset management companies, with the five largest accounting for about 65 percent of funds under management in Italy. - Payment institutions, remittances, and payment-service providers: - At end-2014 there were 41 domestic payment institutions authorized; 16 provided remittance services, mostly as primary business. - These payment institutions operate through a network of 21 branches and 1,400 agreements with local agents. - Since the introduction of the EU Payment Service Directive (March 2010), over 240 EU payment institutions have given notification of their intention to provide services in Italy. - Italian service providers now process only 10 percent of remittances. - Remittances from Italy have been growing at an annual rate of 13 percent since 2005, totaling €6.8 billion in 2012, of which 40 percent was destined to China. - Trusts and trust companies: - Over 300 trust companies exist in Italy and are treated as part of the financial sector. - The “dynamic” trust company has largely disappeared; the majority “static” trust companies act under a direct mandate executed on behalf of the client. - Selected supervisory and market counts (as presented): - Banks and BancoPosta: 667 supervised by BoI (including branches of foreign banks 79; Large 42; Medium 32; Minor 473; Small 42). - Banking groups: 75. - Investment firms (Società di intermediazione mobiliare): 89 supervised by BoI + CONSOB. - Asset management companies (Società di gestione del risparmio and SICAV): 147 supervised by BoI + CONSOB. - Non bank financial intermediaries ex article 107 of BL: 175 supervised by BoI + GdF. - Non bank financial intermediaries ex article 106 of BL: 525 supervised by BoI + GdF. - Electronic Money Institutions (Imel): 5 supervised by BoI. - Payment Institutions (including domestically registered money remitters): 41 supervised by BoI + GdF. - Money-changers: 104 supervised by GdF. - Life-insurance companies: 64 supervised by IVASS. - Insurance brokers: 5,285 supervised by IVASS. - Insurance agents: 35,942 supervised by IVASS. - Trust Companies: 310 supervised by GdF. ### DNFBPs, professionals, and other sectors - Notaries: - Approximately 4,600 notaries. - Notaries authenticate and hold documents relating to movable and immovable property and corporate affairs. - Notaries undertake about three million acts each year, only a proportion involve transactions captured under the AML Law. - Lawyers: - Approximately 234,000 lawyers in Italy; about 80 percent act solely as litigators and are not subject to the AML legislation. - Some 90 firms located in 30 cities involving approximately 5,000 lawyers generate the vast majority of revenues from corporate, commercial and financial sectors. - Accountants and auditors: - About 114,000 registered accountants. - The AML Law has been extended to cover auditors, of whom there are about 100,000. - Real estate agents: - There are 31,681 active real estate agents recorded in the register. - Casinos and gambling: - Italy hosts four casinos (Campione d’Italia, San Remo, Venice, and Saint Vincent), all owned and managed by the municipalities in which they are located. - A very active internet gambling sector comprises approximately 800 vendors, some of which are covered by the AML Law. - Businesses, legal persons and NPOs: - SRL is the most common legal person; lower minimum capital requirement (€10,000 vs. €120,000 for SPA and SAPA) contributes to popularity. - Tables and counts indicate totals (as presented): Active companies and entities include totals such as Active 3,174,315 individual enterprises, partnerships 900,058, companies 40,624, other forms 1,175,480, total 5,418,804; grand totals presented include 6,199,110 and 1,592,542 (as in the tables). - NPOs: 68,349 incorporated associations and 6,220 foundations. - Legal arrangements and fiduciaries: - Two types of legal arrangements referred to as “trust companies” under Italian law: - Static fiduciary: nominee under direct mandate, do not actively manage assets. - Dynamic fiduciary: mandate to actively manage assets. - Both are subject to AML/CFT requirements. - In practice: 282 static fiduciaries (very small arrangements) and less than ten dynamic fiduciaries currently operating in Italy. - The 2014 NRA highlights they are highly vulnerable to misuse; however, considering limited numbers, supervision, and decline, the net risk of domestic legal arrangements appears low. ### Preventive measures and legal framework - The current legal framework relevant to preventive measures postdates the last assessment of Italy’s compliance (based on situation in 2005) and is materially different; no reliance placed on the previous assessment when considering compliance with the 2012 standards. - Key legal instruments and timing: - AML Law of 2007, as subsequently amended. - BoI regulations on CDD and record-keeping effective from January 1, 2014 (record-keeping regulation was an update of a 1993 regulation). - BoI regulation on internal controls effective September 1, 2011. - IVASS regulations on internal controls and CDD effective August 1, 2012 and January 1, 2015, respectively. - September 2012 BoI instructions for application of EU Regulation 1781/2006 on information on the payer accompanying the transfer of funds. - Additional relevant laws include the Consolidated Laws on both Banking and Finance. - Scope and coverage: - The AML Law applies to all financial activities and DNFBPs specified under the FATF Recommendations and extends to additional activities not addressed within the standards (examples): clearing and settlement services, security transport businesses, gaming enterprises, auditing firms, antiques traders, auction houses and art galleries. - The primary law is comprehensive on preventive measures; BoI, CONSOB, and IVASS regulations add detail and enforceable guidance. - For DNFBPs other than PIE auditors and notaries, there is no substantive secondary legislation or guideline linked to the 2007 AML Law. - Wire transfers: - Italy remains bound by the 2006 EU Wire Transfer Regulation pending EU-level action; this does not reflect the revised FATF requirements regarding beneficiary information and obligations on intermediary FIs. - Exemptions: - Italy has not applied any exemptions from the AML/CFT framework with respect to financial activities defined within the FATF standards. ### Key findings and policy-relevant observations - Institutional strengths: - Strong institutional framework with multiple specialized LEAs and preventive measures across sectors. - Use of innovative measures such as anti-mafia preventive measures and expanded confiscation powers. - Gaps and areas for improvement: - No fully developed nationally coordinated AML/CFT strategy fully informed by NRA results, though FSC is working on it. - Uncertainty whether resource allocation to AML/CFT aligns with NRA results. - Data gaps exist for comprehensive statistics on ML/TF investigations and international cooperation. - TF component of NRA less developed than ML component due to limited underlying data. - Secondary legislation or guidance is lacking for many DNFBPs (other than PIE auditors and notaries). - Wire transfer regime not yet aligned with the revised FATF standards due to reliance on the 2006 EU Wire Transfer Regulation. *Italic: Source — IMF staff report content unit _cr1643.* ### 89. Italy is a party to Hague Convention of July 1, 1985 on the recognition of trusts, and foreign ### _cr1643 - 89. Italy is a party to Hague Convention of July 1, 1985 on the recognition of trusts, and foreign ### Trusts and legal arrangements - Italy is a party to the Hague Convention of July 1, 1985 on the recognition of trusts; foreign trusts are established under another jurisdiction’s law and managed by Italian FIs and DNFBPs. - Providers of services to trusts are explicitly mentioned in the AML Law as being subject to its requirements, including the obligation to identify the beneficial owner of a trust (see write-up for IO.4 for more details). - Trustees are not required to disclose that they are acting as trustee, but must, like any other customer, provide reporting entities with all the necessary information, including information on the beneficial owner. - Significant shareholdings in Italian companies held by trusts must be declared to CONSOB. - Quantitative indicators on foreign involvement in Italian legal persons: - 0.62 percent of Italian legal persons are partly owned by foreign legal persons. - 0.47 percent of Italian legal persons are partly owned by foreign legal arrangements. - Total number of such legal persons: 17,618. - Employment associated with these companies: 1.3 million persons. - Estimated turnover associated with these companies: 458 billion. - Authorities noted an increase in instances where Italian FIs or DNFBPs act as trustees of a foreign trust, and that legal arrangements established in Italy under another jurisdiction’s legislation are on the rise. ### Company formation and business registers - Recent reforms have improved ease of doing business; company formation can now be completed within a matter of days. - Italy participates in the European Business Register (EBR) initiative to allow unified access by its 27 members to an agreed minimum amount of information related to limited liability companies in domestic Business Registers. - Access to business register information in Italy is granted online through the Infocamere database. ### Overview of supervisory arrangements - Under the SSM the ECB supervises significant banks (effectively the 13 largest banking groups in Italy). - The Bank of Italy (BoI) is responsible for: - Prudential supervision of remaining banks. - AML/CFT supervision of all banks. - Prudential and AML/CFT supervision of e-money institutions, payment institutions (PIs), Poste Italiane SPA, financial intermediaries, and Cassa Depositi e Prestiti SPA. - Prudential and AML/CFT supervision of investment firms, asset management companies, stock brokers and Società di Investimento a Capitale Variable (SICAV). - CONSOB is responsible for market conduct supervision and undertakes some AML/CFT supervisory activities with respect to capital market licensees on behalf of the BoI. - IVASS supervises insurance entities. - GdF supervises trust companies and bureaux de change, and is responsible for AML/CFT supervision of a wide range of DNFBPs including: - (i) lawyers; (ii) accountants; (iii) notaries; (iv) casinos; (v) specified categories of persons engaged in manufacture, intermediation, and commerce including exporting and importing precious objects; (vi) trust and company service providers; and (vii) real estate agents. - OAM supervises loan brokers and finance agents; AML/CFT supervision of these entities rests with the GdF. - CONSOB is responsible for the AML/CFT supervision of auditing firms PIE auditors. - UIF verifies compliance of all obliged entities with regard to reporting of suspicious transactions. - BoI can delegate GdF to carry out inspections at PIs (including Italian branches of EU PIs) and non-bank financial intermediaries. - Supervisory powers and enforcement: - The AML Law gives all supervisory authorities power to undertake off-site and on-site inspections. - The law sets out a number of sanctions that can be imposed by supervisors for breaches. ### International cooperation - Italy has ratified the Vienna, Palermo, CFT and Merida conventions. - Central Authority for MLA and extradition is the Ministry of Justice. - Where international conventions are lacking, CPC provisions on dual criminality apply. - International cooperation is a focus due to the high risk of organized-crime groups laundering abroad proceeds generated by predicate offenses committed in Italy. ### National AML/CFT policies and coordination — Key findings - Authorities have largely succeeded in identifying, assessing, and understanding ML and TF risks. - A risk-based approach (RBA) has been applied to varying degrees; a nationally coordinated AML/CFT strategy informed by a national risk assessment (NRA) is being developed. - Domestic policy cooperation and coordination is relatively strong. - LEAs and prosecutors can undertake large and complex financial investigations and prosecutions; considerable amounts of illegal assets have been removed from criminals. Current efforts focus mainly on predicate offenses and some related third party ML, at the expense of standalone ML cases and ML of proceeds of foreign predicate offenses. - Investigative and prosecutorial resources do not seem commensurate with the nature and scale of ML/TF risks. - Financial institutions, especially banks, have a good understanding of ML risks; uncertainty remains about the robustness of banks’ measures to deal with tax evasion, the biggest single ML threat. - Understanding of ML/TF risks within DNFBP sectors is very mixed and overall not as sound as within the financial sector. ### National AML/CFT policies and coordination — Recommended Actions Italy should: - Complete the update on TF risks expeditiously. - Extend the scope of the national risk assessment to cover remaining areas (e.g., art galleries and ship-based casinos). - Continue to monitor, review, and orient policies and activities in line with the NRA. - Implement more forceful policies and strategies for pursuing: - stand-alone ML cases, - ML generated by foreign predicate offenses, - complex ML cases involving legal persons with a view to disrupt major ML networks and facilitators. - Review current investigative, prosecutorial and judicial resources and ensure they are commensurate with identified ML/TF risks. - Continue to adapt supervisory tools and operational practices to the identified risks. - Work closely with the financial sector to help improve understanding of tax evasion typologies. - Issue secondary legislation (or guidance) to cover all DNFBP sectors and raise awareness on AML/CFT. - Ensure exemptions from CDD are based on a proper assessment of ML/TF risks. - Collect and maintain more granular statistics on financial investigations and international cooperation. ### Immediate Outcome 1 (Risk, Policy and Coordination) — Country’s understanding of ML/TF risks - The NRA provided was of high quality in relation to ML risks; the TF component is less sophisticated but of good quality and has yielded reasonable findings. - NRA involved close coordination among agencies, used multiple sources, and consulted private sector and academics; UIF contributed several strategic analysis studies. - Following NRA adoption and publication, Italy has not yet articulated a nationally coordinated and prioritized AML/CFT strategy to address identified threats and vulnerabilities. - The Financial Security Committee (FSC) is responsible for overall policy setting and coordination; FSC members have very good understanding of risks and will be involved in updating TF risks and developing strategy. - Supervisors participated in the NRA and demonstrate good understanding of threats and vulnerabilities, but have not fully adapted tools and operational practices to reflect identified risks. - BoI reports resource allocation is based on RBA; an improved risk-based supervisory methodology is under development but may have limitations (e.g., capturing exposure to PEPs). - UIF demonstrates a high level of understanding and has restructured to focus more on analysis based on NRA results. - LEAs and prosecutors: - Have a good understanding of risks supported by the NRA. - Have adopted measures to mitigate main ML risks (e.g., asset seizure, specialized units for financial and organized crime). - Focus remains more on predicate offenses and related third-party ML than on standalone ML or ML from foreign predicate offenses; lack of sufficient resources may be a factor. - The lack of criminalization of self-laundering until January 1, 2015 limited use of the AML framework against tax evasion; the new provision is a significant step but it is too soon to assess practical effect. - TF risk assessed as relatively low domestically; most significant emerging risk is support of Italian residents travelling to conflict zones to help foreign terrorist groups. - Strategic Counter-Terrorism Analysis Committee (CASA) coordinates strategic response to terrorist and TF threats. - Exemptions from AML/CFT requirements have not been sought for covered financial activities; obligations have been extended to additional activities and entities (e.g., public administration, clearing and settlement services, security transport businesses, gaming enterprises, auditing firms, antiques traders, auction houses and art galleries). - Exemptions from CDD provided under AML arise from transposition of the EU Directive rather than a domestic risk assessment. - Coordination and cooperation: - FSC and CASA are well managed for their missions but lack strong policy coordination between them. - Good collaboration among BoI, CONSOB, and IVASS on oversight approaches; less effective cooperation between GdF and professional associations. - Good communication channels between UIF and other competent authorities; cooperation among regulators and supervisors is governed by MOUs and works well. - LEA cooperation is sometimes hindered by the sheer number of agencies and overlapping responsibilities; cooperation and feedback to UIF could be improved. *ITALY INTERNATIONAL MONETARY FUND* ### 112. For NPO oversight, Italy lacks a proper mechanism for domestic cooperation and ### _cr1643 - 112. For NPO oversight, Italy lacks a proper mechanism for domestic cooperation and ### NPO oversight and domestic cooperation - For NPO oversight, Italy lacks a proper mechanism for domestic cooperation and coordination that would allow for information to be shared among authorities and organizations that hold relevant information on NPOs. (Paragraph 112) - Coordination for combating proliferation financing is focused on the risks related to Iran. The FSC and the Interagency Dual-Use Export Council coordinate on the application for export of dual-use goods and the respective financial payments. The authorities are able to identify potential sanctions evasion activities and prevent payment for goods or shipment of goods. (Paragraph 113) ### Private sector’s awareness of ML/TF risks - The authorities have shared the results of the NRA with FIs, DNFBPs, and NPOs; as a result, these sectors are generally aware of the main ML risks and to a lesser extent TF risks and how the identified risks relate to their institutions in the context of their business models. (Paragraph 114) - Supervisors and SRBs have undertaken initiatives to provide guidance to reporting entities and to generally raise awareness of ML/TF risks. (Paragraph 114) - Financial sector: - The financial sector, and banks in particular, have a good understanding of the ML risks in Italy. The sector was consulted in the preparation of the NRA, and FIs consider that the conclusions of the NRA broadly reflect their own perceptions. (Paragraph 115) - Key perceived threats: proceeds of tax crimes, corruption, organized crime, drug trafficking, loan sharking and usury. (Paragraph 115) - Uncertainties/shortcomings: robustness of banks’ measures to deal with the particular complexities of tax evasion; appreciation of TF risks appears less developed and based on a less well articulated basis. (Paragraph 115) - DNFBP sector: - Understanding of ML/TF risks within DNFBP sectors is very mixed and overall not as sound as within the financial sector. (Paragraph 116) - With the exception of notaries and PIE auditors, there has been less engagement by the authorities with DNFBPs; DNFBPs (other than PIE auditors and notaries) are still not subject to secondary legislation or guidelines to support the 2007 AML Law. (Paragraph 116) - Introduction of BoI, CONSOB, and IVASS regulations and notaries’ CDD guidelines improved risk-based approach appreciation in those parts of the DNFBP sector. (Paragraph 116) ### Overall conclusions on Immediate Outcome 1 (IO.1) - Italy is achieving IO.1 to a large extent. It has a generally good understanding of the main ML/TF risks, and generally good policy cooperation and coordination to address its ML/TF risks. The NRA is of good quality and demonstrates that risks have been identified and assessed. (Paragraph 117) - Shortcomings and gaps: - No nationally coordinated AML/CFT strategy fully informed by the ML/TF risks in the NRA, although several initiatives have been launched following the NRA and results are beginning to influence strategy. (Paragraph 118) - Supervisors have not fully adapted tools and operational practices to reflect identified risks. The UIF could further improve policies and activities and better use resources to focus more on high-risk areas. Current efforts are mainly aimed at sanctioning predicate offenses, and some related third-party ML, and confiscating related assets at the expense of standalone ML cases and those generated by foreign predicate offenses. (Paragraph 119) - Lack of criminalization of self-laundering until January 1, 2015 limited use of AML framework against tax evasion; new provision is significant but too soon to assess practical effect. (Paragraph 119) - Authorities deem TF risk relatively low but are updating TF risk assessment in light of the global rise in the threat of terrorism. (Paragraph 119) - Going forward: the FSC will need to ensure that policies and activities are fully aligned with and prioritized according to the identified risks. (Paragraph 120) - Reiteration: results of NRA shared with FIs and DNFBPs; financial sector understanding is stronger than DNFBPs. (Paragraphs 121) - Italy has achieved a substantial level of effectiveness for IO.1. (Paragraph 122) ### Legal system and operational issues — key findings - Italy has a comprehensive framework of LEAs responsible for investigating ML, TF, and predicate offenses. The authorities have adequate powers and expertise. Financial investigations are conducted in every investigation into serious asset generating crimes. (Section A) - Risk of duplication of efforts among different LEAs in initial stages of investigation. (Section A) - UIF produces good analysis that serves GdF and DIA well in launching investigations, but UIF lacks sufficient access to law enforcement information which weakens filtering of STRs and analysis; it also lacks the ability to disseminate some information more selectively and beyond GdF and DIA. (Section A) - Customs does not proactively send suspicious declarations to the UIF. (Section A) - LEAs and prosecutors can undertake large and complex financial investigations and have had success in high-profile cases, including disabling criminal enterprises. However, current efforts focus mainly on predicate offenses and some related third-party ML at the expense of standalone ML cases and ML of proceeds of foreign predicate offenses. The complexity and length of ML investigations and of the criminal process can reduce the likelihood of successful outcomes. (Section A) ### Legal system and operational issues — recommended actions (selected) - IO.6 recommendations for UIF and information access: - Provide UIF with the power to access law enforcement information, and allow it in practice to access additional administrative information (e.g., the land registry); finalize its data mining (“Warehouse”) IT tool. - Enable UIF to disseminate selected information and results of its analysis beyond DIA and GdF NSPV to additional LEAs and concerned agencies (e.g., TF cases). UIF should refrain from sending all STRs to LEAs and improve selective dissemination to allow recipient agencies to focus on relevant cases and information. - Provide DNFBPs with comprehensive guidance on reporting jointly developed by the UIF and supervisors. - Require recipient agencies to provide regular feedback on the quality of disseminated intelligence to the UIF. - Amend the AML Law to provide an explicit reference to the UIF powers in relation to predicate crimes. - IO.7 recommendations on investigations and prosecutions: - Place greater focus on detecting and pursuing self-laundering, standalone ML, ML generated by foreign predicate offenses, and complex ML cases involving legal persons. - Ensure that sanctions applied are dissuasive. - Consider streamlining judicial procedures to shorten the criminal process. - Improve collection of statistics related to ML investigations, prosecutions and convictions. - Improve coordination between LEAs during initial phases of investigations. - IO.8 recommendations on asset seizure/confiscation and cross-border measures: - Ensure seizure and confiscation of assets located abroad are pursued on a systematic basis. - Continue asset recovery (criminal and administrative proceedings) especially with respect to main ML threats (organized crime, corruption and tax crimes) to ensure crime is made unprofitable. - Increase efforts to detect cross-border movements of cash and other BNIs suspected of being linked to ML, and consider implementing the FATF Best Practice paper and targeting efforts on key transit points (such as the border with Switzerland) and higher-risk individuals. - Introduce a mechanism to monitor assets more closely through stages of criminal or administrative processes for seizure and confiscation. - Share assets confiscated in Italy with foreign countries where predicate offenses have been committed abroad. ### Immediate Outcome 6 — Use of financial intelligence and other information - UIF access and inputs: - UIF receives a wide range of STRs and other information, and can access a wide range of administrative and financial information. (Paragraph 123) - UIF receives STRs through an electronic platform (“RADAR”) dedicated to collection, storage, and management of reports. The system identifies instances where a particular natural or legal person has been previously reported. UIF can request additional information from reporting entities. Most additional requests are directed to banks; in few instances other reporting entities were also asked. (Paragraphs 126) - UIF can obtain information from the customs database containing cross-border currency and bearer negotiable instrument declarations and gold transactions; however customs do not notify UIF about suspicious cross-border transportation incidents. This is a concern given high risks of laundering through cash couriers in Italy. (Paragraph 127) - Administrative and financial information accessible to UIF (Paragraph 128): - Administrative: - (1) Tax registry (article 6(6)(e)), contains data and information from tax declarations and complaints and related verifications, and other data of possible fiscal relevance (article 1 of Italy’s DPR n. 605/1973); - (2) Commercial register (Infocamere off-site and Cerved on-site); - (3) Central tax reports database (CEBIL) that contains ID tax data and tax declarations held by the tax agency; - (4) Local administrators database (municipality, district and region). - Financial: - (1) Central electronic archive (article 37 of the AML Law) for CDD information from some FIs; - (2) Central database of bank accounts; - (3) Central credit register on the debt of banks and other FIs’ customers managed by BoI (accessible on line); - (4) TARGET2 (Trans-European Automated Real-Time Gross Settlement Express Transfer System), which stores all the data pertaining to wire transfers in the Euro Area; - (5) Database containing information about restituted funds in case of impossibility to complete CDD pursuant to article 23 para.1 bis of the AML Law. - Open source and commercial databases: World-check; Orbis (international business database). - Limitations and operational notes: - UIF does not have access rights to law enforcement databases, but can obtain information from LEAs to respond to foreign FIU information requests. GdF provides monthly feedback to UIF classifying reported persons by level of risk; feedback is useful but limited in content and not timely. Lack of direct and timely access to law enforcement databases weakens UIF operational analysis. (Paragraph 129) - UIF access to other administrative databases such as the land registry would be useful, particularly given vulnerability of the real estate sector. A centralized notaries’ database containing all real estate transactions is being developed and access will be provided to the UIF; access to cadastre and mortgage archive will be available in the future. (Paragraph 129, footnote) - UIF seeks access (indirectly through fiscal database) to Central database of bank accounts in a limited number of cases; more regular access may prove useful. (Paragraph 129) - AML Law does not specifically enable UIF to receive STRs related to predicate crimes; in practice UIF does receive, analyze and disseminate them to GdF-NSPV and DIA. GdF-NSPV and DIA have direct access without prior judicial authorization to a broader range of information than UIF, including law enforcement databases (tax database held by GdF, criminal records, information about criminal proceedings and suspects). (Paragraph 130) - STRs and reporting statistics: - Number of STRs (table): - Money laundering: 20,660 (2009); 37,047 (2010); 48,836 (2011); 66,855 (2012); 64,415 (2013); 71,661 (2014). (Paragraph 125 table) - Terrorism Financing: 366 (2009); 222 (2010); 205 (2011); 171 (2012); 131 (2013); 93 (2014). (Paragraph 125 table) - Proliferation of weapons of mass destruction: 40 (2009); 52 (2010); 34 (2011); 21 (2012); 55 (2013); 4 (2014). (Paragraph 125 table) - Total STRs: 21,066 (2009); 37,321 (2010); 49,075 (2011); 67,047 (2012); 64,601 (2013); 71,758 (2014). (Paragraph 125 table) - ANTI-MONEY LAUNDERING AGGREGATE REPORTS—DESCRIPTIVE STATISTICS—2014 (ESTIMATE) (Paragraph 125 table): - Banks, Poste Italiane, and CDP: Number of entities submitting reports: 705; Total number of aggregate data sent (billions of euros): 20,414.6; Total number of transactions underlying the aggregate data: 297,930,666. - Trust companies: 282 entities; 84.6 (billions of euros); 503,743 transactions. - Other financial intermediaries: 187 entities; 286.6 (billions of euros); 4,601,182 transactions. - Asset management companies: 171 entities; 234.6 (billions of euros); 5,942,323 transactions. - Investment firms: 146 entities; 105.2 (billions of euros); 6,519,564 transactions. - Insurance companies: [number of entities not listed]; 279.0 (billions of euros); 2,803,846 transactions. - Payment Institutions: 91 entities; 66.4 (billions of euros); 5,435,053 transactions. - Electronic money institutions: 4 entities; 1.0 (billions of euros); 175,986 transactions. - Total: 1,586 entities; 21,472.0 (billions of euros); 323,912,363 transactions. - STR quality and use: - Most STRs are filed by banks and UIF considers them to be of good quality. DNFBPs, except notaries, send very few reports; this affects the quality of information received, analysed, and disseminated by UIF. (Paragraph 124) - UIF receives aggregated data from FIs on a monthly basis; the number of aggregate reports is high due to requirement for financial intermediaries to submit aggregated data on their activities. UIF conducts targeted analysis of this data to detect ML/TF anomalies in specific geographical areas. (Paragraph 125) - UIF requested additional information from reporting entities in about 25 percent of cases in 2014: some 19,000 requests to banks and non-bank FIs, and around 100 to DNFBPs. (Paragraph 132) - Aggregated data used for studies and strategic analysis (e.g., financial flows from tax evasion, financial flows connected to NPOs or loan sharking activities). (Paragraph 132) - UIF does not provide feedback on the quality of STRs to reporting entities but is developing and testing a feedback system. It publishes annual reports with comprehensive statistics and information about activities including trends and typologies. (Paragraph 132) - Operational impact: - LEAs routinely access and use financial intelligence and other information to identify and trace proceeds, and to support investigations and prosecutions of predicate offenses and to a lesser extent ML. LEAs and prosecutors are focused on pursuing financial investigations and value “following the money,” but evidence development and tracing are more often related to domestic predicate offenses than to self-laundering, standalone ML investigations, or foreign predicate offenses. (Paragraphs 131 and 123) *Italic: IMF staff report content (source PDF)._ ### 133. The customs integrate the cash declarations into a database that can be accessed by the ### _cr1643 - 133. The customs integrate the cash declarations into a database that can be accessed by the ### Customs reporting and UIF access - Customs integrate cash declarations into a database that can be accessed by the UIF, but Customs does not send to the UIF declarations that appear suspicious. - Finding: Considering that the proceeds of tax evasion and other crimes are often transported in cash across the border, Customs is in an ideal position to identify potential cases of ML. Recommendation: Customs should, as a matter of priority, inform the UIF of suspicious declarations. ### FIU (UIF) analysis and dissemination activity - The UIF disseminated more than 92,415 STRs in 2013, and 75,858 in 2014 to the DIA and GdF-NSPV. Over 2009–2014 there has been a steady increase in disseminations. - STRs that are closed are also forwarded to the GdF and DIA for inclusion into their databases and further “pre-investigation.” - Number of suspicious transaction reports received, analyzed, and dismissed: - Reports received: 2009 21,066; 2010 37,321; 2011 49,075; 2012 67,047; 2013 64,601; 2014 71,758 - Reports analyzed: 2009 18.838; 2010 26.963; 2011 30.596; 2012 60.078; 2013 92.415; 2014 75.858 - Reports dismissed: 2009 4.024; 2010 3.560; 2011 1.271; 2012 3.271; 2013 7.494; 2014 16.263 - STRs included in disseminated technical notes: 2009 14,814; 2010 23,403; 2011 29,325; 2012 56,807; 2013 84,921; 2014 59,595 ### UIF systems, analytical capabilities, and projects - The UIF has an advanced reporting system (RADAR) with some data mining features; RADAR allows classification of STRs by risks, cross checking, and tracking until dissemination, and has features to compare STR information with other databases. - Current systems allow aggregated analysis of multiple STRs based on identified connections and interactions. - Disseminated technical reports to GdF and DIA include analysis of financial flows, identification of economic reasons and motivations, assessment of origin of funds, and a risk scale assigned by LEA feedback based on criteria (recurring patterns, sector risk exposure, payment instrument vulnerability). - UIF sometimes suspends execution of relevant transactions for a maximum of five days to allow LEAs time to launch investigations and impose provisional measures. - The UIF is finalizing the “Warehouse” project, an IT platform to consolidate all information from STRs with other received information and databases accessible by the UIF; the project is in roll-out. Note: The new system has been activated since June 2015. - Expected Warehouse benefits: better tools for data mining, identification of specific targets, determination of links between targets and possible proceeds of crime. ### Results of UIF disseminations and LEA use - GdF pre-investigation and LEA investigation metrics (2010–2014): - Number of STRs analyzed by GdF during the pre-investigation phase: 2010 22,728; 2011 21,621; 2012 17,245; 2013 85,483; 2014 85,581 - LEAs investigations prompted by UIF reports — Cases by number of STRs relevant for further investigations: 2010 13,654; 2011 9.140; 2012 12.198; 2013 13,514; 2014 27,771 - Cases—by number of STRs—relevant for further investigations by DIA: 2010 372; 2011 445; 2012 343; 2013 443; 2014 449 - Investigations with positive action/outcome: 2010 4,654; 2011 3,619; 2012 4,030; 2013 6,753; 2014 8,355 - New legal proceedings/investigations: 2010 666; 2011 396; 2012 578; 2013 604; 2014 588 - Requests of information from prosecutors (STRs provided): 2010 922; 2011 774; 2012 615; 2013 874; 2014 931 - STRs absorbed into existing legal proceedings: 2010 2,484; 2011 1,923; 2012 2,070; 2013 4,454; 2014 6,049 - GdF investigations resulting from technical notes and STRs (2010–2014): - Total number of criminal violations stemming from GdF investigations (triggered by UIF dissemination): 2010 766; 2011 805; 2012 1010; 2013 972; 2014 755 - Specific offense counts (selected examples across years as presented): - ML: 2010 143; 2011 59; 2012 103; 2013 80; 2014 66 - Non-Compliance with AML/CFT Laws and regulations: 2010 144; 2011 127; 2012 188; 2013 148; 2014 115 - Fiscal violations: 2010 68; 2011 142; 2012 246; 2013 245; 2014 276 - Fraud: 2010 12; 2011 33; 2012 68; 2013 137; 2014 43 - Loan sharking: 2010 27; 2011 11; 2012 22; 2013 17; 2014 13 - Illegal financial activity—unlicensed businesses: 2010 12; 2011 10; 2012 39; 2013 48; 2014 31 - Falsification: 2010 122; 2011 46; 2012 90; 2013 98; 2014 35 - DIA’s ML and associated predicate crimes investigations triggered by STRs classified by relevant criminal organization: - By OC / Year — Cosa Nostra: 2010 91; 2011 99; 2012 63; 2013 89; 2014 143 - Camorra: 2010 103; 2011 145; 2012 117; 2013 70; 2014 105 - 'Ndrangheta: 2010 138; 2011 186; 2012 150; 2013 213; 2014 187 - Apulian: 2010 16; 2011 9; 2012 5; 2013 6; 2014 10 - Other Italian organized crime groups: 2010 20; 2011 6; 2012 8; 2013 41; 2014 4 - Other foreign organized crime groups: 2010 4; 2011 -; 2012 -; 2013 24; 2014 - - Total number of STRs relevant for further investigations: 2010 372; 2011 445; 2012 343; 2013 443; 2014 449 ### IT tools used by GdF/DIA and strategic analysis - Box 2 — Examples of strategic analysis conducted by the UIF: - STRs featuring connections with tax havens or offshore financial centers - Statistical indicators to evaluate banks activity and risk-exposure in different provinces - Econometric model on anomalous use of cash at Municipality level - Econometric analysis of banks’ compliance with suspicious transaction reporting activity - STRs connected to suspected loan-sharking activity - STRs connected to pre-paid cards; and analysis on financial flows connected to NPOs - Box 3 — IT tools: - SIVA (Sistema d’Intelligenzia Valutaria): intelligence management and analysis system used by GdF to manage STR investigations; links law enforcement databases and open sources. - SCICO Geo-Loc: geographical localization of areas of influence of organized criminal groups; used to prioritize investigations geographically. - MOLECOLA: tool for financial investigations importing bulk information from different databases (law enforcement databases, tax administration database, land register, company register, open sources); generates standardized reports and detects links between people and financial operations. ### Cooperation, dissemination scope, and feedback issues - The UIF, GdF, and DIA use secure channels and protect confidentiality in exchanges; UIF enhanced controls and procedures governing exchange and use of information from local counterparts. - Limitation: The AML Law does not allow the UIF to disseminate its technical reports to other GdF specialized units and other concerned agencies. UIF disseminations are made to GdF-NSPV and DIA; within GdF the NSPV enters STRs into SIVA which is accessible by other GdF specialized agencies, but not necessarily targeted or timely. - Finding: Enabling the UIF to disseminate intelligence to competent authorities beyond the GdF-NSPV and DIA would increase use of financial intelligence and timeliness of action, including dissemination to the revenue agency and ANAC for tax offenses and corruption. - Feedback gap: The GdF and DIA do not provide feedback to the UIF about actions taken in relation to received STRs and technical notes. Recommendation: Provide feedback and closer coordination/meetings between UIF analysts and GdF/DIA officers to improve technical notes and reporting entity feedback. ### UIF resources and staffing - UIF staff increased from 121 in 2012 to 130 in 2014, and is projected to increase further to 141 in 2015. - Most new staff are analysts. - Costs covered by the BoI; budget for additional expenses: €172,000 in 2012 and €197,000 in 2014. UIF director can authorize expenditures. - Assessment: UIF structure seems adequate especially after allocation of additional staff to the analysis division. ### Effectiveness conclusions (Immediate Outcome 6) - The UIF and LEAs collect and use a wide variety of intelligence and other relevant information to investigate ML, associated predicate offenses, and TF. - The UIF is a well-functioning FIU producing good operational and high quality strategic analyses; technical notes assist GdF-NSPV and DIA in launching ML, associated predicate crimes, and TF investigations. - Overall assessment: Italy has achieved a substantial level of effectiveness with IO.6. ### ML investigation and prosecution context (Immediate Outcome 7 intro) - Italy’s main law enforcement policy objective is to disrupt and deter crimes, including through ML investigations and prosecutions. LEAs focus on organized crime, corruption, and tax offenses as main proceeds-generating predicate risks. - Observation: Italy should expand focus to ensure more ML cases (including self-laundering) are investigated and effectively sanctioned. - At time of on-site visit, no investigation into self-laundering had been concluded due to recent enactment of the new self-laundering provision. Footnote: GdF subsequently developed 28 investigations for self-laundering (with 14 persons arrested) during the first six months of 2015. One case was presented before the Court of Rome. - Institutional framework: GdF, Carabinieri, State Police, and DIA have expertise “following the money”; DIA and GdF-NSPV designated as special police units for investigating facts in UIF STRs. - Coordination: strategic coordination occurs within the Security and Public Order Committee (MoI); operational and intelligence coordination via SDI (Sistema d’Indagine) administered by MoI. - Risk: SDI does not include information on initial stages of investigations (before referral to prosecutor), creating risk of duplication of law enforcement efforts during initial stages. Prosecutor’s office coordinates activities once more intrusive measures are needed and leads further inquiries. *Italic: Source — _cr1643 - 133. The customs integrate the cash declarations into a database that can be accessed by the* ### 151. Investigations into organized crime activities are coordinated by the DIA, a special inter- ### Investigations into organized crime activities are coordinated by the DIA, a special inter- ### Coordination, mandate and investigative focus of the DIA and LEAs - The DIA is a special inter-force investigative body with specific powers under the Anti-Mafia Code, bringing together staff from the GdF, Carabinieri, and State Police with practical experience in financial and organized crime investigations. - The DIA develops two types of investigation: - Judicial police investigations on mafia-type crimes. - Financial-flow investigations of people linked to mafia-type organizations, focusing on identification of the criminal organization structure and gathering evidence of illicit financial activities to seize assets held by members. - Observed limitation: additional efforts in pursuing legal persons and their ultimate beneficial owners to obtain effective convictions and dismantle the whole financial infrastructure of criminal organizations would prove useful. - LEA efforts are threat-based and focused on domestic predicate crimes and laundering activities. - Additional attention warranted to laundering of foreign proceeds and cross-border laundering activities (e.g., outgoing cash couriers and remittances). ### Role of Customs and declaration system - Customs sometimes assist in detecting ML activities through smuggling or other predicate crimes; such cases are investigated with the assistance of GdF. - The declaration system is, however, not being used effectively to detect and disrupt suspicious transportation of cash and bearer negotiable instruments and false declarations. - Footnote: Since the end of 2014 Customs have started developing typologies–in cooperation with DNA–to detect suspicious physical and/or legal persons; intelligence has also been used to establish links between flows of goods at risk and suspicious financial flows. ### AML supervisory inspections and escalation to criminal investigations - Information obtained in the context of GdF AML supervisory activities may result in police investigations when inspections reveal sufficient evidence. - Special attention is placed on results of inspections, particularly in the monitoring of money transfer services. ### Case Study: Money River Operation—December 2014 - Context: Money transfer services in Rome include many operators from foreign communities; AML inspection of a money transfer agent by GdF revealed abnormal operations leading to a two-year criminal investigation. - Entities and actors: - Rome branch of the Payment Institution (a U.K.-based multinational company specializing in worldwide money transfers). - Seven money transfer agencies operating within the network. - Association members included branch managers, AML compliance officers, and front-office staff. - Findings and volumes: - Agents transferred abroad (principally to China) approximately €1 billion, representing proceeds of predicate offenses: import and sale of counterfeit goods, market fraud, sales of industrial products with false or misleading trademarks, and tax evasion. - Transfers performed via a large number of illicit cash transfers using fictitious names, names of deceased persons, or unsuspecting customers already registered. - Transfers were always made below applicable cash transaction thresholds: €4,999 up to August 12, 2011 when the threshold stood at €5,000; €2,499 up to December 5, 2011 when the threshold was €2,500; and, most recently, €999 when the threshold stands at €1,000. - Perpetrators: Chinese entrepreneurs and traders, with histories of convictions for smuggling, counterfeiting and tax evasion. - Outcomes: - Money transfer operators were indicted for transnational criminal association and money laundering; 18 persons were arrested. - GdF seized assets worth over €13 million, representing total profits from the illicit transactions. ### LEA authorities, tools and case management - All LEAs are authorized to pursue investigation of potential ML in parallel to their investigation into the predicate offense; LEAs are not required to refer cases to a single dedicated agency for follow-up. - Sophisticated IT tools (e.g., MOLECOLA) are available and used by LEAs to provide intelligence to target suspects and their assets. ### Consistency of ML investigations and prosecutions with threats, risk profile, and national AML policies - Main asset-generating activities in Italy: tax offenses, mafia-type organized crime, and corruption. - Types of ML activities investigated and prosecuted are generally consistent with Italy’s risk profile and the results of the NRA. - Authorities have specific mechanisms to counter organized crime: DNA and the DIA, with special investigative powers. Measures initially conceived to fight organized crime can also be used to fight ML, tax crimes, or other habitual crimes, as well as TF. - The DIA’s investigative activities are frequently implemented in practice; many DIA investigations are triggered by STRs. ### Case Study: Operation “Green Fees” - Initiated in 2012 by the Public Prosecutor's Office in Milan and GdF through analysis of STRs and other financial information, including from abroad. - Scheme involved illegal exchanges of emission allowances (CO2 certificates) using intra-Community VAT carousel fraud. - Fraud mechanics: - Complex company schemes including foreign companies; “empty boxes” ceased operation without paying taxes. - Companies benefited from significant tax credit used to request refunds or compensation of tax debts, acquiring CO2 certificates at competitive prices and distorting competition. - Outcomes: - Arrest warrants issued against 11 people and 82 individuals reported for conspiracy, transnational in nature, aimed at tax evasion and money laundering. - Major bases for VAT to €659,727,230.83 were established and supplies of money to €80,302,998 were impounded. ### Case Study: “MIDDLE-WORLD” (December 2014) - Joint Carabinieri and GdF investigation into a previously unknown mafia-type organization with strong intimidation, hierarchical structure and secrecy code; initiated in 2012. - Investigation approach: joint teams—one focused on predicate offenses, the other on financial activities. - Findings: - Criminal activities and modus operandi similar to traditional mafia organizations. - Detection of a corruption network at local level; involvement in projects funded by the city of Rome and related municipal companies (management of nomad camps and facilities for foreign asylum seekers, waste collection, maintenance of public parks). - Outcomes: - 37 suspects arrested in December 2014 for participation in mafia-style criminal organization, extortion, usury, bribery, bid rigging, false invoicing, fraudulent transfer of assets and money-laundering, with aggravating circumstance of mafia-type and armed association. - Seizure of assets (including companies, real estate and cash) held by suspects, for overall €204 million. - Result: the new organized crime group was effectively dismantled. ### Corruption, regional profiles and prosecutorial specialization - Corruption is mainly linked to contracts for construction of public works, services or supplies, generally affecting local and regional public administrations. - Corruption cases often show tight relationships between mafia-type organizations, corrupt politicians and officials. - Italy's parliament approved an anti-corruption law in May 2015 introducing measures including re-introduction of the crime of presenting false accounts, increased punishments, lengthened statutes of limitations, and requirement that all investigations be notified to ANAC. - Statistics on corruption prosecutions and convictions (as presented): - 2010 2011 2012 2013 2014 (Persons arrested) 224 275 154 129 164 - 2010 2011 2012 2013 2014 (Persons reported but not arrested) 330 175 313 125 305 - Prosecutorial structure varies by region and is based on criminality profile; specialized prosecutor pools exist (e.g., Milan with prosecutors specialized in tax and other financial crimes). ### Recommendations and areas for further improvement (implied by the assessment) - Increase efforts to pursue legal persons and ultimate beneficial owners to obtain effective convictions and dismantle financial infrastructures of criminal organizations. - Increase attention to laundering of foreign proceeds and cross-border laundering activities, including outgoing cash couriers and remittances. - Improve use of the declaration system to detect and disrupt suspicious transportation of cash and bearer negotiable instruments and false declarations. - Strengthen LEA prioritization by determining objective criteria to focus on ML cases related to major proceeds-generating offenses and those related to foreign predicates. - Enhance LEA focus on laundering of proceeds of corruption. ### Types of ML cases pursued and enforcement patterns - Prosecutions and convictions of ML are focused on proceeds of domestic predicate offenses, and to a lesser extent on foreign predicate crimes. - No prosecutions and convictions related to self-laundering due to its recent criminalization. - ML investigations are generally identified through detection of related predicate offenses; few standalone ML investigations are conducted by GdF and other LEAs. - Explanation offered: criminal action is mandatory and suspicions of a predicate must therefore be investigated; illegal proceeds are, in most cases, generated in Italy rather than abroad. - Predicate offenses identified by GdF in recent years include a range of offenses (see GdF arrest/conviction tables below). ### Selected statistics and enforcement figures (as presented in the source) - NATURAL PERSONS ARRESTED BY GDF FOR ML—LINKED TO PO (ARTICLES 648 BIS AND 648 TER CC) — Predicate offense counts by year: - Tax fraud: 2010 31, 2011 5, 2012 15, 2013 34, 2014 51 - Usury and Extortion: 2010 23, 2011 2, 2012 15, 2013 4, 2014 3 - Forgery: 2010 -, 2011 -, 2012 1, 2013 -, 2014 - - Drug trafficking: 2010 7, 2011 13, 2012 6, 2013 8, 2014 - - Financial Abusiveness: 2010 -, 2011 19, 2012 1, 2013 37, 2014 - - Bankruptcy: 2010 1, 2011 13, 2012 8, 2013 13, 2014 8 - Scam (Article. 640 C.C): 2010 14, 2011 12, 2012 8, 2013 30, 2014 8 - Theft: 2010 10, 2011 13, 2012 7, 2013 9, 2014 10 - Corruption: 2010 1, 2011 -, 2012 3, 2013 7, 2014 5 - Other cases: 2010 27, 2011 30, 2012 12, 2013 6, 2014 24 - Smuggling: 2010 -, 2011 -, 2012 3, 2013 -, 2014 - - Illegal Immigration: 2010 -, 2011 -, 2012 -, 2013 1, 2014 - - Buying stolen goods (art. 648 CC): 2010 16, 2011 8, 2012 8, 2013 6, 2014 3 - Mafia-Type organization: 2010 15, 2011 3, 2012 26, 2013 12, 2014 20 - Total: 2010 145, 2011 118, 2012 113, 2013 167, 2014 132 - NUMBER OF PEOPLE ARRESTED AND CONVICTED BY FINAL SENTENCE IN ITALY FOR CORRUPTION AGAINST PUBLIC ADMINISTRATION (ARTICLES 314, 317, 318, 319, 319 TER, 320, 323 CRIMINAL CODE) — selected years: - Year 2011: Number of people arrested 700; Number of people convicted 597 - Year 2012: Number of people arrested 942; Number of people convicted 619 - Year 2013: Number of people arrested 762; Number of people convicted 558 - NUMBER OF PROSECUTIONS AND NUMBER OF PEOPLE INCLUDED FOR THE REQUESTS OF PROSECUTION FOR THE RELATED CRIMES (selected regulations and years) - Money Laundering 648 bis Criminal Code: - Cases 2010 1,375; 2011 1,292; 2012 1,285 - Persons 2010 2,285; 2011 2,261; 2012 2,189 - 648 ter Criminal Code: - Cases 2010 43; 2011 49; 2012 77 - Persons 2010 123; 2011 134; 2012 207 - Article 12 quinquies D.L. 306/92: - Cases 2010 68; 2011 70; 2012 74 - Persons 2010 212; 2011 276; 2012 229 - Tax Crimes Law 74/200 Articles 2, 4, 5, 8: - Cases 2010 5,270; 2011 7,533; 2012 7,648 - Persons 2010 7,821; 2011 10,692; 2012 10,661 - Corruption 318, 319, 319 ter, 320 Criminal Code: - Cases 2010 349; 2011 307; 2012 304 - Persons 2010 1,067; 2011 719; 2012 1,402 ### Observations on enforcement patterns - ML prosecutions are generally linked to predicate offenses; fewer prosecutions for ML as a standalone crime. - Foreign predicate offenses are not frequently prosecuted from the ML perspective because Italy does not consider foreign predicate offenses as major predicates for ML in Italy, though suspicions exist about foreign organized crimes laundering funds in Italy. - Italy has extensive experience prosecuting complex cases mainly involving laundering of proceeds of predicate crimes committed in Italy. - High number of investigations linked to associated predicate crimes indicates investigations and prosecutions are not pursued unless the link to the predicate offense is well established. _Italic: Source—excerpt from IMF staff assessment contained in the provided content unit._ ### 168. Up until January 1, 2015, the lack of criminalization of the self-laundering meant that only ### _cr1643 - 168. Up until January 1, 2015, the lack of criminalization of the self-laundering meant that only ### Criminalization of self-laundering and immediate effects - Up until January 1, 2015, the lack of criminalization of the self-laundering meant that only third-party laundering could be prosecuted. - Consequences described: - The author of the predicate offense could not be sanctioned for laundering the proceeds of that offense. - In many instances this hindered sanctioning of activities performed by some third parties, more specifically certain groups of professionals (e.g. accountants in the case of tax crime). - Any involvement by such professionals in ML activities, even a minor one, led judges to conclude the matter was self-laundering and therefore not punishable under prior law. - A conviction was therefore often based only on participation in the predicate crime (as accomplice or accessory), which generally carries a lower penalty than ML. - Recent change: - Introduction of the self-laundering offense (effective from January 1, 2015) opens additional avenues to fight crime and provides opportunities for greater international cooperation. - As of the assessment, the self-laundering offense had not been widely tested by prosecutors and courts; its impact is subject to courts’ jurisprudence. - Authorities reported GdF developed 28 investigations for self-laundering (with 14 persons arrested) during the first six months of 2015 and a case in the Court of Rome leading to precautionary measures related to self-laundering. ### ML prosecutions, investigations, and convictions — key figures and trends - Definitive convictions by type of crime (years shown: 2010, 2011, 2012, 2013): - Money Laundering 648 bis Criminal Code (ML offense) - Cases: 1,080; 1,060; 880; 941 - Persons: 676; 719; 642; 666 - 648 ter Criminal Code (use of money goods or assets of illicit origin) - Cases: 12; 11; 15; 20 - Persons: 10; 9; 8; 15 - Sentence issued under Articles 648 (receiving), 648 bis, or 648 ter but not as the more serious crime - Persons: 2,655; 2,664; 2,585; 2,472 - Article 12 quinquies D.L. 306/92 - Persons: 27; 27; 25; 36 - Tax crimes Article 2,4,5 and 8 Law 74 - Cases: 1,979; 2,593; 2,604; 2,761 - Persons: 1,197; 1,352; 1,588; 1,641 - Corruption 318,319,319 ter,320 Criminal Code - Cases: 369; 313; 301; 208 - Persons: 110; 101; 79; 91 - Notes on data: - Authorities informed that it was not possible to split some numbers for each type of crime (648, 648 bis, and 648 ter); statistics indicate most refer to article 648 (receiving). - Number of ML prosecutions compared to total number of prosecutions (2010–2012): - Table-like entries in source for multiple CP and LEG articles showing Initiated and Closed counts across 2010, 2011, 2012 (raw values preserved in source). - ML investigations (annual totals and agency breakdown) - Number of ML cases investigated by GdF: 2010: 477; 2011: 449; 2012: 651; 2013: 619; 2014: 736; 2015: (not provided) - Of which triggered by STRs: 143; 59; 103; 80; 66 - Number of persons investigated by GdF for ML (648 bis and 648 ter): 1,131; 1,053; 1,307; 1,352; 1,483 - Number of persons arrested by GdF for ML investigations: 145; 118; 113; 167; 132 - Number of persons investigated for ML by GdF (article 12 quinquies): 545; 895; 614; 839; 635; 402 - Out of which, number of persons arrested for ML by GdF (article 12 quinquies): 95; 68; 86; 141; 83; 32 - Number of ML cases investigated by DIA: 16; 11; 11; 22; 9 - Number of persons investigated for ML by DIA: 102; 87; 175; 46; 30 - Total number of ML cases investigated: 493; 460; 662; 641; 745 - ML prosecutions and convictions aggregated (select years) - ML prosecutions: - 648 bis—number of cases: 1,375; 1,292; 1,285 - 648 ter—number of cases: 43; 49; 77 - 12 quinquies—number of cases: 68; 70; 74 - Total number of ML cases prosecuted: 1,486; 1,411; 1,436 - ML convictions: - 648 bis—number of cases: 1,080; 1,060; 880; 941 - 648 ter—number of cases: 12; 11; 15; 20 - 12 quinquies – number of cases: 27; 27; 25; 36 - Total number of ML convictions: 1,119; 1,098; 920; 996 - Observations and trends: - Authorities report difficulty compiling prosecutions/convictions distinguishing standalone ML and ML related to foreign predicate offences because foreign predicates are often considered domestic. - Number of final convictions is low compared to number of cases investigated. - Italy lacks up-to-date statistics on sanctions of legal persons; only one case where a legal person was sanctioned was provided. - Italy has improved in obtaining ML convictions since the last assessment and is achieving reasonable results, but overall results are lower than warranted by the magnitude of risks. - Numbers have been slightly decreasing in recent years while risks remain at the same level. - The number of ML prosecutions is generally low compared to the overall number of prosecutions in associated predicate crimes. ### Effectiveness, proportionality, dissuasiveness of sanctions and procedural matters - Sentencing patterns (article references and terms): - Most ML cases (article 648 bis) were sanctioned with a penalty of imprisonment of 2 to 5 years, with some higher terms of imprisonment of 5 to 10 years. - Cases of receiving (article 648) were sanctioned with a penalty of imprisonment of less than one year. - Use of money, goods or assets of illicit origin (article 648 ter) were sanctioned with penalties of imprisonment of 2–5 years, with some individuals sentenced to 1–2 years of imprisonment. - Repeat offenders: - Discussions with LEAs revealed a large number of persons sanctioned for ML and predicate crimes are repeat offenders. - This suggests sanctions may not be sufficiently dissuasive; authorities contend it is more indicative of lack of adequate rehabilitation. - Legal persons: - Legal persons have not been often prosecuted for ML despite being misused to a relatively large extent for ML purposes (per the NRA). - Statistics on sanctions imposed on legal entities are not available; cases shared indicate sanctions are applied in some cases (e.g., confiscation of shares where companies were involved or owned by criminals). - At time of assessment, no sanctions had been imposed on charges of self-laundering due to recent entry into force. - Overall conclusion: legal persons are not sufficiently prosecuted for ML activities. - Procedural complexity and statute of limitation concerns: - Complexity of criminal activities, complexity of court procedures, and the combination of two courts of merit plus Corte di Cassazione contribute to prolonged proceedings, which could undermine judicial efficacy. - Some authorities expressed concerns over statute of limitation procedural aspects. - Statute of limitation regime (summary from source): - Periods for prescription (articles 157–161 Criminal Code) on ML: - Article 648: Basic period 12 years; Maximum period 13 years and 4 months; Maximum period for repeated offenders 16 years - Article 648 bis: Basic period 18 years; Maximum period 20 years; Maximum period for repeated offenders 24 years - Article 648 ter: Basic period 18 years; Maximum period 20 years; Maximum period for repeated offenders 24 years - Time starts to run from the day on which the offense was committed (or for attempted/continuing offences, from date the activity ceased). Definitive sentence must be handed down before the term expires. - The average of the limitation period for article 648 bis CC runs for 18 to 24 years and is not affected by the limitation period for the predicate crime. - Recent Law 190 of 2012 and 2015 anti-corruption regulation amended CC provisions including regime of statute limitation for corruption crimes; prior to those regulations limitation period for corruption cases was shorter. - Other criminal justice measures when conviction is not possible: - Plea bargaining: - Possible during the process in limited circumstances, also for repeat offenders, and in most crimes punished with final penalties less than five years of imprisonment (article 51 of CPC). - Plea bargaining cannot apply to organized crimes cases; authorities mentioned it is possible to implement plea bargaining for ML cases with the above limitations. - Use of provisional and confiscation measures: - LEAs and public prosecutors make great use of different provisional and confiscation measures, including non-conviction based confiscation, to deprive criminals of proceeds and instrumentalities. - Resources and training: - Resources are generally available for LEAs, prosecutors and courts; however, lack of financial resources for prosecutors and courts in some provinces is an issue. - LEAs could benefit from additional training about the ML offense. ### Assessment conclusions on investigation and prosecution effectiveness (Immediate Outcome 7) - Italy demonstrates many characteristics of an effective system for investigating and prosecuting ML offenses: - ML cases, including large, complex cases, are investigated through specialized teams using sophisticated and well-developed IT tools and a range of investigative techniques. - The anti-mafia toolbox is particularly useful in practice, including in cases unrelated to organized crime. - These features, and the quality and expertise of police officers and prosecutors, have led to a good number of ML activities being investigated and prosecuted and offenders sanctioned. - Overall appraisal: - Some moderate improvements are necessary to better align detection, conviction, and punishment with the high risk of ML in Italy. - Italy has achieved a substantial level of effectiveness for IO.7. ### Confiscation policy and mechanisms (Immediate Outcome 8 — introductory points) - Confiscation of criminal proceeds, instrumentalities, and property of equivalent value is a clear policy objective pursued to a large extent. - Approach: - Authorities take a “follow the money” approach based on a comprehensive framework for both conviction-based and non-conviction based confiscation. - Asset recovery is viewed as the best way to fight organized criminal groups, in particular mafia-type groups, to remove assets, disrupt activities, and send a strong “symbolic” signal. - Confiscation frameworks available: - Conviction-based confiscation (issued within criminal proceedings and includes both criminal and “extended” confiscation). - Preventive confiscation developed specifically to target serious and organized crime offenses, usable outside criminal proceedings (see Anti-Mafia Code measures). - Anti-Mafia Code (LD No. 159/2011) preventive measures — key features: - Designed originally to fight the mafia; now available in other contexts including ML when conducted on a “habitual” basis and TF. - Target assets of persons who: - are linked to organized and non-organized crime; - “habitually” conduct criminal activities (i.e., appear to be living, even in part, on proceeds of criminal activity); - are suspected of funding terror (including natural and legal persons designated by the UNSC). - Can be applied independently from prosecution and include confiscation per equivalent. - Key prerequisite: potentially socially dangerous conduct of the subject (e.g., potential affiliation to a criminal organization). - Burden of proof reversal: prosecution need not prove commission of an offense—only that person is habitually engaged in criminal activities or living from proceeds; affected person must demonstrate legitimacy of assets seized/confiscated. - Wide range of financial crimes captured: theft, robbery, extortion, fraud, usury, third party ML or self-laundering, and tax offenses. - Preventive confiscation may apply where the person is deceased. - Provisional measures in anticipation of confiscation include preventive seizure (“sequestro di prevenzione”) and early seizure (“sequestro anticipato”) to preserve assets at risk. *Italic: Content derived from the provided IMF assessment excerpt.* ### 181. In practice, the authorities pay adequate attention to the confiscation of assets (of all types) ### _cr1643 - 181. In practice, the authorities pay adequate attention to the confiscation of assets (of all types) ### Asset confiscation practices and tools - LEAs carry out financial investigations during domestic predicate-offense probes to identify assets for seizure and confiscation. - The SCICO (GDF Unit against organized crime) uses the MOLECOLA platform to identify all assets owned by a suspect or linked third persons. - All types of assets are seized and confiscated, including bank accounts, shares of legal persons, real estate, businesses, cars and luxury goods. - The UIF can suspend momentarily suspicious transactions and implement freezing measures; from 2009 to 2014 it suspended 238 transactions, for a total value of €313.80 million. ### Preventive measures and geographic focus - Preventive measures under the Anti-Mafia Code are frequently and effectively applied against a variety of assets, on grounds of predicate offenses and ML. - Preventive measures are more often implemented in the south of Italy, specifically Calabria, Campania, and Sicily, both in number of assets and amounts represented. - Seizures ordered in these regions account for some €1.6 billion of a national total of some €2.8 billion. - Confiscations in these regions account for some €2 billion out of a national amount of some €2.9 billion. - Organized-crime groups of greatest concern: the N’drangheta in Calabria, the Camorra in Campania (notably in Naples), and the Cosa Nostra in Sicily. ### Consolidated seizures and confiscations (selected figures) - Consolidated TOTAL seizures (€, MILLIONS) by year: - 2010: 3531.1 - 2011: 802.7 - 2012: 1320.3 - 2013: 5484.6 - 2014: 4675.4 - Consolidated TOTAL confiscations (€, MILLIONS) by year: - 2010: 229.9 - 2011: 1023.7 - 2012: 1799.3 - 2013: 2941.2 - 2014: NA - Note: the table consolidates statistics maintained by different authorities using different criteria and over different time periods. ### International cooperation and assets abroad - Authorities are proactive in seeking other jurisdictions’ assistance to seize and confiscate assets located abroad; limited statistics were provided. - Number of requests for police cooperation sent through the ARO: - 2012: 37 requests sent abroad - 2013: 68 requests sent abroad - Cases provided show successful repatriation of large amounts in specific investigations, though it was not established that assets abroad are targeted as systematically as assets in Italy. ### Agencies managing seized/confiscated assets and portfolio statistics - Assets are managed by: - ANBSC (National Agency for the Management and Allocation of Seized and Confiscated Assets to Organized Crime) — in charge of administration, management and custody of assets other than funds definitively confiscated in organized and mafia-related crimes. - Fondo Unico Giustizia (FUG) — in charge of administration of seized and confiscated funds. - Agenzia del Demanio — in charge of administration, management and custody of public property and confiscated real estate nonrelated to organized-crime cases. - ANBSC portfolio as of January 2015: - 1,491 companies - 8,713 real estate - FUG transfers to State budget: - From 2009 to September 30, 2014: €905,037,225 - Information provided does not enable establishing the percentage of seizing orders or preventive confiscation orders that ultimately result in final confiscation. ### Cross-border currency/BNI declaration and confiscation regime - Declaration threshold: applies to inter- and intra-European transfers equal to or above €10,000. - Italy is among the few EU Member States with an intra-European declaration obligation for currency/BNI. - Where currency/BNI are not properly declared, authorities seize amounts equal to 30 or 50 percent of the amounts transferred over €10,000, depending on the value of the undeclared amounts. - The percentage applied is: - 30 percent of the amount transferred or attempted to be transferred exceeding the €10,000 threshold, whereby such surplus does not exceed €10,000; and - 50 percent of the amount transferred or attempted to be transferred exceeding the €10,000 threshold, whereby such surplus exceeds €10,000. - Cross-border declaration statistics (selected annual totals): - 2010 — Total declarations: 24,378; Value of declarations: 4,429,788,278; Amount seized: 82,702,051 - 2011 — Total declarations: 28,730; Value of declarations: 5,836,552,604; Amount seized: 37,533,000 - 2012 — Total declarations: 32,627; Value of declarations: 8,128,583,176; Amount seized: 43,673,236 - 2013 — Total declarations: 32,888; Value of declarations: 6,691,459,418; Amount seized: 45,773,162 - 2014 — Total declarations: 30,888; Value of declarations: 6,652,739,233; Amount seized: 9,247,998 - Observations: - There is a steady increase in issuance of sanction decrees while overall amount collected remains steady. - Level of amounts seized/paid related to illegal cross-border movements of cash is low compared with number of controls and increased number of cross-border cash movements. - Operational cooperation: - Customs and GdF implement the declaration system independently with limited cooperation beyond one-way transfer of reports from Customs to GdF. - Between 2011 and 2014, Customs transmitted 2,603 reports to IRA (2,599 related to checks along Italy–Switzerland border) and 41 reports to GdF about 208 subjects. ### Consistency with ML/TF risks and fiscal enforcement - Confiscation results reflect ML/TF risk assessments: organized-crime groups are priority targets. - Proceeds of corruption have been seized/confiscated but to a lesser extent. - Tax crime recovery efforts have increased substantially: - NRA estimated average value of annual tax evasion around €140 billion. - 2015 MEF report estimates a tax gap of some €90 billion for 2014. - MEF recovery of unpaid taxes: - €38.3 billion recovered from 2011 to 2013 (total) - €14.2 billion recovered in 2014 (an increase of 8.4 percent compared to 2013) - Recovery efforts are producing significant results and indicate authorities’ willingness to curb tax evasion. ### Overall conclusions on Immediate Outcome 8 - Italy’s system demonstrates many characteristics of an effective system: - Strong focus on provisional and confiscation measures domestically and internationally; “follow the money” approach. - Priority targeting of organized crime; significant efforts to recover proceeds from other crimes including corruption and tax crimes. - Effective use of Anti-Mafia Code preventive measures to confiscate a range of assets linked to crime. - Effectiveness is particularly strong for assets located in Italy; statutory data limitations prevent establishing equal systematic targeting of assets abroad, despite successful international cooperation in notable cases. - Criminals have been deprived of large amounts of proceeds, especially in higher risk regions. - The total amount of assets confiscated in Italy varies between some 12.3 percent to 1.7 percent of the estimated total amount of proceeds (estimated total proceeds range between 27 and 194 billion). - Despite efforts, organized crime, corruption and tax crimes remain significant concerns; shortcomings are more related to IO.7 issues than confiscation-framework implementation. - Overall assessment: Italy has achieved a substantial level of effectiveness with IO.8. ### Terrorist financing (TF) and financing of proliferation — key findings and recommended actions (summary) - Key findings: - Authorities demonstrate a good understanding of TF risk; anti-terrorism efforts focus on detecting/disrupting terrorist cells and include parallel financial investigations. - No evidence of TF identified; no prosecutions for TF. - CASA (coordinates response to specific terrorist threats) and FSC (coordinates management of targeted financial sanctions - TFS) are well managed but lack policy coordination between them. - Italy has effectively implemented TFS but new listings are not actively communicated to FIs and DNFBPs. - FSC has nominated more than 90 individuals and entities for UN listing and is effective in managing assets of listed persons, but its mandate and means for information sharing are not sufficiently wide. - Italy adopted national measures to remedy EU framework deficiencies for UN 1267/1989 and 1988 sanctions, although not all measures have been tested. - No targeted, interagency coordinated approach to supervising the NPO sector; MLSP is not integrated into FSC’s work; limited outreach to the sector. - Italy mitigates PF risk from Iran and is aware of North Korea PF risk, but cannot demonstrate that TFS can always be implemented without delay. - Recommended actions (Italy should): - Conduct additional outreach to the financial and non-financial sector regarding PF and TF risk. - Establish a system to actively notify reporting entities of new sanctions listings and ensure that new listings/designations for TF and PF are systematically implemented without delay. - Adopt a more strategic mandate to address TF risk by discussing typologies and methodologies of TF; consider modalities to better integrate CASA and FSC activities and consider legislative reforms to ensure smooth information flow across agencies to further FSC’s mission. - Continue efforts to detect possible TF offenses and, if detected, proactively investigate and prosecute TF activities. - Adopt a targeted, coordinated, RBA to oversight of higher risk NPOs and conduct additional outreach and awareness raising for NPOs. *Source: IMF country report content unit _cr1643 - 181. In practice, the authorities pay adequate attention to the confiscation of assets (of all types)* ### 195. The Italian authorities demonstrated a good understanding of TF risk. Risks are influenced ### The Italian authorities demonstrated a good understanding of TF risk ### TF risk profile and threat assessment - Risks are influenced mainly by international tensions and conflicts, particularly in Iraq, Libya and Syria. - The most significant emerging risk is the potential support of Italian residents travelling to conflict zones abroad to help foreign terrorist groups. - Terrorist activities detected (domestic and foreign) are based mainly in small, self-financed cells. - Kidnapping for ransom (KFR) is a noted source of funds for terrorist groups globally; Italian citizens have been taken hostage by terrorist groups in the Sahara, Afghanistan/Pakistan, Syria, Iraq, and Libya over the past 15 years. - Italy’s MFA provides a website for Italians to register travel abroad to crisis areas and issues travel warnings for high-risk areas. ### Institutional coordination and operational response - CASA coordinates the response to specific terrorist threats at the strategic level; CASA is composed of the GdF, Carabinieri, State Police, and the Intelligence Services. - In CASA, terrorism information is shared and analyzed periodically to plan preventive actions; CASA focuses on assessment of terrorist threats at domestic and international level. - Counter-terrorism strategies include TF investigation as part of the strategy; competent authorities systematically investigate the financial aspects of terrorists’ activities (financing, incoming/outgoing flows). - Authorities use all available investigative means, including access to banking information, wire-tapping, searches, and observation. - Authorities make effective use of international cooperation channels, particularly with neighbouring countries. - Italy has used deportation as a preventive measure: three individuals were deported in 2012, two in 2013 and one in 2014 where no evidence of terrorism or TF existed but possible links were suspected. ### Investigations, prosecutions, and sentencing outcomes - As a result of LEA activities, several individuals were arrested on terrorist activities charges over the last five years. No evidence of TF activities was found; cases related to self-financed cells involved relatively small amounts. Similarly, none of the investigations revealed potential misuse of NPOs. - Prosecutions were initiated for terrorist activities (article 270 bis CC), but not TF. - Statistics provided (as in source): - NUMBER OF REQUESTS FOR PROSECUTION INITIATION OR FILING FOR TERRORISM (ARTICLE 270 BIS CC) - Year 2009 2010 2011 2012 - Prosecutio n initiation Prosecutio n filing Prosecutio n initiation Prosecutio n filing Prosecutio n initiation Prosecutio n filing Prosecutio n initiation Prosecutio n filing 270 bis 63 10 6 63 1 55 4 50 - PERSONS CONVICTED BY FINAL SENTENCE (270 BIS CC) - Year 2008 — 13 - Year 2009 — 12 - Year 2010 — 3 - Year 2011 — 3 - Year 2012 — 5 - Some statistics (not consolidated for publication) revealed most terrorism cases are sanctioned with imprisonment of 5–10 years, with some individuals sentenced to 2–5 years of imprisonment. - Note: In March 2015 (after the on-site visit), a sentencing for TF was published; sentences for TF prior to 2009 were also made available by the Italian authorities. ### Targeted Financial Sanctions (TFS) framework and implementation - As an EU member, Italy relies on the EU framework for implementing designations under UNSCR 1267/1989 and 1988, EU Regulations 881/2002, and 753/2011. Italy adopted national legislation for implementing TFS (LD 109/2007 and Ministerial Decree (MD) 203/2010). - Italy has national measures to supplement the EU freezing framework via the Anti-Mafia Code and joint MEF/MFA decree (LD 109/2007), including freezing assets of “EU Internals” and assets “owned or controlled” by a listed person. - Example: authorities froze a bank account and company registered in the name of the spouse of a listed UNSCR 1267/1989 person. - The joint MEF/MFA decree was used one time and it took several months to conclude under non-emergency conditions. - Pre-designation coordination: Italy usually receives notification of pending UN designation proposals a few weeks before UN listing; UIF conducts searches to determine presence of accounts/property in Italy. These national measures have not been tested in practice for assets located in Italy at time of UN designation; effectiveness and ability to freeze “without delay” cannot be determined. - Transactions transiting Italy: time delay between UN designation and EU action can allow transactions to be processed; UIF alerts financial intermediaries in advance of new EU listings but the binding nature of UIF alerts on intermediaries is unclear. - Nominations and delistings: - Italy has nominated 80 individuals and 16 entities to the UNSCR 1267 Al Qaeda Sanctions Committee. - Italy has nominated 16 individuals and one entity to the EU CP 931 Committee. - Italy’s last successful terrorism designation proposal was in 2006 (16 individuals and 1 entity listed). - Among those designated by Italy under the Al Qaeda sanctions regime, 27 individuals and 16 entities were subsequently delisted. - One case of accidental freezing due to homonymy was resolved via coordination with a third country and assets were unfrozen. - Freezing and asset management: - Pursuant to UNSCR 1267, Italy has frozen approximately $110,000 in assets related to 53 transactions/accounts and 38 persons/entities to date. - Since 2007, Italy placed four companies listed by the UN’s Al Qaeda Sanctions Committee under controlled management by the State Property Agency. - Between 2005 and 2007, Italy dealt with the freezing of a hotel in Milan through an ad hoc procedure. - The FSC manages assets of persons/entities sanctioned by the UN under the EU framework and handles requests for unfreezing. - Since 2010, the FSC has granted four of the seven requests received for unfreezing terrorist assets under the basic expenses exemption of UNSCR 1452 (mainly health-related expenses). - Authorities report funds tracing systems to ensure unfrozen funds are used for intended purposes. - Through the State Property Agency, Italy manages designated companies to prevent benefit to designated persons while preserving employment. - Supervision and enforcement of TFS: - UIF conducts on-site and off-site supervision of all reporting entities for TF-related TFS implementation. - Between 2012 and 2014, UIF identified nine potential sanctions breaches which resulted in three final sanctions issued by the MEF: - one €500 fine in 2012 - two fines for a total of €900 in 2013 - Most frequent violation: transfer of funds to subjects listed (article 5.4); other breaches included UIF not being informed of freezing adopted (article 7.1) and failure to pass information related to listed persons to the UIF (article 7.2). - Authorities issued guidance in 2001, 2002, 2009, and 2010 for FIs and DNFBPs on TF asset freezing obligations; UIF website contains references to freezing obligations. - Notification mechanisms and use of commercial databases: - Italy does not have a mechanism for actively notifying FIs and DNFBPs of newly listed individuals/entities; UIF links to UN, EU, and U.S. sanctions lists on its webpage but does not proactively reach out when names are added to the UN Consolidated list. - Individual firms can subscribe to a European Commission RSS feed for designation updates. - Most FIs and larger DNFBPs use external service providers (e.g., World-Check) for sanctions screening; authorities inspect commercial databases of financial intermediaries but have not conducted checks to verify contents and robustness of those commercial databases. ### Non-Profit Organizations (NPOs) — risks, outreach, and oversight - The Italian non-profit sector comprises over 300,000 entities in various legal forms. - NRA conclusion: the NPO sector represents a low TF risk; primary NPO risk identified by authorities is tax evasion due to preferential tax regimes. - Since 2010, UIF received and analyzed a total of 26 STRs all sent by financial intermediaries regarding activities of non-profit entity account holders (data from the NRA concerns Islamic NPOs). - GdF has access to information on NPOs’ financial activities but authorities have not conducted a targeted risk-based analysis to prioritize NPO monitoring/enforcement per R.8. - Italy does not have a targeted, interagency coordinated approach to supervise NPOs with highest risk (e.g., those operating overseas or controlling largest financial resources). Multiple ministries, regions, and LEAs exercise authorities over different aspects of the NPO sector, which limits effective national coordination for TF threat identification. - MLSP is the ministry responsible for non-profit oversight but has limited involvement in FSC and CASA and has not established a coordination mechanism with counterpart ministries, law enforcement, and regional governments for risk-based TF mitigation. - Enforcement and inspections: - Authorities can identify abuse in daily activities and take enforcement actions; GdF and IRA carry out enforcement. - Since 2010, GdF inspected 224 NPOs for potential tax crimes under LD 74/2000; none revealed potential signs of TF. - Outreach and guidance: - MLSP is responsible for publishing guidance and conducting outreach (including recent engagement to discuss NRA results) but overall has conducted limited engagement to maintain regular dialogue with domestic NPO sector on TF risks and TF-specific risk mitigation best practices. - MLSP has not published guidance on the TF threat to the charitable sector. - The assessment team did not meet with the NPO sector to determine sector awareness of TF vulnerabilities and mitigation measures. ### Overall conclusions and observations - Italy exhibits many characteristics of an effective system for investigating and prosecuting individuals involved in terrorist actions. - The legal framework for investigation and prosecution of TF is generally sound; every counter-terrorism investigation includes an investigation into potential TF. - While some convictions on terrorist activities have been secured, no recent TF convictions were produced due to case characteristics (small self-financed terrorist cells). - Italy uses other measures (including deportation and disruption-focused investigations) to address emerging terrorist activities. - Italian anti-terrorism investigations are mainly targeted on disruption; parallel investigations have revealed assets in limited instances and resulted in few provisional measures. - Given focus on disrupting terrorist cells and limited TF evidence, Italy’s law enforcement uses TFS for TF less actively than in the past. - FSC adequately manages frozen assets as AML/CFT policy coordinator, but its effectiveness to implement TFS could be improved by considering additional strategic initiatives (e.g., typology discussions) and potentially an expanded mandate. - Information sharing within FSC is not hindered by confidentiality clauses, but sharing is often limited to listing, delisting, and freezing deliberations. *Source: IMF country report content unit _cr1643 - 195. The Italian authorities demonstrated a good understanding of TF risk. Risks are influenced* ### 225. Italy demonstrates some characteristics of an effective system in this area. While the ### _cr1643 - 225. Italy demonstrates some characteristics of an effective system in this area. While the ### Immediate outcomes and overall assessment - Italy demonstrates some characteristics of an effective system in targeted financial sanctions (TFS) and proliferation financing (PF) measures, but deficiencies remain with respect to implementing freezing without delay and the prohibition related to ongoing financial services. - Italy has a passive system of notification to FIs and DNFBPs for new listings; authorities have not conducted recent outreach to obligors or published recent guidance. - NPOs are an area for improved efforts: lack of targeted TF-related outreach and TF-related monitoring of NPOs leaves them potentially vulnerable to misuse by terrorist organizations. - Italy has parallel financial investigations for terrorism cases but has taken few provisional measures. - Italy has achieved a moderate level of effectiveness for IO.10. - Italy has achieved a substantial level of effectiveness for IO.11. ### Immediate Outcome 11 (PF Financial Sanctions) — legal and institutional framework - As an EU member, Italy relies on the EU framework for restrictive measures against Iran and North Korea; legal system and processes for implementing UNSCRs 1718 and 1737 are the same as for UNSCR 1267 and successor resolutions. - National controls supplement the EU regime and provide for designation of EU internals and affect assets owned and controlled by designated persons/entities. - Deficiencies from R.6 and IO.10 also apply to PF-related financial sanctions: inability to freeze without delay and lack of an active notification regime. - FSC mandate expanded in 2007 to cover Iran sanctions; Ministry of Economic Development and Customs Agency invited into FSC membership to coordinate trade in dual use goods and corresponding financial transactions. - FSC responsible for proposing new listings to UN and EU bodies, but the effectiveness of the regime for new designations has not been fully tested in practice. ### Trade with Iran and North Korea (2014 and historical context) - Italy trade with Iran (2014): - Imports: €441,000,000 - Total Exports: €156,000,000 - Dual-use Good Exports: €6,000,000 - Italy trade with North Korea (2014): - Imports: €427,000 - Total Exports: €919,000 - Dual-use Good Exports: 0 - Historical trade notes: - Historically Iran was Italy’s leading trade partner; by 2014 trade had dropped considerably. - Major categories of Italian exports to Iran: industrial and manufacturing equipment, electronics, and automobile parts. - 2012 Italy’s trade with North Korea: over €6 million in exports and €1 million in imports; by 2014 this dropped to €919,000 in exports and €427,000 in imports. - Examples reported of North Korea attempting to obtain luxury goods contravening UNSCR 1718; press reports also noted attempted procurements of snow blowers, tap dancing shoes, and wine. ### Implementation of targeted financial sanctions without delay / Bank Sepah case - In response to UNSCR 1747 (2007), BoI in collaboration with the FSC placed the Italian subsidiary of Bank Sepah under special administration in March 2007, a month before the EU listing. - Over a weekend, Italian authorities established a legal mechanism to permit continued operation under strict controls to avoid compromising sound management. - Since 2007, the branch has conducted only transactions authorized by the UN sanctions committee, including: payment of current expenses, legal fees and expenses related to extraordinary administration, and payments in favor of individuals/entities not listed relating to contracts concluded before the listing of Bank Sepah. ### Identification of assets/funds frozen and pre-authorizations - FSC has managed sizeable assets frozen under the Iran sanctions program. - Italian FIs have frozen 60 accounts and transactions of 14 individuals subject to EU and UN sanctions on Iran totalling an amount of approximately $13 billion. - No funds have been frozen pursuant to DPRK sanctions. - Funds and assets frozen pursuant to PF-related sanctions (annual figures): - Assets Frozen (USD): 2009: 0; 2010: 0; 2011: 0; 2012: 238,712; 2013: 3,561,933,562; 2014: 3,562,400,332 - Assets Frozen (EUR): 2009: 466,424; 2010: 6,554,521; 2011: 4,382,474; 2012: 8,139,540; 2013: 8,591,076; 2014: 7,878,188 - Assets Frozen (CHF): 2009: 0; 2010: 37,781; 2011: 37,593; 2012: 37,593; 2013: 37,593; 2014: 37,593 - Accounts and Transactions: 2009: 11; 2010: 25; 2011: 29; 2012: 56; 2013: 57; 2014: 60 - FSC responsible for authorizing requests to frozen funds for basic expenses per UNSCR 1737; to date, no basic expense authorizations have been approved under EC Regulation 267/2012. - FSC pre-authorizes transactions under EU’s Iran sanctions program; pursuant to EU Council Regulation 267/2012, Italian government must pre-approve all financial transactions involving Iranian persons and entities worth more than €40,000 (which was subsequently increased). - Since January 2014 (Joint Program of Agreement) pre-approval threshold increased to €400,000; FSC reviewed over 4,700 transactions in 2014. - Italy developed an IT solution for submission process and interagency review. ### Financial institutions (FIs), STRs, and sectoral understanding - Italy’s FIs demonstrate knowledge of PF risk and are filing PF STRs. - UIF guidance published to aid reporting entities in filing suspicious transaction reports related to proliferation and PF activities. - Since 2009, there have been 206 PF STRs submitted, all provided by banks. - PF STRs reported across nine provinces; concentrated in industrial regions Emilia-Romagna and Lombardia. - Banks submitted STRs for transactions involving UN or EU listed persons, but majority were for reasons not related to listed parties. - Most frequent reasons for filing: irregularities with commercial counterparts (recipients, consignee, and banks), mis-coding of export goods, delivery to a destination not the shipper’s. - MEF has issued interpretive guidance to obliged entities on compliance with EU sanctions. ### Competent authorities, inspections, enforcement, and outreach - UIF inspectors visited two financial intermediaries holding frozen accounts/transactions during the last two years; inspections verified internal controls and procedures regarding these funds were in place; neither on-site inspection revealed any violation. - More frequent on-site inspections are necessary to ensure effective compliance by FIs and DNFBPs. - Final sanctions by MEF for proliferation violations (2012–2014): - 2012: Number 0; Total Amount (EUR) 0 - 2013: Number 2; Total Amount (EUR) 11,318 - 2014: Number 5; Total Amount (EUR) 50,882 - Total: 62,200 - MEF and MISE have conducted outreach to financial and DNFBP sectors on PF risk. MISE and Customs engaged the export manufacturing sector on PF risks; FSC engaged Confindustria and maintains daily contact with financial sector on legal interpretation issues. ### Sanctions evasion detection and dual-use trade monitoring - Authorities detect sanctions evasion through tracking dual-use trade via interagency coordination and analysis of exporter trends. - Dual-use trade monitored by both FSC (authorizes financial transactions) and MED-led interagency dual-use export council (approves dual-use good export applications); either body can suspend authorization at request of the other. - MED’s analysis of trends in dual-use exports has identified potential sanctions evasion through third countries when recurrent exporters to Iran divert trade to third countries. ### Overall conclusions on IO.11 - Italy demonstrates many characteristics of an effective system in PF financial sanctions, though some deficiencies mirror IO.10 (notably in NPO sector for IO.10). - Italy has frozen a substantial volume of assets and other funds pursuant to PF sanctions programs. - FIs demonstrate knowledge of PF risk and filed related STRs. - Authorities have adequate domestic cooperation mechanisms related to sanctions evasion for Iran and North Korea PF programs. - BoI on-site examinations include PF among assessed issues, but Italian authorities do not conduct frequent on-site inspections of FIs outside BoI’s purview (e.g., insurance companies) nor of DNFBPs; given main risk linked to banking sector, this deficiency does not appear materially impactful. ### Preventive measures — key findings - FIs generally have a good understanding of ML threats; appreciation of TF risk is much less developed. - DNFBP sectors are far less attuned to risk, partly because updated secondary legislation has not been issued since the introduction of the AML Law. - Banks are potentially most vulnerable to ML; larger banks appear strongest in defenses. - Major concern: provision of remittance services by agents acting under EU passporting arrangements (Payment Services Directive); investigations revealed large-scale abuses of cash reporting requirements. - CDD measures are well embedded in the financial sector, but over-reliance exists on due diligence undertaken by banks when accepting business through agency arrangements. - Lack of consistency in processes for ascertaining beneficial ownership; undue reliance on registry information and customers’ self-declarations. - Obligation to identify domestic PEPs extended only to financial sector; many institutions have extended PEP risk profiling beyond regulation scope to include regional and local politicians and administrators. - STR reporting by banks has improved, but questions remain about promptness. DNFBP reporting generally poor, improving for notaries. - Notaries play a key role; Council of Notaries identifies real estate and corporate deed transfers as highest concern. Real estate agents generally have low awareness of ML issues. ### Preventive measures — recommended actions (selected) - Issue secondary legislation (or guidance) to cover all DNFBP sectors in consultation with relevant professional associations; engage in outreach on AML/CFT obligations (CDD, STR submission, RBA). - Work closely with financial sector to improve understanding of tax evasion typologies and improve reporting of suspicious transactions. - Extend obligations with respect to domestic PEPs and persons holding positions of influence in international organizations to all FIs and DNFBPs; consider extending domestic PEPs definition to include regional and local level persons. - Provide further guidance and education to reporting entities on steps to identify ultimate beneficial owner; clarify that reliance on customer self-declaration is not sufficient. - Explicitly require filing of STRs in relation to the proceeds of criminal activity (not just ML/TF); stress importance of prompt filing. - Consider measures to require banks to strengthen procedures for dealing with correspondent banks within the EU to account for true risks when dealing with different institutions in the EU. *Italic: International Monetary Fund — Italy country report excerpts provided in the source content.* ### 249. Lawyers view their ML/TF risk as limited only to those in their profession engaging in ### _cr1643 - 249. Lawyers view their ML/TF risk as limited only to those in their profession engaging in ### Lawyers’ perception of ML/TF risk - Almost 80 percent of Italy’s 180,000 active lawyers are litigators operating in law firms with fewer than 6 professional staff, and so the market for business/financial lawyers is limited in size. - Lawyers view their ML/TF risk as limited to those in the profession engaging in financial/business consultancy activities. - There is no common appreciation of lawyers’ vulnerability to being used by ML facilitators. - Most agreed that risks are highest in: - real estate transactions, - advising on project capital, - providing tax advice. ### Application of Enhanced or Specific CDD and recordkeeping - CDD procedures across much of the financial sector are surprisingly uniform and appear to be well embedded. - Financial institutions and professional associations generally have a good appreciation of obligations and challenges in meeting them. - BoI inspection data show a declining number of CDD deficiencies, but the pattern of deficiencies remains fairly consistent: - incorrect or incomplete CDD averaged 44 percent of the total over the last three years. - BoI estimates that about 90 percent of clients on the books prior to the introduction of the AML Law have now been successfully processed. - Reliance on banks for CDD by insurers, asset managers, and payment institutions: - about 50 percent of the life insurance business is sold through the banking sector, - virtually all business handled by asset managers and card-issuing payment institutions is channeled through banks. - Problems from third-party reliance: - insurers relying on non-bank agents found discrepancies in approximately 18 percent of a sample of CDD files. - IVASS regulations on CDD came into force on January 1, 2015 to provide more guidance. ### Beneficial ownership identification and data sources - Inconsistent application of the 25 percent threshold: institutions lack consistency in treating any legal or natural person that holds 25 percent or more of the shares at each level of the ownership chain as a potential beneficial owner. - Distinction between beneficial ownership and shareholding is not always fully appreciated. - BoI and IVASS regulations (effective January 1, 2014 and January 1, 2015, respectively) include clearer statements than the primary law. - DNFBP sectors generally lack similar regulations or guidance (exceptions: PIE auditors addressed by CONSOB secondary regulations; notaries received guidelines from their professional body). - Over-reliance on Chambers of Commerce database (Infocamere): - Infocamere holds only shareholding interests and cannot indicate whether the ultimate shareholder of record is also the beneficial owner. - Notaries are required to identify and record true beneficial ownership when processing company formations, but that information does not form part of Infocamere. - Over-reliance on customer self-declaration for complex ownership chains is common, particularly among less sophisticated FIs and DNFBPs. - It is an offense under the AML Law for a customer to provide incomplete or false information on beneficial ownership; prosecutions have been brought in some cases. ### Domestic PEPs, correspondent banking, and risk coverage - Primary legislation addresses foreign PEPs only; BoI and IVASS have extended definition to persons resident in Italy and require a risk-based approach. - Many FIs consider the regulatory scope too narrow and have extended internal profiling to include a broad range of regional and local politicians and administrators. - DNFBP oversight authorities (apart from PIE auditors) have not extended CDD requirements with respect to domestic PEPs; most firms follow the letter of the law only. - Banks do not apply enhanced or basic CDD measures when establishing correspondent-banking relationships with other EU institutions, as permitted under the AML Law in line with EU principles: - banks verify establishment and regulation in a Member State to be exempted from measures applicable to non-EU entities, despite heterogeneous respondent risks across Member States. ### Money remitters and DNFBP challenges - NRA identifies money remitters as a weak link in AML/CFT compliance; the financial sector largely shares this view. - Majority of remitters do business in Italy under EU “passporting” arrangements (Payment Services Directive), placing primary regulatory responsibility with the home country supervisor. - Where remitters operate through a permanent establishment in Italy, they often do so through many agents based in otherwise unregulated businesses (e.g., corner shops, petrol stations). - Italian authorities have limited oversight powers over such agent networks; MEF can prohibit operations if home country regulator fails to address reported problems. - Italian authorities helped secure specific provisions in the EU’s 4th Money Laundering Directive to strengthen the regulatory framework for such entities. - Italian remittance businesses argue competitive disadvantage to EU-passported firms, claiming clients choose passported firms to avoid Italian-level CDD measures. - DNFBP CDD approach is generally less nuanced than financial sector: - basic identification and verification is the norm, - many DNFBPs are not positioned to go beyond client self-declaration on beneficial ownership or monitor for foreign PEPs, - requirement to identify domestic PEPs has not yet been extended to these sectors. - Casino sector: customer identification procedures exist but no means for verifying customer identification. ### Real estate risks and record-keeping - Real estate transactions are widely recognized as a key ML risk; construction sector has significant involvement by organized crime. - Real estate agents are third parties; many of approximately 31,681 active agents are small- and medium-sized and lack capacity to undertake all required CDD measures. - Record-keeping across the financial sector is generally good: - Most institutions must maintain a Single Electronic Archive (AUI) dedicated solely to specific AML/CFT data, run in parallel with normal record-keeping. - Both the AUI and general records must be maintained for at least ten years. - Earlier deficiencies in transfer and updating of information in the AUI have declined as institutions address technological challenges. ### STR reporting patterns, content, and timeliness - UIF sees significant improvement in STR quality from the banking sector and progress in the insurance sector. - Structural problems in banks relate to centralizing internal reporting across extensive branch networks; big banks have better STR controls than many regional institutions. - Increase in reporting often follows inspections; some filings may be “defensive” reporting. - STR counts by sector (Number of STRs filed) — exact figures: - Financial Intermediaries: 2012 64,677; 2013 61,765; 2014 68,220 - Banks and BancoPosta: 2012 58,929; 2013 53,745; 2014 59,048 - Non-bank financial intermediaries: 2012 3,739; 2013 5,645; 2014 6,041 - Insurance companies: 2012 369; 2013 602; 2014 723 - Electronic money institutions: 2012 535; 2013 1,304; 2014 1,822 - Trust companies: 2012 270; 2013 263; 2014 310 - Asset management companies: 2012 158; 2013 134; 2014 127 - Securities firms: 2012 36; 2013 45; 2014 64 - Other financial intermediaries: 2012 641; 2013 27; 2014 85 - Professionals and non-financial businesses: 2012 2,370; 2013 2,836; 2014 3,538 - Notaries: 2012 1,876; 2013 1,824; 2014 2,186 - Accountants, book keepers: 2012 90; 2013 98; 2014 148 - Lawyers: 2012 14; 2013 35; 2014 27 - Auditors: 2012 5; 2013 10; 2014 16 - Other professionals: 2012 3; 2013 18; 2014 13 - Casinos and betting operators: 2012 283; 2013 774; 2014 1,053 - Gold traders and high value manufacturers and traders: 2012 54; 2013 26; 2014 47 - Other non-financial operators: 2012 45; 2013 51; 2014 48 - Total: 2012 67,047; 2013 64,601; 2014 71,758 - UIF 2014 data: unexplained cash transactions account for about 30 percent of STRs by number but only 13 percent by value. - Real estate transactions are commonly linked to STR triggers. - Some low-volume reporters’ STRs arise from law enforcement requests (reactive reporting). - Outside core retail banking, STR-filing is mixed: trust companies and asset managers file relatively few reports due primarily to weak customer profiling. - Money remittance services under EU passporting show failure to report despite high-risk business; attributed to non-professional agents and lack of parent-company control. - DNFBP STR-filing is very low except for notaries: - Notaries averaged just under 2,000 STRs each year for the past three years (reflecting strong engagement), yet assessors remain unconvinced about adequacy given real estate prevalence and notaries’ role in authenticating over three million documents each year. - Reporting by other professionals (lawyers, accountants, auditors) doubled since 2012 but only reached just over 200 in 2014. - Timeliness of reporting: - UIF 2013 analysis: 65 percent of reports filed within two months of execution of a suspicious transaction; nine percent filed more than seven months after the event. - 2014 improvements: 72 percent filed within two months; six percent filed more than seven months after the event. - DNFBP sectors: 80 percent of reports filed within two months in 2014, compared with 70 percent in 2013. - Timeliness remains a concern for the immediate value of reports to the UIF. ### Internal controls, governance, and impending implementation - BoI inspection data show a marked drop in problems identified related to overall systems and controls. - Section 52 of the AML Law (underpinned by criminal sanctions) obliges internal governance bodies to report to the authorities all failures to comply with relevant supervisory regulations. - This obligation encourages structured compliance functions reporting to senior management. - In the four years to end-2014, approximately 450 such reports were made. - Authorities and FIs indicate the vast majority of these reports relate to individual cases of procedure non-compliance rather than systemic control failures. - The criminal sanction creates a strong personal incentive at top management level to report every specific case identified. *Italic: IMF staff report text as provided in the content unit.* ### 271. In broad terms, the FIs consider that the biggest challenge they face is trying to keep their ### _cr1643 - 271. In broad terms, the FIs consider that the biggest challenge they face is trying to keep their ### Major challenges and sectoral control environments - Financial institutions (FIs) consider the biggest challenge is keeping their technology up to date with the rapidly changing regulatory environment caused by the bringing into force of new regulations over the past two years. - Larger banks are, in principle, better placed to accommodate required changes, but the scale of their operations has often meant that adjustments have taken longer than expected. - Regulatory authorities considered that systems and controls were improving and that there were no significant or consistent problems identified through their inspection program. - Outside the banking sector, no generic concerns were identified in control environments across the financial sector, except for money remitters operating under EU passporting arrangements: - Considerable concerns exist about controls maintained by the agents and the oversight exercised by some parent companies. - AML/CFT internal controls in DNFBP sectors fall well short of those applied by most FIs: - A recent survey by one lawyers’ professional association revealed that fewer than 40 percent of the firms that responded had routine AML/CFT training programs for their staff. - Some professions and businesses attribute lower standards to a lack of new secondary legislation supporting primary law; others attribute it to an inability to handle AML/CFT complexities. - Some professional associations are developing guidance to be promoted as a standard for their profession but report difficulties engaging with regulators and the MEF because associations are not seen as part of the regulatory oversight network. ### Overall conclusion on Immediate Outcome 4 (IO.4) - Strong points: - Generally good understanding of ML risks in the core financial sector, particularly among banks which dominate the sector. - Appreciation of TF risks is less developed. - Weaknesses: - Significantly less understanding of both ML and TF risks in DNFBP sectors; general awareness of the risk-based approach is much more limited, except for PIE auditors and notaries who received specific regulator input. - Preventive measures are more robust in FIs than DNFBPs. - Large domestic banks and BancoPosta have taken measures to strengthen CDD, record-keeping and STR filing in recent years. - Important challenge: mitigating client tax evasion risk given the endemic nature of this problem in Italy. - Marked variations in understanding among FIs and DNFBPs about establishing ultimate beneficial ownership — a key area of concern. - Passporting under the EU Payment Services Directive led to many remittance agents in Italy; authorities have evidence some agents systematically fail to implement proper AML/CFT controls, affecting the robustness of Italy’s AML/CFT framework (this can only be addressed at EU level). - Among DNFBPs, preventive measures tend to be mechanical with little attempt to identify high-risk situations and take appropriate measures. - Certain technical compliance deficiencies adversely impact effectiveness, particularly those relating to CDD exemptions, correspondent banking, PEPs and wire transfers. - Assessment: - Italy has achieved a moderate level of effectiveness for IO.4. *Italic: Source — content unit _cr1643 - 271. In broad terms, the FIs consider that the biggest challenge they face is trying to keep their (IMF PDF).* ### Supervision — Key findings - Financial sector supervisors and the UIF generally have a good understanding of the ML/TF risk associated with the FIs they oversee. - Sound arrangements exist to prevent criminals from participating in ownership, control, and/or management of FIs and DNFBPs. - Supervisory tools fall short of providing comprehensive, timely and consistent data on the nature and quantum of inherent risk at individual institutions. - A new risk-based supervisory methodology under development by the BoI is expected to improve the situation, but concerns remain about limitations in capturing exposure to PEPs. - Framework for supervision of EU PIs operating in Italy under EU arrangements is in place, but: - Robust and ongoing supervisory cooperation between OAM and home-country supervision is not operating as well as it should. - Cooperation between OAM and the GdF with respect to supervision of these entities is not as effective as it should be. - The BoI, IVASS, and the MEF apply sanctions for violations of the AML Law and related regulations. Concerns include: - The BoI’s inability to sanction natural persons including removing a member of the board of directors or senior management is a concern. (Footnote: This deficiency was addressed by Decree 72 of 2015 which came into effect after the on-site visit.) - Sanctions are not commensurate with institutions’ size and financial capacity and, for insurance licensees, are not imposed in a timely manner. - The GdF’s risk-based approach for most DNFBPs is biased towards law enforcement-type indicators and does not sufficiently integrate indicators aligned with ML/TF risk in Italy. ### Supervision — Recommended actions - The BoI should continue development of its new risk-based supervision model; IVASS should commence development of a more robust model. Both models should: - Take full account of specific risks to which supervised entities are exposed and the quality of their risk management practices. - Generate outputs that can clearly prioritize institutions for supervisory oversight. - Develop supervisory returns/reports requiring institutions periodically to submit information on: - The type and quantum of inherent risk implicit in their operations. - The type of risk mitigation measures adopted. - Requirements for coverage of inherent risk should align with major threats identified through the NRA and other credible processes. - For joint AML/CFT oversight of capital market licensees, CONSOB should, where relevant, contribute to the design of the BoI risk-based model. - Increase dissuasiveness of sanctions for AML/CFT noncompliance; IVASS should endeavor to reduce the current two-year period required to impose a sanction. - Until the 4th AML Directive is implemented, authorities should clarify if sanctions under the CLB can be applied to banks subject to the ECB’s prudential oversight. - Ensure DNFBPs are subject to administrative sanctions in addition to criminal sanctions. - The GdF should: - Develop a risk-based model placing less emphasis on law enforcement-type intelligence and better aligned with inherent risk across DNFBPs. - Develop mechanisms allowing supervised persons to periodically report on inherent risk and risk management practices, particularly for larger and more sophisticated entities/persons. - Better integrate OAM into planning for on-site inspections of agents of PIs operating under an EU passport. - Work more closely with industry associations to strengthen understanding of member risks. - The OAM should strengthen cooperation with home-country supervisors of PI agents operating in Italy under an EU passport. ### Immediate Outcome 3 (Supervision) — Licensing, registration and controls preventing criminals entering the market - Licensing program: - Italy has a comprehensive program for licensing FIs. The BoI, CONSOB, and IVASS undertake fit and proper assessments of shareholders, members of the board of directors, and managers of entities seeking to be licensed as FIs. - Assessments include reference to any criminal proceedings or convictions. - Post-licensing fit and proper assessments: - FIs are responsible for undertaking fit and proper assessments when there are changes in persons subject to review; assessments must be reviewed and confirmed by the institution’s board of directors and submitted to the supervisor. - Supervisors review information received and make selective enquiries with law enforcement and relevant supervisory authorities to verify accuracy. - Because supervisors do not undertake fit and proper assessments after licensing and only selectively verify institutions’ assessments, the process is less robust and likely less effective. - Agents providing services on behalf of Italian PIs and EMIs are subject to a fit and proper assessment by the OAM. - DNFBP registers and oversight: - Lawyers, accountants, and notaries are enrolled in registers maintained by national professional associations and are subject to ongoing oversight and monitoring; persons with criminal convictions are not allowed admission. - For lawyers and accountants, ongoing monitoring performed by local professional associations emphasizes conduct, ethics and integrity standards. - Four casinos in Italy are public entities operated by municipalities under MoI oversight; persons involved in casino management are subject to fit and proper assessments by the MoI. - Unauthorized financial services: - Authorities are aware of instances of persons providing financial services without appropriate authorization, with highest incidence in the MVTS sector; authorities have taken steps to terminate such activity where identified. ### Supervisors’ understanding and identification of ML/TF risks - All supervisors were involved in developing the NRA and demonstrate good understanding of identified threats and vulnerabilities. - Predicate activity focus includes tax evasion, corruption, and organized crime. - Institutional business-model risk attention includes cash transactions, wire transfers (particularly involving high-risk countries), correspondent banking, activities related to PEPs and high net worth individuals, and geographic regions with relatively high criminal activity. - Insurance sector risk determinants include the nature of products, size of distribution network and quantum of premium income. - Allocation of supervisory resources heavily focuses on banks as this sector accounts for 85 percent of financial sector assets. ### Risk-based supervision of compliance with AML/CFT requirements (BoI) - Organizational and staffing: - AML/CFT supervision within the BoI is the responsibility of the Consumer Protection and Anti-Money Laundering Unit within the Bank Supervision Department (BSD). - The unit was formed approximately one year ago, has a staff of 43 and has access to other BSD staff resources. - Methodology and tools: - BoI has started developing and experimentally applying a new risk-based methodology; it is currently being tested, not officially adopted, and expected to be fully introduced over the next year. - The BoI uses off-site surveillance and on-site inspections. BoI’s Risk Assessment System (RAS) incorporates AML/CFT risk as part of reputational and operational risk — one of nine risk factors used to assess a bank’s overall risk profile. - The Guide to Supervisory Activities—Circular 269/2008 rates each of nine factors on a scale of 1 (best) to 6 (worst). The full range of scores can only be used for qualitative factors where on-site inspection information exists. - Under RAS, ML/TF risk is assessed in the context of “anomalies from on-site analysis including the level of compliance with ML/TF legal and regulatory requirements.” RAS uses mainly on-site inspection information and focuses more on risk mitigation than indicators of inherent ML/TF risk. Significance is attached to institution size; larger and more systemically important institutions receive more intensive oversight. - Off-site activity and indicators: - Off-site review sources include prudential returns (balance sheet and income statement data by economic sector and geographic location), returns with some information on distribution channels, annual reports outlining specific AML Law violations, prior supervisory activity, and information from UIF, GdF, and other agencies. - BoI uses indicators to develop views on institution inherent risk, including analyses of relative levels of cash transactions, transactions to high-risk countries (including wire transfers), and relative levels of occasional transactions. - BoI developed a methodology prioritizing bank branches for on-site inspections, taking geographic risk into account and prioritizing areas with higher criminal activity using LEA data. The approach considers number of STRs, number of investigations prompted by STRs, level of transfers to tax havens, total cash transactions, and incidence of criminal activity such as extortion and usury. - Greater resources are dedicated to institutions with large branch networks. - Because RAS (Circular 269/2008) does not include an analysis of inherent risk, additional inherent risk indicators are used alongside RAS outputs to set AML/CFT supervisory priorities. - Inspection activity and thematic reviews: - BoI aims to undertake three to four targeted AML/CFT inspections annually at major banks or banking groups and has a four to five year supervisory cycle for “minor” banks (~450 institutions). - During 2010 to 2013, BoI undertook approximately 1,070 AML/CFT inspections at offices of regulated entities; branch inspections accounted for one-third (347) of AML/CFT on-site inspections. - Examples provided of on-site inspections addressing specific concerns about ML/TF risk and weaknesses in risk management; triggers included law enforcement concerns and supervisory findings. - BoI periodically conducts thematic reviews on PEPs, trusts and fiduciaries, and effectiveness of identifying beneficial owners of legal persons. - On-site inspection procedures include assessing banks’ compliance with requirements for contractors, subcontractors, and concessionaires to use dedicated accounts for public works and services; important findings are generally shared with industry. - During 2013-2014 BoI conducted short on-site inspections of payment institutions (PIs) and electronic money institutions to assess effectiveness of risk management frameworks. - BoI requires PIs to have agents connected directly to PI information systems to ensure agents operate within established limits; PIs lacking this ability cannot engage agents. Where an existing PI fails this requirement, it cannot engage new agents and is requested to suspend operations of existing agents. - Where concerns emerge about PI internal controls, BoI can require submission of internal audit reports related to agent networks. - On at least two occasions BoI intervened early and objected to plans of EU countries to establish branches of PIs in Italy; outcomes included revocation of authorization by the home supervisor in one case and restriction of PI operations to the home country in another. *Italic: Source — content unit _cr1643 - 271. In broad terms, the FIs consider that the biggest challenge they face is trying to keep their (IMF PDF).* ### 288. CONSOB undertakes AML/CFT on-site inspections of capital market licensees on behalf of ### _cr1643 - 288. CONSOB undertakes AML/CFT on-site inspections of capital market licensees on behalf of ### CONSOB role and interaction with Bank of Italy (BoI) - CONSOB undertakes AML/CFT on-site inspections of capital market licensees on behalf of the BoI. - Inspections occur as a component of a wider-focus inspection or as a standalone inspection. - As an agent of the BoI, CONSOB uses the BoI’s supervisory tools and methodologies to undertake such inspections. - CONSOB contributes to the development of AML/CFT risk profiles for capital market licensees by providing the BoI with information it considers relevant, including: - nature of the licensee’s core operations; - general risk management practices; and - any concerns relating to integrity and standards of ethical conduct. ### On-site inspections conducted by Bank of Italy (2010–2014) - Summary table (institutions and inspections by category and year): - Banks (including branches) - 2010: 760 institutions, 236 inspections - 2011: 740 institutions, 208 inspections - 2012: 706 institutions, 212 inspections - 2013: 684 institutions, 199 inspections - 2014: 667 institutions, 213 inspections - Banking Groups - 2010: 76 institutions, 1 inspection - 2011: 77 institutions, 3 inspections - 2012: 75 institutions, 4 inspections - 2013: 77 institutions, 13 inspections - 2014: 75 institutions, 2 inspections - Financial Intermediaries - 2010: 1483 institutions, 28 inspections - 2011: 970 institutions, 20 inspections - 2012: 844 institutions, 29 inspections - 2013: 725 institutions, 22 inspections - 2014: 700 institutions, 18 inspections - Payment institutions - 2010: 1 institution, - - 2011: 34 institutions, - - 2012: 44 institutions, - - 2013: 43 institutions, 4 inspections - 2014: 41 institutions, 3 inspections - E-money Institutions - 2010: 3 institutions, 1 inspection - 2011: 3 institutions, 1 inspection - 2012: 3 institutions, 1 inspection - 2013: 4 institutions, 1 inspection - 2014: 5 institutions, - - Investment Firms - 2010: 111 institutions, 17 inspections - 2011: 102 institutions, 8 inspections - 2012: 101 institutions, 10 inspections - 2013: 94 institutions, 11 inspections - 2014: 147 institutions, 10 inspections - Collective Investment Funds - 2010: 198 institutions, 10 inspections - 2011: 190 institutions, 12 inspections - 2012: 172 institutions, 10 inspections - 2013: 152 institutions, 9 inspections - 2014: 89 institutions, 14 inspections ### IVASS AML/CFT supervisory approach and inspections (2011–2014) - IVASS uses both on-site and off-site methodologies for AML/CFT supervision. - Major inputs into prioritizing licensees: - results of previous supervisory activity; - outcomes of review of reports submitted by licensees under article 52 of the AML Law and ISVAP regulation of 20/2008. - Reports provide information on: - violations related to CDD, record keeping, internal organization and controls; and - licensee’s AML/CFT risk management function. - In assessing inherent risk across insurance entities IVASS considers: - geographic areas of operation; - size of distribution network; - types of contracts sold; - volume of premium income; - number of STRs filed with UIF. - IVASS employs a risk-based model covering major risks: (i) underwriting, (ii) financial, (iii) strategic, (iv) operational, and (v) counterparty. ML/TF risk is assessed as a component of operational risk. - IVASS is finalizing a handbook expected to be issued during the first quarter of 2015. - ON-SITE INSPECTIONS CONDUCTED BY IVASS (2011–2014) - Life Insurance Companies - 2011: 5 - 2012: 3 - 2013: 6 - 2014: 9 - Intermediaries of Life Insurance - 2011: 5 - 2012: 4 - 2013: - - 2014: - - Total - 2011: 10 - 2012: 7 - 2013: 6 - 2014: 9 - Over 2011–2014 IVASS undertook on-site inspections of: - 23 insurance entities; and - 9 intermediaries. - Industry context and coverage statistics: - Number of insurance entities remained relatively stable at 64 institutions. - Between 2011 and 2012 IVASS inspected 8 insurance institutions; between 2013 and 2014 this increased to 15. - Over 2011–2012 inspections accounted for 13 percent and 32 percent of the industry’s premium income on a solo and group basis respectively. - Over 2013–2014 inspections accounted for 29 percent and 33 percent of premium income on a solo and group basis respectively. - Over the four-year period the corresponding figures were 42 percent and 56 percent. - Inspected principal institutions on average represented 12 percent of all life insurance entities. - On-site inspections of intermediaries numbered 9 over a four year period out of a total 5,285 brokers and 35,942 agents.72 - Concerns and operational changes: - Reduction in on-site inspections of intermediaries raises concerns that deficiencies not identified by principal institutions may go unnoticed. - IVASS is revising internal processes to generally reduce time required for supervisory activities. ### Findings on supervisory methodologies and deficiencies (BoI, CONSOB, IVASS) - Supervisors have undertaken many on-site inspections (full scope, limited scope, thematic) and off-site analyses. - Identified deficiencies as of the on-site visit: - The RAS (main risk assessment model used by BoI) does not give prominence to ML/TF risk; ML/TF risk is analyzed as a component of reputational risk, which is a component of operational risk. - Much of the data originates from prudential returns primarily intended for prudential purposes; no clear model uses prudential data from 667 banks to enable meaningful ML/TF comparisons across banks. - No guidance sets out how data extracted from prudential returns should be analyzed to produce a rating that can be integrated into the RAS rating. - The system does not generate a rating or ranking of institutions in the context of ML/TF risk. - Systems do not adequately capture all inherent risks to which institutions are exposed; supervisors cannot adequately assess customer, product/service, geographic and delivery channel risks. - No mechanisms to inform supervisors of each institution’s exposure to PEPs and other customers creating direct exposure to corruption. - Absence of off-site supervision tools that would allow institutions to periodically provide such information to supervisors. - Consequence: - Supervisors are not in a position to develop reliable rankings of net ML/TF risk for all institutions. - Note: - Authorities have confirmed the system in place does not generate a rating or ranking of institutions regarding ML/TF risk. ### MVTS, OAM, GdF, and passported agents under PSD - Supervisory roles: - OAM has general supervisory responsibility for agents of payment institutions. - GdF is the AML/CFT supervisor. - OAM is notified by the central contact point when a passported agent commences operation. - On a quarterly basis the OAM provides the GdF with a list of financial agents operating in Italy on behalf of EU e-money and payment institutions. - Cooperation and deficiencies: - GdF has identified agents of payment institutions as priorities for AML/CFT oversight. - GdF’s cooperation with OAM in MVTS supervision is suboptimal. - For criminal investigations OAM cooperates with relevant Comandi Provinciali and GdF. - For AML/CFT supervision GdF provides OAM with copies of on-site supervision reports but does not consult OAM prior to inspections. - On-site inspection planning does not benefit from OAM input. - Scale and registration of passported agents: - There are currently in excess of 1,7,500 agents and 22,500 stores operating in Italy of which only 1,000 are registered by the OAM.73 - Vast majority of passported PSD agents are affiliated to U.K. and Ireland-based entities; others affiliated with entities licensed in Spain, Romania and Belgium. - Supervisory mechanisms and cross-border cooperation: - OAM and GdF do not have powers to exercise AML/CFT oversight of these entities; GdF can undertake on-site inspections and inform OAM of violations. - OAM would inform the home country supervisor of violations; if OAM deems home supervisor has not taken appropriate action it can ask the MEF to impose sanctions. - Authorities did not identify instances in which MEF was requested to impose such sanctions. - One instance: an order of application of precautionary measures was adopted by the Court of Rome against a British payment institution and some of its agents. - Example of cooperation: In 2014 GdF, acting under authority of a prosecuting agency, uncovered AML/CFT violations at a passported agent and provided relevant information to the home country supervisor. - No instances identified where a home country supervisor undertook an on-site inspection of agents operating in Italy; operational interaction between OAM and home country supervisors is limited. - Recommendation/observation: - Important for OAM, GdF and home country supervisors to strengthen arrangements for ongoing supervisory cooperation given the very large number of agents operating under the PSD. ### DNFBPs supervision by GdF - GdF supervisory approach: - Uses a risk-based approach focusing on relative exposure to predicate offenses among supervised persons. - Sources for prioritization include STRs, criminal and tax records, known association with criminal circles. - Focus areas: links between criminal groups and DNFBP categories such as financial agents and real estate agents; persons engaged in international tax planning and company formation. - Prioritized sectors: lawyers, credit agents, payment intermediaries and trust companies, aligned with the NRA. - Inspections of prioritized DNFBPs (2012–2014) — table of inspections by category and year (totals shown): - Agents of Financial Institutions - 2012: 155 - 2013: 83 - 2014: 73 - Total: 311 - Notaries - 2012: 31 - 2013: 38 - 2014: 53 - Total: 122 - Lawyers - 2012: 20 - 2013: 30 - 2014: 42 - Total: 92 - Real Estate agents - 2012: 23 - 2013: 15 - 2014: 20 - Total: 58 - Trust and Company Service Providers - 2012: - - 2013: - - 2014: 4 - Total: 4 - Accountants - 2012: 39 - 2013: 75 - 2014: 94 - Total: 208 - Casinos - 2012: - - 2013: 1 - 2014: - - Total: 1 - Observations on GdF model and gaps: - Main indicators used to prioritize DNFBPs are heavily influenced by law enforcement-type intelligence (criminal convictions, suspected connections to criminal activity). - ML/TF risk inherent in various DNFBP sectors does not appear to be given sufficient weight in establishing supervisory priorities. - Industry associations expressed that GdF has not worked closely enough with them to develop understanding of sector-specific ML/TF risks; no mechanism exists for sector perspectives to feed into GdF supervisory strategy. - GdF relies heavily on on-site inspection and intelligence about possible criminal activity; lacks tools for persons/entities to submit periodic reports on inherent risk and quality of risk management. - On-site inspection practices viewed by sectors as largely compliance based and not sufficiently differentiated by relative ML/TF risk. - With the exception of PIE auditors and notaries, absence of AML/CFT regulations or guidelines for DNFBPs places DNFBP supervision at a disadvantage compared to FIs supervised by BoI, CONSOB, and IVASS. *Source: IMF country report content provided in the input.* ### 303. The AML Law requires professional bodies to “foster and verify” their members’ compliance ### _cr1643 - 303. The AML Law requires professional bodies to “foster and verify” their members’ compliance ### Professional bodies — initiatives undertaken - The AML Law requires professional bodies to “foster and verify” their members’ compliance with the law. Several professional associations have undertaken initiatives that positively impact sensitizing reporting persons to ML/TF risk and enhance compliance. - Examples of initiatives: - Association of Notaries - Issued CDD Guidelines. - Developed a handbook which provides guidance with respect to the process of analyzing suspicious transactions and filing a report with the UIF. - Oversight of membership undertaken through regional associations. - Association of PIE Auditors - Developed a paper for its membership that summarizes AML/CFT duties applicable to audit firms. - Associazione Studi Legali Associati (ASLA) - An ASLA working group has drafted AML guidelines for its members. - The guidelines have been shared with the National Bar Council and the MEF. - Note: ASLA represents 90 law firms. Its members account for a large percentage of revenues of the legal sector. - Real Estate Association - Arranges AML/CFT training for its members in conjunction with the GdF and the DIA. - Association of Accountants - Developed AML/CFT Guidelines for its members in 2008 and updated them in 2011. - Association of Fiduciaries - Issued AML/CFT guidelines to members. - Provides members with updates on sanctions list. - Conducts on-going training programs which include AML/CFT component. - Conducts annual training event undertaken in conjunction with the BoI and GdF. - Audit Firms - (See CONSOB oversight below.) ### Oversight of auditing firms (CONSOB) - CONSOB is the AML/CFT supervisor for auditing firms PIE auditors. - CONSOB considers auditing firms to represent a relatively low risk for ML/TF (a view echoed by the NRA) but recognizes they are a valuable source of information about clients with regard to STR obligations. - 2013: CONSOB sent a questionnaire to all audit firms to assess the nature of their potential exposure to ML/TF risk. - 2014: The questionnaire was updated after the CDD regulation came into force. - CONSOB undertakes AML/CFT oversight based on risk classification arising from questionnaire responses. - CONSOB undertook three on-site inspections of PIE auditors in 2014. ### UIF inspections and prioritization - The UIF undertakes inspections to assess reporting persons’ compliance with their obligations to file STRs. - Prioritization model: - Based on assumptions about expected STR reporting derived from the nature of an entity’s operations, including products, customers and geographic regions. - Prioritizes on-site inspections at reporting persons that appear to be underreporting based on the level of expected reporting indicated by the model. - Decisions to undertake inspections can also be influenced by intelligence received by the UIF or trends indicated by STRs. - Cooperation and feedback: - The UIF shares concerns related to weaknesses in STR reporting with BoI, IVASS and CONSOB. - These supervisors address STR reporting issues in the wider context of assessing the quality of risk management systems and practices in institutions. ### Remedial actions and sanctions — overview and BoI sanctions data - Prior to the BoI March 2011 regulation entering into force in December 2012, sanctions for AML/CFT violations were applied under the CLB in the wider context of “anomalies regarding organization and internal controls” and were applied to natural persons such as members of the board and senior management. - Since December 2012 pecuniary sanctions have been applied under the AML Law and can only be applied to legal persons. - BoI uses a grid to determine pecuniary sanctions case by case, aiming to ensure sanctions are proportionate to entity size and the score under BoI’s SREP or other scoring tools. - BoI remedial actions include letters, ad hoc-meetings, follow-up inspections; formalized written communications with corrective measures and specific timelines; 2014 examples: - BoI wrote 95 letters of intervention requiring institutions to adopt corrective measures within specific timelines. - 26 occasions in 2014 where entities were requested after meetings with BoI to adopt action plans to correct identified deficiencies. - Progress reports are requested to monitor developments. - BoI may apply other sanctions under the CLB including prudential measures (additional capital buffer for operational risks; prohibition of certain categories of transactions; restrictions on operations or branch structure). - Concern: Uncertainty whether Italian legal framework allows BoI to apply AML/CFT sanctions based on the CLB to banks supervised by the ECB (these 13 largest banking groups account for approximately 70 percent of the assets of the sector). - Sanctions applied by BoI under AML Law (year-by-year): - 2012 - Number of Sanctions: 1 - Amount of Sanctions: 10,000 - 2013 - Number of Sanctions: 3 - Amount of Sanctions: 158,300 - 2014 - Number of Sanctions: 11 - Amount of Sanctions: 477,000 - Sanctions applied by BoI to natural persons under CLB where underlying deficiency related to AML (year-by-year): - 2012 - Number of Sanctions: 36 - Amount of Sanctions: 4,800,000 - 2013 - Number of Sanctions: 33 - Amount of Sanctions: 9,500.000 - 2014 - Number of Sanctions: 26 - Amount of Sanctions: 10,200,000 - Average and largest sanction values: - Average value of individual pecuniary sanctions applied to legal persons in 2013: €57,766; largest €85,000. - Average value of sanctions applied to legal persons in 2014: € 43,363; largest individual sanction €113,500. - Sanctions applied to natural persons under the CLB averaged: - €133,333 in 2012, - €287,878 in 2013, - €384,615 in 2014. - Observation: Sanctions applied to natural persons have been significantly higher than those applied to legal persons; the lesser sanctions applied to legal persons are unlikely to be dissuasive in the context of their asset size and revenue streams. ### MEF sanctions for failure to file STRs (2011–2014) - The MEF applied sanctions related to violations of the obligation to file STRs during 2011 to 2014 to 164 entities/persons with the following yearly breakdown: - 2011 - Category of Institutions/Persons: 37 financial institutions; 2 trust companies; 1 currency exchange - Total Value of Sanctions (euros): 17,563,247 - 2012 - Category of Institutions/Persons: 27 financial institutions; 1 trust company; 2 accountants - Total Value of Sanctions (euros): 22,351,906 - 2013 - Category of Institutions/Persons: 52 financial institutions; 3 money transfers operators; 1 accountant; 1 notary - Total Value of Sanctions (euros): 18,537,138 - 2014 - Category of Institutions/Persons: 30 financial institutions; 4 money transfer operators; 2 notaries; 1 accountant - Total Value of Sanctions (euros): 8,412,527 ### IVASS sanction procedures initiated (2011–2014) — status and timing issues - IVASS initiated the process to impose pecuniary sanctions on six institutions during 2011–2014. Due to the length of IVASS’ internal processes, it can take up to two years before sanctions are actually imposed, significantly reducing effectiveness. - STATUS OF SANCTION PROCEDURES INITIATED BY IVASS (2011–2014) - 1 — 2011 — € 32,500 — Sanctions Imposed - 2 — 2012 — € 65,000–950,000 — On-going - Note: This case was concluded on March 25, 2015. - 3 — 2013 — € 70,000–1,400,000 — On-going - Note: This case was concluded on June 3, 2015. - 4 — 2013 — € 60,000–1,200,000 — On-going - 5 — 2014 — € 20,000–400,000 — On-going - 6 — 2014 — € 40,000–800,000 — On-going ### Administrative vs criminal sanctions for DNFBPs; inspection findings - With the exception of PIE auditors, DNFBPs are not subject to administrative sanctions with respect to violations of CDD requirements. - Some violations identified by the GdF during on-site inspections attract criminal sanctions set out under article 55 of the law. - Deficiency: Lack of administrative sanctions for DNFBPs makes it difficult to apply a sanction commensurate with the violation; some sanctions appear disproportionately harsh relative to the violation. - Sample of violations identified by the GdF during 2010–2014 (counts of inspections, criminal violations, administrative violations): - Notaries: Inspections 138 — Criminal 45 — Administrative 49 - Lawyers: Inspections 94 — Criminal 49 — Administrative 46 - Chartered Accountants: Inspections 202 — Criminal 190 — Administrative 124 - Statutory Auditors: Inspections 4 — Criminal 4 — Administrative 1 - Trust and Company Service Providers: Inspections 4 — Criminal 6 — Administrative 3 - Authorities did not provide details of the sanctions applied with respect to these violations. ### Impact of supervisory actions on compliance - BoI indicates its supervisory activity, including use of sanctions, usually produces desired changes in supervised entities’ behavior. - One instance where AML/CFT violations triggered the use of crisis management powers under the CLB: problems assessed as endemic, Board inhibiting AML/CFT compliance function; special administrators under judicial direction are in place seeking to rectify AML/CFT risk management deficiencies. ### Promoting understanding of AML/CFT obligations and ML/TF risks - BoI, IVASS, CONSOB, GdF, and the UIF have undertaken initiatives to sensitize reporting persons: - Issuing circulars and guidance. - Organizing and participating in seminars and workshops. - Publishing FAQs and lists of ML/TF indicators. - UIF publishes a six-month review related to STRs reported and has an on-going training program for reporting persons to enhance STR filing processes. - UIF is developing a system to provide feedback to reporting persons to enhance understanding of ML/TF risk, including higher risk offenses such as corruption and tax evasion. - BoI informs licensees of outcomes of its thematic reviews focusing on specific threats and vulnerabilities. - Feedback from reporting persons: - UIF and BoI generally seen as very proactive. - GdF engages with reporting persons but often participates in events arranged by others; this engagement was not seen as effective as supervisor-arranged events. - Notwithstanding initiatives, some reporting persons (particularly DNFBPs) lack a clear understanding of principal ML/TF risks; notaries generally being the exception. - Some FIs, including asset management companies and investment firms, may consider ML/TF risk virtually eliminated when customers come through an intermediary FI. ### Overall conclusion on Immediate Outcome 3 (IO.3) - Financial sector supervisors and the UIF generally have a good understanding of ML/TF risk associated with the FIs they oversee; BoI has undertaken a large number of on-site inspections across institutions it supervises. - Supervisory tools could be improved to provide comprehensive, timely and consistent data on the nature and quantum of inherent risk at individual institutions. - No well-defined, documented model ensures that operational risk rating generated by the RAS is effectively integrated into a comprehensive rating that accounts for inherent risk and risk mitigants for supervisory prioritization. - Weaknesses in supervisory arrangements exist for a large number of agents of EU PIs operating in Italy under EU passports; supervisory cooperation with foreign counterparts is generally inadequate and no home country supervisor has undertaken an on-site inspection of any agents operating in Italy to date. - Scope to strengthen sanction arrangements; notable concern about uncertainty over BoI’s ability to apply CLB-based sanctions to banks under ECB supervision (these banks account for approximately 70 percent of sector assets). - BoI’s inability to remove directors and managers was addressed by legislative decree 72/2015 which came into effect after the on-site visit. - GdF’s risk-based supervisory model is biased towards law enforcement-type indicators and does not sufficiently integrate indicators better aligned with ML/TF risk in Italy, especially relevant for oversight of larger and more sophisticated operators. - GdF needs to strengthen cooperation with industry associations of DNFBP sub-sectors and with the OAM regarding supervision of agents of PIs operating under EU passports. - Italy has achieved a moderate level of effectiveness for IO.3. ### Legal persons and arrangements — key findings and recommended actions (IO.5) - Key findings: - Italian companies are misused to some extent in ML schemes, mostly organized domestically, especially by Mafia-type criminal organizations, and involve simple corporate structures and straw men. - Authorities are well aware of misuse risk by organized crime groups and in tax evasion schemes, but less so for misuse in other circumstances such as corruption. - Legal persons other than companies and domestic legal arrangements appear less at risk. - Foreign legal arrangements are increasingly used in domestic ML schemes. - Accurate and up-to-date basic information on legal persons incorporated in Italy is readily accessible by competent authorities and reporting entities. - Information on beneficial ownership is generally accessible on a timely basis, but reliability varies; this has not prevented identification of ultimate beneficial owners and confiscation actions. - Notaries play a key role during creation and life cycle of most companies; shortcomings remain in the process they use for identifying beneficial owners, despite signs of progress. - Recommended actions for Italy: - With respect to notaries: - Conduct outreach to foster a greater understanding of the ML/TF risks. - Amend the CNN guidelines to: - Reflect the main typologies of misuse of companies in Italy, in particular the risk of infiltration by organized crime through the use of straw men. - Foster deeper and more accurate examination of the beneficial owner including through thorough verification of the declarations provided. - Ensure effective supervision of the notaries’ implementation of their CDD obligation and registration obligations. - Ensure that competent authorities always have timely access to beneficial ownership information. Consider making tools similar to MOLECOLA available to other authorities, and centralizing beneficial ownership information (e.g., by broadening the scope of the Business Register) to facilitate access by competent authorities and reporting entities. - In line with recommendations under IO.7, and building on recent successes, ensure that LEAs focus more on companies in the context of their investigations. - Conduct a formal assessment of the ML/TF risks of Italian legal persons in contexts other than those linked to organized crime and fiscal crimes, in particular with respect to corruption. - Consider conducting a more in-depth assessment of Italian legal persons with foreign ownership. - Apply proportionate and dissuasive sanctions to persons who fail to comply with the information requirements. - The relevant Immediate Outcome considered and assessed in this chapter is IO.5. The recommendations relevant for the assessment of effectiveness under this section are R.24 and 25. *Source: _cr1643 - 303. The AML Law requires professional bodies to “foster and verify” their members’ compliance* ### 317. Information on the creation and types of legal persons that may be established under ### Information on the creation and types of legal persons that may be established under Italian law (extract) ### Identification, assessment, and understanding of ML/TF risks and vulnerabilities of legal entities - Italy’s NRA (2014) assessed threats and vulnerabilities of most legal persons based on: review of legal framework (Civil Code), cases where corporate shares were confiscated from organized crime, and academic studies. Listed companies and cooperatives were not covered (listed companies subject to separate transparency rules; cooperatives concluded to present no vulnerabilities in terms of transparency due to specific voting rules). - NRA conclusions on transparency and vulnerabilities: - Basic information on legal persons: assessed as adequately transparent. - Beneficial ownership information: assessed as less accurate and less easily accessible, particularly for companies with foreign ownership. - Organized crime investment patterns: do not target highly regulated/controlled sectors, high entry cost sectors, or complex corporate structures; mainly use relatively simple corporate structures (most frequently in the form of the SRL) active in labor-intensive, low tech sectors (including, in decreasing order: wholesale and retail, and the repair of motor vehicles; constructions; hotels and restaurants; and other sectors). - Most frequent form of infiltration: use of straw men (not specified whether straw men appear most frequently as shareholders or in managerial function). - Motivations for misuse (Transcrime study incorporated into NRA): profit making, ML, control of territory, and “social consensus.” - Regions most affected (in decreasing order): Sicily, Campania, and Lombardia. - Legal person type most frequently confiscated from organized crime: SRL (which account for 46.7 percent of all legal persons–or shares therein–and other commercial enterprises confiscated from organized crime). - Overall risk assessments (NRA): - Risk of misuse of domestic legal persons: “relevant” (scale includes “negligible risks,” “average risk”, “relevant risk,” and “high risk”). - Level of relative vulnerability of legal persons: “rather significant” (scale includes “non significant,” “lowly significant,” “rather significant,” and “very significant”). - Identified needs: greater exploitation of the potential of the Business Register and of the CDD performed by reporting entities. - Observation: Italian companies with foreign ownership—despite low numbers—deserve further attention given relatively large turnover. - Scope limitations and shortcomings of the NRA: - Threat analysis mainly based on Infocamere data and statistics on legal persons confiscated from organized crime; choice justified by data availability and prevalence of organized-crime-related offences in Italy. - NRA did not assess risk of misuse of legal persons in contexts outside organized crime (e.g., tax crimes or corruption unrelated to mafia-type groups). This omission was characterized as a relatively major shortcoming of the 2014 NRA, partly mitigated by GdF’s operational understanding of ML linked to fiscal crimes. - NRA did not assess potential misuse of bearer shares; considered a minor shortcoming because bearer shares may only be issued in the form of saving shares (i.e., without voting powers), in limited circumstances, and are dematerialized. - Trusts and fiduciary arrangements: - Domestic fiduciary arrangements assessed as vulnerable to misuse, but net risk in practice appears low. - ML/TF risk posed by common law trusts established abroad or in Italy under another jurisdiction assessed using UIF December 2013 study of STRs related to foreign legal arrangements and GdF analysis of investigations involving foreign trusts. - UIF study finding: STRs generally reported due to difficulties identifying the beneficial owner, not primarily due to the nature of operations. - GdF finding: increase in presence of foreign trusts in Italy. - Vulnerability and risk ratings for trusts in NRA: - Vulnerability of trusts: “very significant.” - Specific risk of misuse of trusts: “high risk” (i.e., higher than the risk posed by Italian legal persons). - Practical confirmation: discussions with authorities and private sector confirmed trusts are being misused in Italy, but not to a significant extent. - Understanding by authorities and private sector: - FIU and LEAs: generally have a good understanding of risks related to legal persons and foreign trusts; less comprehensive understanding of risks linked to domestic legal arrangements due to scarcity of such arrangements. - Private sector awareness: varies; banks have better understanding than most. Notaries tend to assume main ML/TF risks arise from foreign ownership despite NRA typologies indicating infiltration by domestic organized crime of Italian legal persons; notaries may underestimate risk from straw men. - CNN (notarial) guidelines: characterize private agreements of representation not revealed to notaries as “marginal within the notary’ activity.” Assessment recommends amending the guidelines to adequately reflect high risk of infiltration by organized crime groups. - Footnote statistics at time of assessment: (i) 0.62 percent of Italian legal persons had foreign legal persons as shareholders (any percentage); (ii) 0.47 percent of Italian legal persons had trusts or other legal arrangements as shareholders (any percentage). At the time of the assessment, these figures were slightly lower. ### Mitigating measures to prevent misuse of legal persons and arrangements - Main measures for transparency of legal persons incorporated in Italy: - Public availability of information contained in the Business Register (Infocamere). - Access granted to authorities—to varying degrees and under different circumstances—to information collected by reporting entities. - Italian Business Register (Infocamere) features and procedures: - Focus: legal ownership; includes basic information on all types of companies and cooperatives incorporated in Italy. - Data included: company name, legal form, place of incorporation, names of administrators (board members and directors), shareholders of limited liability companies. - At incorporation: information entered based on a public deed prepared by a notary and processed online via digital signature. The public deed itself is available to external parties “as is.” - Automated checks upon registration: - Automated calculation of shares (to ensure they don’t exceed 100 percent). - Automated calculation of capital (to ensure it does not exceed the proposed total). - Automated validation of technical elements such as the tax ID number entered, digital signature (and therefore the identity of the applicant), and payment of mandatory fees and taxes. - Additional automated checks for new information (e.g., ensure shares are only transferred by persons already in the system). - Any anomaly from automated checks is analyzed by Business Register staff before publication is authorized. - Checks do not include verification of the identity of the persons mentioned or of the beneficial owners of a company. - Filing and timing requirements for changes in ownership/control: - SRLs and SRLSs: changes must be recorded into the Register within 30 days of the notarial act that validates them. - SPAs: changes recorded once a year (i.e., at the time of filing the annual accounts). - Transfers of shares filing requirements: - Must be filed with the Business Register by a notary or be performed by a bank or stockbroker. - For SRL and SRLS, information may be filed by notaries or chartered accountants. - Checks performed on filings by notaries: same automated checks as above. - Filings by other professionals: subject to further scrutiny (including merit checks vs. relevant regulation, verification of compliance with technical specifications by the Ministry of Economic Development, verification that chartered accountant is authorized to file on behalf of the person, and registration of the deed with the Agenzia delle Entrate), but do not include verification of identity of the owners. - Access to Infocamere information and usage statistics: - Access terms: basic information free for public entities (unless more targeted analysis of consolidated information required); set fee for private users. - Usage data (Infocamere): - Public authorities (central and local): some 50,000 users who consult the Infocamere database on average 15 million times a year. - Commercial data providers, trade associations and other SRBs: some 80 distributors who, on average, consult the database some 50 million times per year. - Private users: some 220,000 private users who consult the database some 13 million times per year. - Through the website: possible to obtain simple information (company name and address) and, for a higher fee, more complex data (annual accounts, articles of association, names of administrators and shareholders, stakes in other companies, auditors and supervisory board members, and for limited liability companies only, history of transfers of shares). - Personal Data File and Company Data File: allow retrieval of information on individuals’ positions in various legal persons and businesses, and shareholdings. Extracts available in Italian and, since October 2014, chamber of commerce certificate and company reports also available in English (without need for sworn authentication of translation). - Role and practices of notaries and other DNFBPs: - Notaries perform a public function; information they provide is deemed self-sufficient and is not verified other than through automated checks. - Other DNFBPs (e.g., accountants): may trigger additional checks focused on completeness rather than accuracy. - Information entered pertains to legal ownership, not beneficial ownership. - Authorities’ view: registration system provides adequate transparency over legal ownership; main opacity risk originates from foreign companies or legal arrangements. - Authorities satisfied with accuracy and timeliness of legal ownership information entered by notaries (and others). - Associations, foundations, and cooperatives: - Basic information maintained in the Register of legal persons which is publicly available. - Authorities have access to additional information in same instances as for companies. - Perceived risk: associations, foundations, and cooperatives present a relatively minor risk of misuse. - Bearer shares, warrants, nominee shareholders/directors: - Not considered a significant issue in Italy. - Bearer shares may be issued in limited circumstances for SPAs (i) in the form of saving shares (no voting rights), or (ii) in context of a SICAV; they must be dematerialized and deposited with a central depository; exercise of rights may only be performed through a reporting entity. - Central depository: opens an account for each intermediary to record movements of financial instruments. - Bearer warrants subject to same conditions/procedures as bearer shares. - Nominee shareholders and nominee directors are not common. - Publicity rules for company directors do not allow recourse to nominees. - Shareholder representation by third parties permitted only on basis of duly signed power of attorney; companies must maintain copy of power of attorney when non-shareholder third party exercises rights in general assembly. Same requirement applies to notaries and accountants for transfers performed by third parties. Normal CDD requirements apply. ### Timely access to adequate, accurate and current basic and beneficial ownership information - Accessibility and accuracy: - Basic information: easily accessible through online consultation of Business Register; generally considered accurate and up-to-date. - Beneficial ownership information: less accurate and slower to access, especially when related to foreign owners and/or use of front men (in Italy or abroad) to mask ultimate beneficial owners. - Specific cases where beneficial ownership is more readily available: - Shareholders who hold more than 25 percent of an SRL: information available in the Business Register. - Beneficial owners of listed companies: information available at CONSOB. - Outside those cases, access to and reliability of beneficial ownership information vary and depend mainly on information collected by reporting entities and different databases used by some LEAs. - Authorities’ practical access routes to beneficial ownership information: - UIF and LEAs may access beneficial ownership information held by reporting entities once the reporting entity holding the information has been identified. - Most frequent practical data sources: banks and notaries. - If a legal person has a business relationship with an Italian bank, the bank can be identified via the Archivio dei rapporti finanziari held by the AdE; this enables retrieval of CDD information collected by the bank and stored in the Archivio Unico Informatico. - Consultation of the Business Register can identify the notary who filed the information (though identifying the notary may be challenging in practice due to organized crime practice of consulting different notaries at different times). - Quality of information collected by reporting entities: - LEAs consider quality of information collected by banks and notaries generally adequate. - NRA (2014) finding: beneficial ownership information generally less reliable than basic information; process for identification of beneficial owners needs strengthening. - Concerns: - Use of front men in company creation is an established practice of organized crime, indicating notaries may give insufficient attention to identification of real beneficial owner. - Assessment team concluded identification of beneficial owners by notaries is not as rigorous as it should be and the reliability of information they collect is not optimal. - Concern heightened by (i) role of notaries in Italy, (ii) predominant filing of Business Register information by notaries, and (iii) risk of misuse of legal persons by organized crime groups. *Source: IMF country report excerpt on Italy (section 317–333).* ### 334. The authorities noted that progress is being made: they highlighted in particular that the ### _cr1643 - 334. The authorities noted that progress is being made: they highlighted in particular that the ### Identification of beneficial owners — progress and remaining weaknesses - Recent increase in the number of STRs filed by notaries (and others) facing obstacles in the CDD process is a sign that reporting entities and notaries in particular are devoting more attention to the identification of the beneficial owners. - The CNN’s 2014 CDD guidelines and the MoJ’s list of indicators of anomalous activities are positive steps to ensure better understanding and implementation of the AML Law’s requirements on identification of beneficial owners. - The CNN guidelines include misleading statements: they explicitly qualify instances of private agreements of representation that are not revealed to the notaries as being “marginal within the notary’ activity,” which raises a risk that insufficient attention may continue to be given to circumstances surrounding establishment of legal persons or other activities requiring identification by the notary. - Concerns remain with respect to identification of beneficial owners by banks, suggesting that the accuracy and reliability of information collected by notaries and banks accessible to the authorities are not as optimal as they should be. - Shortcomings are largely compensated by cross-checks conducted by authorities, in particular the GdF and DNA, using the MOLECOLA platform which processes information from: Business Register, law enforcement databases, tax administration database, land register, lists of designated persons under the UNSCRs, and other open sources. - The MOLECOLA platform has enabled successful identification of ultimate beneficial owners in a number of instances including complex, transnational corporate structures and has considerably reduced the time needed to conduct cross-checks, but: - MOLECOLA is not available to Carabinieri ROS, Polizia di Stato, nor to the UIF. - International cooperation provides additional information, generally adequate for most EU countries, but is considerably more challenging when counterparties do not cooperate or provide information in a non-Roman alphabet; these challenges have caused delays though have not prevented eventual identification and seizure in some cases. - Access to beneficial ownership information of foreign legal arrangements may be obtained from reporting entities (especially banks through consultation of the ADC) but is generally more reliant on foreign countries’ active cooperation; foreign trusts are often deliberately established in jurisdictions that do not collaborate, making identification particularly arduous. ### Quantitative indicators on STRs and cross-check activity - The percentage of STRs filed for being unable to complete the identification of the beneficial owner rose from 1 percent of the total number of STRs filed in 2012 to 14 percent of those filed in 2014. - The number of violations of CDD requirements by reporting entities and customers (article 5 para. 1, 2, and 3 of the AML Law) detected by the GdF are 242 in 2012, 315 in 2013 and 246 in 2014. - The number of persons referred to the judicial authorities on these grounds are 696 in 2012, 663 in 2013 and 382 in 2014. ### Sanctions, enforcement and practical outcomes - Main practical consequence of failure to comply with information requirements: notary cannot conclude the notarial deed serving as basis for including new information or amending existing information in the Business Register; CNN representatives note that when beneficial owner information cannot be obtained (e.g., located abroad) they conclude the notarial act on basis of a customer declaration which they do not verify. - Sanctions available but not always implemented in a dissuasive and proportionate manner: - Customer who fails to provide identifying information or provides false information: punishable with imprisonment between 6 to 12 months, and a fine between €500 and €5,000. - Failure to comply with CDD requirements: punishable with a fine between €2,600 and €13,000. - GdF has initiated sanction proceedings on these grounds, but breakdowns (e.g., per category of reporting entity) are not available; unclear extent to which notaries and accountants have been sanctioned. - Sanctions for legal persons exist but appear rarely applied; no statistics provided on number of legal persons or managers sanctioned. ### International cooperation — practices, volumes, and challenges - No comprehensive statistics provided on requests sent by Italy to obtain information on foreign owners of Italian legal persons or on foreign legal persons/arrangements established abroad; several case examples demonstrate proactive cooperation by UIF, LEAs, and prosecutors resulting in exchange of beneficial ownership information and repatriation of assets in some instances. - Requests sent to Italy: basic information on Italian legal persons is accessible online; additional beneficial ownership information may be requested between competent authorities or through international cooperation channels; no statistics provided on incoming requests. - Feedback from other countries highlights no particular challenges or concerns with exchange of information concerning Italian legal persons, though timeliness challenges likely exist. - Italy has a sound legal framework and network of bilateral and multilateral agreements to accelerate cooperation, and authorities undertake a range of activities on behalf of other countries for AML/CFT purposes. - Lack of criminalization (until December 31, 2014) of self-laundering may have undermined scope of assistance; a new self-laundering offense came into force on January 1, 2015, but its practical impact could not be tested at time of assessment. ### Overall conclusions and recommended improvements (IO.5 and International Cooperation) - Overall conclusion for IO.5: - Risk of Italian legal persons, especially companies, being misused for ML purposes is high, notably due to infiltration by organized crime. - Foreign legal arrangements play an increasing role in ML schemes though presence in Italy is more limited. - Authorities’ understanding of misuse risk is comprehensive regarding organized crime and tax evasion but less developed for misuse unrelated to organized crime (e.g., corruption). - Basic information on legal persons incorporated in Italy is readily accessible, accurate, and up-to-date; beneficial ownership information is more difficult to acquire and less reliable until verified by LEAs. - Italian authorities (particularly GdF and DNA) have been successful in many instances identifying beneficial owners through consultation of reporting entities’ information, databases, and international cooperation; timeliness of access varied from a few minutes to a few days and is generally adequate. - Italy’s mechanism could be strengthened: reliability of information from reporting entities varies and requires cross-checks in all instances; notaries’ historical lack of attention to identifying real beneficial owners is a concern but recent progress should be encouraged; greater LEA focus on companies would be useful; effective sanctions do not appear to be applied consistently; greater attention to legal persons with foreign ownership in light of turnover could be useful; stronger enforcement of registration requirements would be a useful deterrent. - Italy has achieved a substantial level of effectiveness for IO.5. - Key findings for International Cooperation: - Italy has a sound legal framework for international cooperation and undertakes a range of activities on behalf of other countries for AML/CFT purposes. - Lack of a case management system and failure to ratify certain EU mutual legal assistance and mutual recognition instruments may hamper effectiveness. - Supervisory authorities (BoI, IVASS, and CONSOB) and the UIF cooperate frequently and effectively with counterparts but do not provide spontaneous information as frequently as commensurate with risk. - Recommended actions for Italy (International Cooperation): - Ratify and transpose additional instruments such as the May 29, 2000 agreement relative to the judicial mutual legal assistance in penal case between the member states of the EU, and the Council Framework Decision of June 13, 2002, related to the common teams of investigation. - Set up, within the MoJ, a case management system (relative to the collection and dissemination of data related to MLA and extraditions request) and improve collection of statistics on international cooperation. - Increase spontaneous exchanges of information with foreign supervisory authorities for AML/CFT purposes commensurate to the risks. - Ensure timely response to requests from other countries to identify and exchange information on the beneficial owners of legal persons and arrangements. - Share assets confiscated in Italy with foreign countries that provided assistance especially in the case where predicate offenses have been committed abroad. ### Immediate Outcome 2 — providing and seeking MLA and extradition - International cooperation is particularly important given high transnational organized crime risk; Italian authorities provided many cases (GdF, ROS, DIA) with active or passive MLA successfully pursued, including large-scale asset seizures and simultaneous arrests in multiple countries. - Selected case examples: - “lost funds” operation (2010): 1,500 clients identified who invested over €350 million; five MLA requests to Luxembourg, Austria, Switzerland, the United Kingdom, and The Bahamas; seizure of assets up to €170 million; arrest warrants against seven associates. - “Telecom/Fastweb case” (2006–2010): ROS custody order against 33 suspects; investigations extended to Switzerland, the United Kingdom, Cyprus, Romania and Austria; measures for equivalent of assets worth €38 million; 18 people sentenced in October 2013 with incarceration from 3 to 15 years and fines totaling €130,500. - Volumes and performance metrics: - DNA processed more than 60 mutual legal assistance requests related to ML offense or preventive measures from 2013 to 2015: 24 in 2013, 29 in 2014 and 3 in January and February of 2015. Main counterparts: Switzerland (16), Netherlands (10), Germany (6) and Spain (5). MLA was active in 44 cases and passive in 19. - GdF processed 957 requests from 2013 to 2015 (including Europol, Interpol, and mutual legal assistance requests): 361 active and 596 passive. - Limitations: - No additional statistics regarding MLA outside organized crime and extradition were provided, notably due to lack of a case management system. - Cooperation in self-laundering cases was constrained prior to January 1, 2015; new self-laundering offense came into force January 1, 2015 but had not been implemented practically at time of assessment. *Source: _cr1643 - 334. The authorities noted that progress is being made: they highlighted in particular that the* ### 352. Italy has not yet transposed into its domestic framework some relevant international ### _cr1643 - 352. Italy has not yet transposed into its domestic framework some relevant international ### International cooperation and transposition of EU instruments - Italy has not transposed into its domestic framework the following EU instruments: - Council Framework Decision of June 13, 2002 (establishment of joint investigation teams). - Council Framework Decision no. 2003/577/JHA (execution in the European Union of orders freezing property or evidence). - Council Framework Decision no. 2005/212/JHA (confiscation of the instruments and proceeds of crime). - Council Framework Decision no. 2006/783/JHA (application of the principle of mutual recognition to confiscation orders). - Italy has not ratified the agreement on judicial mutual legal assistance in penal cases between EU member states of May 29, 2000. - In practice, absence of formal transposition or ratification has not prevented effective international cooperation to date; Italy conducts joint investigations on a case-by-case basis (notably with Albania and Switzerland). - The authorities note that joining the above-mentioned agreements may expedite future cooperation and accelerate investigations by increasing capacities of law enforcement agencies and judicial authorities. - A legislative proposal has been submitted to Parliament to allow creation of joint investigative teams and bilateral/multilateral arrangements in line with the European Decision of June 13, 2002. ### Law enforcement agencies (LEAs) and operational cooperation - LEAs regularly exchange information with foreign counterparts via police channels including Europol, Interpol, and bilateral agreements. - The International Police Co-operation Service within the Criminal Police Central Directorate in the MoI: - Ensures information exchanges through Interpol, Europol and SIRENE channels. - Acts as Assets Recovery Office (ARO) in Italy. - At police level, activities that do not require formal judicial authorization are conducted on the basis of bilateral agreements. - Agreements with Switzerland and Albania have been signed to create joint investigation teams to fight organized crime, corruption and terrorism. ### Financial Intelligence Unit (UIF) cooperation and activity - UIF cooperation features: - Effective in seeking and providing information spontaneously and upon request to/from other FIUs. - Can access and provide administrative, law enforcement and financial information based on requests from foreign FIUs or non-counterparts. - Cooperation is not conditioned on indication of the predicate crime by the foreign counterpart. - Responses are provided on a timely basis, using secured channels, and in line with Egmont principles. - UIF operational enhancements since 2013: - Increased use of FIU.NET for exchanges with European counterparts. - Use of “known/unknown” automatic exchange of information. - Use of bilateral and multilateral data-matching tools to search for positive hits between massive datasets. - Exchanges also occur with non-counterparts. - Assessment note: The number of requests made by the UIF should be higher to commensurate the ML/TF risks and the large number of STRs involving cross-border elements. ### Statistics and illustrative case - Requests to foreign FIUs (annual breakdown) - To comply with requests of the Judicial Authorities by year (2009–2014): 60, 89, 128, 137, 124, 146 - For internal analysis purposes by year (2009–2014): 19, 37, 44, 80, 56, 242 - Known/unknown (2013, 2014): 270, 272 - Total requests by year (2009–2014): 79, 126, 172, 217, 450, 660 - Requests received and subjects requested: - 2013: 793 received and 3,538 requested. - 2014: 939 received and 3,765 requested. - Box 9 (case example — fraud by a disloyal employee): - A disloyal employee fraudulently diverted approximately €1 million from an internal bank account by issuing 20 banker’s checks for a total amount of about €1 million (16 credited abroad totaling about €800,000; remaining 4 for about €200,000 credited to another Italian bank account). - Case originated from a spontaneous communication by a foreign FIU; UIF deployed financial analysis, received STRs, reconstructed funds’ path, and facilitated judicial investigation. - Illustrates importance and effectiveness of timely international FIU cooperation. ### Supervisory cooperation and fit-and-proper / on-site activity - Supervisory cooperation arrangements: - IVASS and the Bank of Italy (BoI) have mechanisms for international cooperation for FIs; for DNFBPs, only CONSOB has similar mechanism (GdF has not). - Cooperation with EU supervisors of FIs does not require an MOU; cooperation with non-EU supervisors relies on bilateral MOUs and requires: - No impediment to sharing information between supervisors and between parent institutions and foreign subsidiaries. - Equivalent confidentiality requirements. - Ability of the Italian supervisor to undertake inspections of Italian branches and subsidiaries in the host country. - Non-EU country to have an adequate AML/CFT framework. - Examples of supervisory cooperation: - BoI undertook on-site inspections in Hong Kong and Singapore of subsidiaries of Italian FIs under cooperation arrangements. - IVASS commenced a joint inspection with the FCA of an Italian branch of a U.K. insurance company. - BoI and IVASS provide ongoing information to other supervisors upon request. - Response times: BoI usually responds to requests within one to three weeks; IVASS usually responds within one month. - In 2014, BoI alerted U.K. authorities about activities of agents of a U.K.-based entity concerning ML/TF risks. - Beneficial ownership and corporate information: - Basic information on legal persons is readily accessible online. - Authorities have received requests for beneficial ownership information of legal persons incorporated in Italy and respond using their domestic powers. - No requests appear to have been made for legal arrangements; authorities did not establish average response timeframes but noted timeliness varies and feedback did not suggest particular concerns. ### Risk assessment framework and NRA history - NRA and methodology: - Italy issued its first NRA in July 2014, following a seven month exercise led by the Financial Security Committee (FSC). - Working Group timeline: started March 2013; draft methodology finalized and approved by the FSC in December 2013; risk assessment initiated January 2014. - The NRA methodology requires a periodic update every three years and earlier updates if emerging threats arise. - In December 2014 the FSC asked experts to re-assess the level of TF threat; results of this review are expected to be finalized and shared with the private sector. - An abstract of the NRA was published on the MEF website on December 4, 2014 (sensitive information excluded). - Findings from the NRA: - The NRA identifies banking and insurance FIs, and DNFBPs (e.g., electronic gaming, gold buyers, real estate agents, gambling, notaries, lawyers) as presenting high levels of risk. - The NRA analyzes ML/TF risks linked to reporting entities under BoI and other supervisors, UIF indicators/typologies, judiciary and LEA trends, and academic/regional/international reports. - Risk-based approach (RBA) implementation: - Authorities have applied RBA to varying degrees; a nationally coordinated RBA based on the NRA is not yet clearly implemented although efforts within the FSC are ongoing. - BoI advises that resource allocation is based on RBA; BoI, IVASS, CONSOB and GdF use varying RBA approaches but improvements needed. - Supervisors lack mechanisms for periodic information from reporting persons on their inherent risk levels; guidance on report format/content is lacking. - No exemptions from the AML/CFT framework have been applied with respect to financial activities defined in the FATF standards; Italy extended AML requirements to additional activities (e.g., clearing and settlement services, security transport, gaming enterprises, auditing firms, antiques traders, auction houses, art galleries). - AML regime measures: - Cash use prohibition for private transactions above the threshold of €1,000 (article 49 (1) of the AML Law; Law 197/1991). - BoI CDD regulation calls for enhanced due diligence for products/technologies favoring anonymity and high denomination banknotes; communications on virtual currency risks issued. - Article 20 of the AML Law requires reporting entities to apply an RBA when conducting CDD. ### Conclusions and recommendations (from the source) - Overall assessment: - Italy demonstrates many characteristics of an effective system and provides constructive and timely assistance when requested by other countries. - Competent authorities provide information, evidence, financial intelligence, supervisory information related to ML/TF or associated predicate offenses, and assist with requests to locate and extradite criminals and to identify, freeze, seize and confiscate assets. - Italy regularly seeks and generally successfully obtains international cooperation to pursue criminals and assets. - Areas for improvement and recommendations: - Set up a case management system and improve statistics on international cooperation. - Encourage implementation/transposition of the relevant EU instruments to avoid potential delays in future cooperation. - Increase exchange with foreign authorities of financial intelligence and supervisory information to further enhance the system. - Effectiveness rating: - Italy has achieved a substantial level of effectiveness for IO.2. *Source: IMF assessment text in PDF content unit _cr1643 - 352. Italy has not yet transposed into its domestic framework some relevant international* ### 1.12 and 1.8. Criterion 1.6 is not applicable. Italy is largely compliant (LC) with R.1. ### _cr1643 - 1.12 and 1.8. Criterion 1.6 is not applicable. Italy is largely compliant (LC) with R.1. ### Recommendation 2 — National Cooperation and Coordination - Italy’s third mutual evaluation report (MER) rating: Largely compliant (LC) with Recommendation 2 (pages 95–96). - Main historical deficiency: absence of a national coordination mechanism for AML matters; subsequent amendment to the AML Law improved national cooperation and coordination. - Criterion 2.1 — (Largely met) - Italy has AML/CFT policies informed by ML/TF risks but has not formulated a national strategy and prioritized action plan informed by the recently completed NRA. - Supervisors will integrate NRA results into their RBA, where appropriate. - Amendments of the AML Law planned for 2015 will benefit from NRA results. - Criterion 2.2 — (Met) - FSC designated as key mechanism responsible for national AML/CFT policies (article 5 of the AML Law (amendment of November 4, 2009), Ministerial Decree (MD) no. 203 of October 20, 2010). - Criterion 2.3 — (Met) - FSC chaired by the Director General of the MEF; includes representatives of several key agencies. - FSC required to present to the MEF, by the end of May each year, a report assessing AML/CFT actions and proposals; UIF, financial sector supervisory authorities, competent authorities, GdF, DIA, and professional associations must provide, by March 30 of each year, statistics and information on their activities over the previous calendar year. - Article 9 of the AML Law establishes detailed rules for exchange of information and collaboration; MOUs must be signed between agencies; UIF information protected by professional secrecy except toward judicial authorities (article 9.1); derogation of professional secrecy for exchange between supervisory authorities and the UIF (article 9.2). UIF signed MOUs with all supervisory authorities. - Criterion 2.4 — (Largely met) - FSC responsible for countering activities of countries threatening international peace and security and fund-freezing measures by the UN and EU (article 3.1 of LD 109/2007), allowing coordination in proliferation financing (PF) matters. - Representatives from MISE and Customs Agency join FSC meetings in PF events (article 3.3 of LD 109/2007); other agencies, including intelligence services, can be invited. - Law does not explicitly extend Committee’s powers to coordinate and cooperate in PF-related policy and activities. - Weighting and Conclusion: Italy meets criteria 2.2–2.3, largely meets criteria 2.1 and 2.4. Italy is largely compliant with R.2. ### Recommendation 3 — Money Laundering Offense - Historical MER (2005): compliant with former R.1 and partially compliant with R.2 (pages 28–30). Technical deficiencies: (i) lack of penal, administrative, and civil liability of legal persons; (ii) penalties not proportionate and dissuasive. Deficiency (i) addressed in LD n.231 of November 21, 2007; deficiency (ii) remains. Standard includes new requirement of self-laundering criminalization. - Criterion 3.1 — (Met) - Italy ratified the 1988 Vienna Convention through Law No. 328 of November 5, 1990, and the 2000 Palermo convention through Law No. 146 of March 16, 2006. - ML criminalized in article 648 bis of the Criminal Code (CC); complemented by articles 648 (receiving) and 648 ter (use of money, goods, or assets of illicit origin). - Criterion 3.2 — (Met) - Article 648 bis considers any “malicious” crime (intentional) as predicate offense; unintentional crimes and contraventions excluded. - All categories of crimes listed in the FATF Glossary considered malicious crimes in Italian law. All tax crimes in LD No. 74 of March 10, 2000 constitute predicate offenses (Court of Cassation, sentences N. 45643/2009 and N. 6061/2012). - Criterion 3.3 — (Met) - Italy applies an all-crimes approach. - Criterion 3.4 — (Met) - Articles 648 bis and 648 ter refer to “money, assets or other property” of illicit origin regardless of value; article 648 refers to “money or property derived from any crime.” Court of Cassation jurisprudence interprets “other property” broadly as “indirect assets” (Sentence No. 6061/2012). - Criterion 3.5 — (Met) - Article 648 bis does not require prior conviction for the predicate offense or identification/charging of the predicate perpetrator. Courts may rely on evidence from investigations (Court of Cassation, Sentence No. 28715/2013). ML offense can be laid even if author of predicate offense is unknown (Court of Cassation, Sentence No. 8384/1990 and N. 36940/2008). - Criterion 3.6 — (Met) - Court of Cassation jurisprudence clarified ML offense applicable when predicate offense committed abroad and also an offense under Italian law (Sentence No. 42120/2012). - Criterion 3.7 — (Met) - Article 648 ter1 of the CC, in force January 1, 2015, criminalizes self-laundering where “ne bis in idem” does not apply. - First paragraph punishes persons who, having committed or participated in committing an intentional crime, “employs, replaces, or transfers within economic, financial, business, or speculative activities, the money, assets, property or others benefits resulting from the commission of this crimes(s), so as to concretely hinder the identification of their criminal origin” (para 1). - Fourth paragraph states “in cases other than [those described above], conducts are not punishable whereby the money, assets/property, or other benefits are intended for merely personal use or enjoyment”. - Article is recent and had not been applied at the time of assessment; precise scope open to interpretation. Authorities’ understanding: first paragraph broad; fourth paragraph residual and applies limitedly where “ne bis in idem” applies. - Authorities’ explanations: “employs” covers re-introduction into legitimate economic circuit; “concretely” refers to objective facts; “within economic, financial, business or speculative activities” introduces “re-introduction”; fourth paragraph limited to post-factum activities and “mere personal use” (money and movables) or “personal enjoyment” (immovables). - Entry into force constitutes important progress; read in light of authorities’ explanations, in line with the standard though wording may pose interpretation challenges for courts. - Criterion 3.8 — (Met) - Article 192 of Criminal Procedure Code (CPC) admits circumstantial evidence; jurisprudence clarifies knowledge element can be inferred from factual circumstances (Court of Cassation, Sentence No. 9090/1995). - Criterion 3.9 — (Partially met) - Since December 4, 2014, ML punishable by imprisonment from 4 to 12 years and a fine from €5,000 to €25,000 to natural persons (article 648 bis of the CC). - Ancillary penalties: prohibition of public functions, or of other profession, prohibition for public procurements (article 19 CC). - For self-laundering, imprisonment ranges from two to eight years, and the fine is the same as for ML (article 648 ter.1 of the CC); ancillary penalties apply. - Penalties reduced for self-laundering related to predicate offenses punished with imprisonment of less than five years: imprisonment from one to four years and a fine of €2,500 to €12,500. - Prior to new law, ML punishable by imprisonment from 4 to 12 years and a fine from €1,032 to €15,493. - Assessment: amount of fines, though among highest in Italy, are not proportionate and dissuasive. - Criterion 3.10 — (Met) - LD No. 231/2007 of November 21, 2007 (in force January 1, 2008) introduces sanctions for legal persons involved in ML, receiving, and use of money/funds/assets of illegal origin (new article 25 octies of LD No. 231/2001). - Sanctions include fines from €25,800 to €1,549,000 and prohibition to conduct certain activities for a period no longer than two years. - Article 5 of the AML Law lays down rules on administrative liability of legal persons for crimes committed in their interest or for their benefit. - Criminal liability of natural persons not affected by liability of legal persons; both actionable. - Criterion 3.11 — (Met) - Instigation, attempt, criminal association, aiding and abetting criminalized in CC (articles 414, 416, 416 bis, 56, and 378–379) and applicable to ML. - Weighting and Conclusion: Italy meets all criteria except 3.9 (partially met) and criterion 3.3 (non-applicable earlier note). Italy is largely compliant with R.3. ### Recommendation 4 — Confiscation and Provisional Measures - 2005 MER rating: largely compliant with former R.3. Technical deficiencies identified: a) voiding transactions should be extended to AML cases; b) definition of assets should be broadened; c) lack of system of confiscation of assets of corresponding value; d) confiscation of assets held by third parties not possible. Italy subsequently addressed b), c), and d) through AML Law, and a) through LD N. 159/2011 (Anti-Mafia Code). - Criterion 4.1 — (Met) - Article 648 quater of the CC provides for confiscation of assets that are product or profit of ML offenses (articles 648 bis and ter). - Confiscation of equivalent sums of money, assets or other property which the offender has available, including through intermediaries, for value equivalent to product, price or profit of offense. - Instrumentalities may be confiscated per article 240 of the CC. - Confiscation “for disproportion” provided (article 12 sexies of Law Decree N. 306/92 converted into Law N.356/1992): when offender cannot justify origin and assets held by third person appear to be his or available to him disproportionately to income. - Article 270 bis of the CC imposes mandatory confiscation for TF-related items that served or were intended to be used. - Preventive confiscation (confiscation not based upon conviction) provided by Anti-Mafia Code (article 24); preventive seizure may be implemented before communicated to concerned party (article 22). - Criterion 4.2 — (Met) - Article 648 quater gives prosecutor powers to take investigative measures to trace assets to be confiscated. - Article 321(2) CC provides for preventive seizure ordered by Court at prosecutor request; seizure of equivalent value may apply. - Judge ordering preventive confiscation must declare nullity of transfer if assets fictitiously assigned to third parties (article 26 Anti-Mafia Code). - Article 19 of Anti-Mafia Code provides “assets investigation” to determine overall financial situation for preventive measures, applicable even outside criminal process. - Criterion 4.3 — (Met) - Bona fide third parties entitled to restitution of seized property (article 263 CPC) and may challenge seizure order through reconsideration and appeal to Court of Cassation (articles 322, 322 bis, 324, 325 CPC). Anti-Mafia Code provides similar measures. - Criterion 4.4 — (Met) - Confiscated funds and assets managed by: - ANBSC (Agenzia Nazionale per l’Amministrazione e la Destinazione dei Beni Sequestrati e Confiscati alla Criminalità Organizzata) — central authority for administration, management, custody of assets other than cash seized/confiscated in mafia and organized crime cases, confiscation for disproportion, and preventive measures (Title III Anti-Mafia Code). - Fondo unico Giustizia (FUG) — administration of seized and confiscated funds. - Agenzia del Demanio — residual authority for confiscated real estate not related to organized-crime cases. - In mafia/organized crime cases, during seizure judicial administrators assisted by ANBSC, which replaces them for direct management once confiscation decision issued (article 35 Anti-Mafia Code). In other cases, article 259 CPC applies for custody of seized objects. - Weighting and Conclusion: Italy meets all criteria; strong and comprehensive legal framework enabling provisional measures and confiscation. Italy is compliant with R.4. ### Recommendation 5 — Terrorist Financing Offense - 2005 MER rating: largely compliant with former SR.II. Deficiencies: lack of definition of “financing associations” covering collection/transfer/concealment of assets, and did not extend to financing of individual terrorists. Italy addressed these via Decree-Law n.144 of July 27, 2005 (converted Law No. 144 31.7.2005, introducing article 270 sexies) and LD n.109/2007 of June 22, 2007. - Criterion 5.1 — (Met) - Italy ratified the ICSFT through Law No.7 of January 14, 2003. - Court of Cassation jurisprudence on article 270 sexies references binding international instruments such as SFT Convention (Sentence No. 1072/2006). - LD N. 109/2007 article 1 para. 1(a) defines “terrorist financing” broadly. - Criterion 5.2 — (Met) - Article 270 bis CC punishes financing associations whose purpose is acts of violence for terrorism or subversion; LD N.109/2007 broadened TF definition to include any financing activity for purpose of committing or favoring terrorist acts. - Criterion 5.3 — (Met) - Article 270 bis includes funds of both legitimate and illegitimate sources; origin of funds irrelevant for TF offense application. - Criterion 5.4 — (Met) - For TF offense, not required that funds are used for an act or allocated to a specific act; offense refers to “alleged risk” and anticipates punishability at a “prodromal time.” Court of Cassation affirmed punishability without necessity of material execution of terrorist act (sentence n° 24994/2006). - Criterion 5.5 — (Met) - Intent and knowledge may be inferred from factual circumstances (see Criterion 3.8). - Criterion 5.6 — (Met) - TF punishable with imprisonment from 7 to 15 years. - Criterion 5.7 — (Met) - Legal persons liable under article 25 quater of LD N.231/2001. Administrative sanctions range from fines (minimum of €51,600 (i.e., 200 “units of fine”) up to a maximum of €1,549,000) to prohibition to exercise activity and/or removal of licenses or authorizations; “definitive interdiction” can be applied if legal person created solely for TF. Criminal liability of natural persons is not affected; both actionable and mandatory to prosecute both. - Criterion 5.8 — (Met) - TF complicity covered by articles 110, 378, and 379 CC. Article 270 bis provides penalties for promoter, founder, manager, organizer, and financer of association; offense assessed as committed once TF conduct begins; attempts punished as committed crime. - Criterion 5.9 — (Met) - TF is a predicate offense for ML. - Criterion 5.10 — (Met) - Article 6 of the CC defines territoriality: offense deemed committed in Italy if act took place wholly or partly in Italy or result occurred there. - Weighting and Conclusion: Italy meets all criteria; criminalized TF comprehensively and addressed prior deficiencies. Italy is compliant with R.5. ### Recommendation 6 — Targeted Financial Sanctions Related to Terrorism and Terrorist Financing - Third MER rating: largely compliant with former SR.III due to limitations in legal regime on asset types that could be frozen and lack of protections for bona fide third parties. - Frameworks: - UNSCR 1267/1989 and 1988 implementation: EU regulations 881/2002 and 753/2011; Italy adopted LD 109/2007 and MD203/2010. - UNSCR 1373 implementation: Council Common Position (CP) 2001/931/CFSP and EC Regulation 2580/2001; Italy adopted LD 109/2007 and MD 203/2010. - Identifying and designating - Criterion 6.1 — (Met) - FSC competent authority for proposing designations under UNSCR 1267/1989 and 1988 and EU; FSC nominated 80 individuals and 16 entities to the 1267/1989 Al-Qaeda section, of which 27 individuals and 16 entities were delisted. - FSC established mechanism to propose targets using information from law enforcement, foreign states, international bodies; article 6(2)c MD 203/2010 requires information consistent with a “reasonableness standard.” - MD 203/2010 sets out sources, types, and form of information to be sent through MFA to UN Sanctions Committee; Decree silent on whether government should make designating status known to other UN member states. - Article 6 of MD 203/2010 lists types of information to collect for designations and requires sharing designation proposals with similar bodies in other countries and transmitting motivated proposals via MFA to UN/EU. - Criterion 6.2 — (Met) - For UNSCR 1373, EU Council is competent authority for designations per Regulation 2580/2001 and CP 931/2001/CFSP; domestically FSC proposes submissions to EU. - FSC may receive requests from third countries (article 3 (9) of LD 109/2007) though silent on promptness for review; Italy has proposed 16 individuals and 1 entity to the CP 2001/931 CFSP list. - EU CP 931 WP applies a “reasonable basis” evidentiary standard; decision not conditional on criminal proceedings. - Criterion 6.3 — (Largely met) - FSC empowered to collect/solicit information to identify persons/entities for designation (articles 3(5) LD 109/2007; 2 (8–10), 3(8), 5 MD 203/2010). - Article 6(2)c MD 203/2010 requires information consistent with a ‘reasonableness standard’ (not further defined); authorities explain it means decision to propose listing supported by underlying information per Article 6(2). - EC Regulation 1286/2009 preamble para.5: designations take place without prior notice to person/entity. Court of Justice of EU makes exception to notice in asset freezing where notice could compromise freezing. - No Italian law provision stipulating ex parte actions; authorities infer from article 8(2) MD n. 203/2010 that notification procedure occurs exclusively after listing. - Freezing - Criterion 6.4 — (Met) - EU implementation of TFS pursuant to UNSCRs 1267/1989 and 1988 does not occur “without delay” due to consultations and translation needs; transposition times in 2013 ranged from 7 to 29 days for resolution 1989 designations, and 7 days to 3.5 months for resolution 1988 designations. - Domestically, MEF and MFA can jointly issue decree imposing freezing order pursuant to article 4 of LD 109/2007 in interim period between UN Security Council action and EU implementing action. - For resolution 1373, TFS implemented without delay via Council Regulation 2580/2001. - FSC may request public prosecutor to freeze accounts under articles 4 and 16 of Anti-Mafia Code; Court must order freezing measures within five days of request or immediately in case of particular urgency (Article 22). - Criterion 6.5 — (Largely met) - (a) EU regulations transposing UNSC decisions are directly applicable upon publication in EU Official Journal; FATF ‘without delay’ standard indicates this should be hours, but transposition delays mean freezing may not occur without delay in practice. For UNSCR 1373, Regulation 2580/2001 applies immediately and without notice. - (b) For UNSCRs 1267/1989 and 1988, freezing extends to all funds/other assets that belong to, are owned, held or controlled by designated person/entity; obligations extend to funds/assets “controlled by” designated entity, covering persons acting on their behalf (EU Council Regulation 881/2002 article 2 (2)). Italy supplemented EU framework via article 1(c) of LD 109/2007 to affect assets “owned also through a third natural or legal persons” and tested in 1267/1989 program. - (c) Under EU framework (Regs. 881/2002 article 2(2), 1286/2009 article 1(2), 753/2011 article 4, 754/2011 article 1), EU nationals and persons within the EU prohibited from making funds/assets available to designated persons/entities. - (d) UIF shall disseminate lists of designated subjects to FIs and DNFBPs via professional associations (articles 10(4) LD 109/2007; 8 and 10(5) MD 203/2010). UIF has issued guidance in 2001 and 2002. Per article 8(3) MD 203/2010, UIF may pre-notify FIs for all designations. EU regulations published in Official Journal; EU maintains consolidated list and RSS feed. - (e) Natural and legal persons (including FIs/DNFBPs) required to provide immediately any information about accounts and amounts frozen under both EU and domestic legislation (articles ... [text truncated in source]). - Assessment summary for R.6: Several elements fully met; key areas “largely met” relate to timeliness of freezing actions for UNSCR 1267/1989 and 1988 due to EU transposition delays and the undefined scope of a domestic “reasonableness standard.” Italy has mechanisms to propose designations, to freeze assets via EU and domestic instruments, and to disseminate lists to FIs/DNFBPs. *Source: _cr1643 - 1.12 and 1.8. Criterion 1.6 is not applicable. Italy is largely compliant (LC) with R.1.* ### 5.1 of EU Regulation 881/2002, 4 of EU Regulation 2580/2001, 8 of EU Regulation 753/2011, and 7 ### 5.1 of EU Regulation 881/2002, 4 of EU Regulation 2580/2001, 8 of EU Regulation 753/2011, and 7 of LD 109/2007 ### Freezing, de‑listing, unfreezing and access to frozen funds (R.6) - Legal protections: - Articles 6 of EC Regulation 881/2002, 7 of EC Regulation 753/2001, 4 of Regulation 2580/2001, and 5 (8) of LD 109/2007 protect rights of bona fide third parties acting in good faith when undertaking freezing actions. - De‑listing and institutional responsibilities: - Articles 10 (1–2) of MD 203/2010 and 3(12) of LD 109/2007 permit the FSC to consider proposals for delisting individuals and/or entities, and to propose to the relevant UN and EU body delisting. - For 1373 designations, amendments to Regulation 2580/2001 are immediately effective in all EU Member States. - Per articles 3 (11) of LD 109 and 11 of MD 203/2010, the FSC is responsible for considering unfreezing funds of individuals and entities from the designation lists. - Legal remedies and review mechanisms: - At EU level a listed individual/entity can write to the Council to have the designation reviewed or challenge relevant Council/Commission Implementing Regulations in Court per TFEU article 263 (4); article 275 allows challenges of CFSP Decisions. - When freezing is decided through LD 109/2007, article 14 applies (petition to the Administrative Tribunal); anti‑mafia freezing triggers judicial remedies. - For UNSCRs 1267/1989 and 1988, designated persons/entities are informed about listing, reasons and legal consequences and have due process rights; EU Commission or Council procedures and UN Ombudsperson/Focal Point mechanisms apply. EU Council Regulation 881/2001 article 7a and EU Council Regulation 753/2011 article 11 enable parallel procedures. - Per article 9 of MD 203 of October 20, 2013, the FSC periodically reviews listings in accordance with subjects in international lists. Per article 4 of LD 109/June 22, 2007, the FSC informs listed entities through the GdF and per article 8(g) of MD 203/2010, GdF would inform listed individuals/entities of remedies including the Focal point mechanism. - Unfreezing and inadvertent listings: - EU Regulations 881/2002 and 2580/2001 require unfrozen funds/assets upon verification that the person/entity is not designated. - Italy does not have publicly known procedures to unfreeze funds of persons inadvertently affected; authorities consider it not urgent given the very few occurrences. - Dissemination to obliged entities: - Articles 10(4) of LD 109/2007 and 8 and 10(5) of MD 203/2010 require the UIF to disseminate lists of designated subjects to FIs and DNFBPs through their professional associations. - Authorizing access to frozen funds: - Mechanisms exist at EU level to authorize access for basic expenses, payment of certain types of expenses, or extraordinary expenses per articles 2a of EU Regulation 881/2002, EU Regulation 753/2011, and 5–6 of EU Regulation 2580/2001. ### Weighting and conclusion (R.6) - Italy meets all R.6 criteria except 6.3 and 6.5 which are largely met. - Authorities and mechanisms exist to propose designations, process basic expense requests, and unfreeze assets; national measures supplement EU framework (e.g., freeze assets of EU internals, assets owned/controlled by listed persons). - Deficiency: no system for active notification to FIs and DNFBPs of newly listed persons. - Overall: Italy is largely compliant with R.6. ### Targeted financial sanctions related to proliferation (R.7) - Criterion 7.1—(Met): - As an EU member, Italy relies on the EU framework, supplemented domestically by LD 109/2007 and MD 203/2010. - Criterion 7.2—(Partially met): - R.7 expects implementation “ideally, within a matter of hours.” - EU regulations require freezing as soon as the regulation is approved and published in the Official Journal of the European Union (OJEU). - Delays in transposing UN designations into EU law can prevent freezing without delay for entities not already designated by the EU. - Article 4 of LD 109/2007 allows adoption of a freezing decree by Ministers at FSC request; authorities state this can be implemented within a matter of hours in practice (MD 203/2010 article 3 permits FSC decisions without meeting), but legislation does not specifically require action “without delay.” - Freezing obligation extends to the full range of funds or other assets required by R.7. - Articles 6(4) of EU Regulation 329/2007 and 23 (3) of EU Regulation 267/2012 prohibit making funds/assets available to designated persons/entities. - Lists are published in OJEU; EU maintains a consolidated list; Italian entities subscribing to EU’s SS feed receive updates. - Article 7 of LD 109/2007 requires obliged entities to report to UIF and GdF‑Special Currency Unit (NSPV) when any freezing action is taken. - Articles 42 of EC Regulation 267/2012 and 11 of EC Regulation 329/2007, and 5 (8) of LD 109/2007 protect rights of third parties acting in good faith when undertaking freezing actions. - Criterion 7.3—(Met): - EU Member States must ensure implementation and have effective, proportionate and dissuasive sanctions (EU Council Regulation 329/2007 article14 and Reg.267/2012 article 47). - Article 10 (1) of LD 109/2007 entrusts UIF with monitoring implementation. - UIF undertakes on‑site and off‑site monitoring. - Administrative sanctions: fines of not less than half the value of the transaction and not more than twice the value when FI/DNFBP makes funds available (article 13 of LD 109/2007); penalties for failing to notify UIF when locating frozen assets range from €500–25,000 (LD 109/2007 article 7). - Criminal penalties: article 2 of LD 64/2009 provides imprisonment from 2 to 6 years; Italy has issued fines under these provisions. - Criterion 7.4—(Largely met): - EU Regulations provide procedures for submitting delisting requests to the UN Security Council; Italy lacks publicly known delisting procedures domestically, but MD 203/2010 article 10 (1–2) and LD 109/2007 article 3(12) permit the FSC to consider delisting proposals. - Council of the EU communicates designation decisions and grounds; Council shall promptly review upon request and inform designated person/entity; UN de‑listing leads to EU amendments. - Per article 4 of LD 109/June 22, 2007, the FSC informs listed entities through the GdF. - Italy does not have publicly known procedures to unfreeze funds of persons inadvertently affected (see 6.6(f)); Law 21/1990 allows anyone to ask FSC why a decision was taken and FSC must reply. - EU provisions exist for authorizing access to funds/assets in line with UNSCRs 1718 and 1737. - Domestically, FSC responsible for unfreeze/transfer requests per articles 3 (11) of LD 109 and 11 of MD 203/2010; Italy has a web‑platform for online authorization requests to transfer or unfreeze funds related to Iranian persons/entities above the threshold set by EU legislation. - Criterion 7.5—(Met): - Interests/earnings to frozen accounts and payments due under contracts are permitted per articles 29 of EU Regulation 267/2012 and 9 of EU Regulation 329/2007, subject to the freezing action. - Payments under contracts entered into prior to listing are permitted with prior notification to UNSCR 1737 Sanctions Committee and a determination the payment is not related to prohibitions under UNSCR 1718 (articles 8 of EU Regulation 329/2007 and 24–28 of EU Regulation 267/2012). - Weighting and conclusion (R.7): - Italy partially meets criterion 7.2, largely meets 7.4, and meets remaining criteria. - Concerns from R.6 on passive notification of obliged entities are relevant. - Criterion 7.2 is fundamental; Italy is partially compliant with R.7. ### Non‑Profit Organizations (R.8) - Overall ratings: - Italy meets criterion 8.2, largely meets criteria 8.1, 8.4, 8.5, 8.6, and 8.7, and partially meets criterion 8.3. - Italy is largely compliant with R.8. - Legal structures and sector overview: - Possible legal structures: associations, foundations, cooperatives, committees. NPO is not a legal status itself; NPOs adopt legal structures of the civil code. - ONLUS is a fiscal entity type providing lower income tax and VAT regimes; ONLUS does not represent a new legal entity. - Article 18 of the Constitution recognizes the right of free associations; associations are not required to be registered unless they wish legal status, grants, or benefits. - NPO counts (Source: ISTAT, 2013): - Non Incorporated Associations: No legal status, Number of entities 201,044 - Incorporated Associations: Yes legal status, Number of entities 68,349 - Foundations: Yes legal status, Number of entities 6,220 - Social Cooperatives: Yes legal status, Number of entities 11,264 - Other forms, including committees: If incorporated, Number of entities 14,354 - Total: 301,191 - Supervision, controls and risk mitigation: - MLSP entrusted with control over NPOs; in 2012 MLSP took over functions of Agenzia per il terzo settore (NPOs Agency). - BoI issued operating guidelines regarding NPOs in July 2003: FIs must pay special attention to quality of associates, beneficiaries, country of destination of donations, inconsistencies between transactions and client profile; obligation to immediately declare suspicious transactions to UIF. - NPOs subject to obligation to transfer funds through authorized financial intermediaries for all transfers of €1,000 and more and to obligation to declare cross‑border transfers. - Specific types: - Voluntary organizations regulated by Law No. 266/1991; registration required to access public donations and tax benefits; National Overseeing Body presided by MLSP. - Social cooperatives established by Law No. 381/1991; listed in Prefectoral Register of Co‑operatives. - NGOs working with developing countries recognized by MOFA (Law No. 49/1987); subject to periodic checks and account certification. - ONLUS: fiscal category under LD 460/1997; currently 19,000 registered ONLUS; registered at regional level via article 11 of LD No. 460/1997; Agenzia delle Entrate responsible for registration and fiscal controls. - Draft law for NPOs pending before Parliament (provides unified register, obligations of internal control, accountability, transparency and information). - Risk understanding and monitoring: - NRA included analysis of risks related to the sector; ISTAT provides detailed statistics. - Authorities could improve understanding of FT risks and features/types particularly at risk of misuse for TF. - Information, record keeping and transparency: - NPOs with legal personality required to maintain information on purpose/objectives and identity of persons who own, control or direct activities; required to issue annual financial statements detailing income/expenditure. - Foundations’ statutes must contain criteria/procedures for payment of annuities; associations must include rules on rights of associates; cooperatives must include rules in establishing act and articles. - NPOs must keep accounts and balance sheets for commercial activities or fund raising; documentation kept for 10 years (articles 22 of DPR n. 600/1973 and 2220 of the Civil Code). - Unclear whether NPOs are required to follow a “know your beneficiaries and associated NPOs” rule. - Supervision, inspections and sanctions: - Controls and sanctions include enrollment in special registers, periodic inspections, administrative sanctions (loss of status and tax benefits), and criminal sanctions. - GdF carries out tax controls and prevention/repression of tax violations; operational procedures rely on cross‑checking databases and risk analysis. - BoI Provision N. 616 dated August 24, 2010 published anomaly indicators related to NPO abuse for TF purposes (e.g., inconsistent transactions, unjustified movements between NPOs, repeated large cash donations followed by transfers to underdeveloped countries). - UIF’s SARA analysis identified anomalous NPO positions regarding wire transfers with counterparts in risky countries; results used for inspections. - Information sharing and international cooperation: - Authorities required to collaborate and share information (Agenzia delle Entrate, MoI, MLSP, MFA, GdF, Government Territorial Office—Prefetture, Regions). - Information can be shared through normal law enforcement international channels (Interpol‑Europol‑Sirene, PWGT, international protocols). - FSC is point of contact to respond to third party requests for targeted financial sanctions; LEAs reply to other types of international requests. - A clear procedure to clarify focal point/steps for requesting NPO information from Italy would be beneficial. ### Financial institution secrecy laws (R.9) - Criterion 9.1—(Met): - Laws applicable to FIs do not inhibit AML/CFT implementation; FIs are subject to data protection and contractual confidentiality but laws provide clear gateways for processing/sharing personal data for compliance (article 24 para. 1 lit. A and 25 para. 2 of the Personal Data Protection Code). - Access by competent authorities: - Articles 6 para. 6 lit. c and 45 para. 3 of the AML Law enable UIF, GdF and DIA to request information from reporting entities for STR analysis/investigation. - Article 53 para. 5 grants supervisory authorities and Special Foreign Exchange Unit of GdF power to compel production of “documents, acts and other useful information” and access FIs’ premises as described under R.27. - Sharing among competent authorities: - Article 9 para. 2 of the AML Law derogates professional secrecy, allowing UIF, supervisors and GdF to exchange information; article 9 paras. 3–4 enable sharing with foreign counterparts. - UIF has MOUs with GdF, DIA, BoI, IVASS, CONSOB, Inland Revenue Agency, Customs Agency, ANAC, National Council of notaries, National Council of Labor Consultants (see MOUs list in source). - Sharing between FIs: - Article 46 para. 4 allows sharing of STR information within same group; BoI Regulation specifies procedures. - Article 46 para. 6 permits exchange between FIs not in same group within privacy law limits; exchange possible with FIs domiciled in third countries if measures similar to EU Third Directive applied. - Weighting and conclusion: - Italy is compliant with R.9. ### Customer Due Diligence (R.10) - Legal framework: - Legal framework postdates prior assessment (AML Law of 2007, BoI and IVASS regulations effective January 1, 2014 and January 1, 2015 respectively); frameworks apply to all financial activities specified under FATF Recommendations. - Criterion 10.1—(Met): - Article 50 of the AML Law prohibits opening or use of anonymous accounts or accounts held in fictitious names. - When CDD is required (Criterion 10.2—Met): - Article 15 of the AML Law requires CDD when: - (i) establishing an ongoing relationship; - (ii) carrying out occasional transactions amounting to €15,000 or more in either a single transaction or multiple related transactions; - (iii) there is a suspicion of ML or TF regardless of thresholds or exemptions; and - (iv) there are doubts about veracity or adequacy of previously obtained customer identification data. - Required CDD measures (Criterion 10.3—Met): - Article 19.1(a) of the AML Law requires FIs to identify and verify identity of the customer and the beneficial owner in the presence of the customer on the basis of valid documents listed in the Technical Annex to the law, which refers to ID documents listed in articles 1 and 35 of Presidential Decree 445 of December 28, 2000. *Source: IMF‑prepared assessment text from _cr1643 - 5.1 of EU Regulation 881/2002, 4 of EU Regulation 2580/2001, 8 of EU Regulation 753/2011, and 7 (PDF).* ### section 5 of the BoI regulations on CDD specifies a range of what are considered to be reliable ### Section 5 of the BoI regulations on CDD — reliable independent records and related CDD provisions ### Verification and reliable independent records; identity of customers and representatives - Section 5 of the BoI regulations on CDD lists sources considered to be reliable independent records for verifying the identity of customers, including: chamber of commerce archives, registers and lists of authorized persons, constituent instruments, bylaws and financial statements or equivalent documents. - Procedures are laid down for different types of customer (e.g., minors, non-EU nationals, stateless persons). - Criterion 10.4 — (Met) - Article 19.1(a) of the AML Law: FIs must verify the authority of the person representing a legal person and identify and verify that person’s identity. - Part 2, section 3 of the BoI regulations: for natural persons, FIs must establish the authority of any “executor” and apply the same identification and verification procedures as for comparable customers. ### Beneficial ownership: definitions, thresholds, and verification measures - Criterion 10.5 — (Met) - Articles 18 and 19 of the AML Law: FIs must identify and verify the beneficial owner at the same time as customer procedures are applied. - Article 21: customer obligation to provide all relevant information in their possession. - Article 1 definition of “beneficial owner”: (i) a natural person on whose behalf a transaction or activity is conducted (type 1); or (ii) for legal persons, the natural person(s) who ultimately control the entity or are the beneficiaries according to criteria in the Technical Annex (type 2). - Technical Annex specifics: - For companies: beneficial owner = natural person(s) with ultimate control through direct or indirect ownership, or who controls over a “sufficient” percentage of capital or voting rights (excluding companies listed on a regulated exchange). - A sufficient percentage is deemed to be 25 percent plus one share. - Beneficial owner also includes any person(s) who exercise(s) control over the company. - For legal arrangements: beneficial owner includes any person who is the beneficiary of 25 percent or more of the property, a person who exercises control over 25 percent or more of the property, or, where persons are yet to be identified, the class of persons for whose benefit the arrangement operates. - Part 2 of BoI regulations on CDD (occasional transactions vs business relationships): - Occasional transactions: customer must declare whether transaction is on behalf of another person. - Business relationships: natural person customer is presumed to be acting for themselves unless specified otherwise. - Where customer is a legal person: presumption that a type 2 beneficial owner needs identification. - Type 1 beneficial owner: same identification and verification procedures as for customers. - Type 2 beneficial owner: FI must take “appropriate” measures to verify identity based on customer’s overall risk profile; in low-risk situations FI may rely on a customer declaration confirming data integrity on type 2 beneficial owner. - Criterion 10.10 — (Met) - Annex to BoI regulations: where holder(s) of a controlling interest (25 percent+1 of the voting shares) is a legal entity, FI should follow chain of ownership until natural person(s) identified. - Requires reference to articles 2539 of the Civil Code and article 93 of the Consolidated Law on Finance (control via dominant influence through agreements). - If no control via shareholding chain, may consider persons running the company as beneficial owners. ### Identification and verification for trusts, foundations, and life insurance beneficiaries - Criterion 10.11 — (Largely met) - Article 19: identification and verification of beneficial owners for “trusts and the like.” - Article 3 of Technical Annex: beneficial ownership for trusts and foundations includes beneficiaries of 25 percent or more, controllers of 25 percent or more, or the class of beneficiaries where individuals not yet identified. - Gap: no reference to identifying the settlor. - Annex to BoI regulations specifies types of information relevant when customer is a trust company or foundation. - CDD for beneficiaries of life insurance policies - Criterion 10.12 — (Met) - Article 9 of the IVASS Regulations: insurers must identify the nominated beneficiary; where beneficiaries are not natural persons, acquire information on type, legal form and activities. - Article 11: identity of the beneficiary must be verified at time of payout. - Article 16: prohibits payout if insurer cannot fulfill CDD requirements. - Criterion 10.13 — (Partially met) - Article 5 of the IVASS Regulations: beneficiaries factored into risk profile when they do not have family or other natural links to the customer, and when beneficiary changes occur frequently or close to payout. - Article 21: insurers must undertake enhanced CDD where higher risks identified, but no specific measures required to identify beneficial owner of beneficiaries when beneficiaries are legal persons or arrangements and are higher risk. - References to beneficial owner in IVASS Regulations relate to the customer and do not extend to the beneficiary where customer and beneficiary differ. ### Timing for verification and delayed verification provisions - Criterion 10.14 — (Met) - Article 19 of the AML/CFT Law: verification of identification of the customer and beneficial owner should take place at the same time as initial identification procedures. - Article 17: occurs at time of establishing a relationship or carrying out occasional transactions. - Article 23: where CDD obligations cannot be complied with, institution must not establish relationship or carry out the transaction. - Part 2, section 5 of BoI regulations and article 11.8(a) of IVASS Regulations: verification of beneficial owner may take place after establishment provided measures are taken to prevent transactions prior to verification; delayed verification allowed when necessary not to interrupt normal course of business and where there is a low ML/TF risk. - Delay must not exceed 30 days, after which institution must decide whether to terminate the relationship. - Noted lack of clarity on interaction between AML Law and regulations, but both align with standards. - Criterion 10.15 — (Partially met) - Part 2, section 5 of BoI regulations: delays in verifying identity of customer, executor or beneficial owner may only take place where there is a low ML/TF risk. - Gap: no requirement to implement specific risk management procedures to govern circumstances under which customers may utilize the relationship prior to verification. ### Existing customers and risk-based approach (RBA) - Criterion 10.16 — (Met) - Article 22 of the AML Law: for existing customers, CDD measures must be applied “upon the first working contact, without prejudice for the assessment of any risk present.” - No BoI regulation provision; examples provided in an MEF circular of July 2013. - Criterion 10.17 — (Met) - Article 20 of the AML Law: FIs must apply an RBA to CDD and be able to demonstrate measures are commensurate with risks; specifies criteria to be taken into account. - Article 28: enhanced due diligence mandated in specified circumstances (e.g., where customer not physically present, correspondent relationships with non-EU FIs, and PEPs). - Part 4, section 1 of BoI regulations and article 21 of IVASS Regulations: repeat obligation to apply enhanced measures in higher risk situations and expand mandatory circumstances to include cross-border transfers of cash or other valuables, higher risk products/transactions/technologies, and when an STR has been filed with the UIF. - Criterion 10.18 — (Partially met) - Article 20: FIs should adopt RBA. - Article 25: statutory exemption from full CDD for a range of customers, including certain regulated financial intermediaries, EU credit and FIs, credit and FIs from non-EU countries deemed equivalent to EU Directive, and certain companies whose financial instruments are eligible to be negotiated in the regulated market per EU Directive 2004/39/EC. - Obligation on FI: establish that customer falls within exempt category. - Article 25 also states FIs “shall be authorized not to apply” CDD in respect of services for specified products and activities meeting conditions. - Exemptions do not apply when there is suspicion of ML or TF. - BoI and IVASS regulations require FIs to satisfy themselves that customer meets conditions for low risk under article 25; limited to acquiring name, legal status, registered office and, where relevant, tax code. - MD of February 2013: for non-EU countries deemed equivalent, FIs must continue to apply an RBA when dealing with relevant customers from such countries; no similar statement referenced for customers within the EU. - Concern: the exemption in the AML Law extends beyond what FATF standards envisage (covers identification/verification and ongoing monitoring), and across all 28 member states may not reflect variations in ML/TF risk among the same customer types in different Member States. - Note: implementation of the EU’s Fourth Money Laundering Directive is expected to address these issues. ### Failure to complete CDD; tipping-off - Criterion 10.19 — (Met) - Article 23 of the AML Law: FIs must refrain from establishing a business relationship or performing a transaction when unable to meet CDD obligations; if relationship has commenced it must be terminated and funds returned to customer by transfer to another current bank account nominated by customer. - Where CDD cannot be completed, FI must assess whether to file a suspicious transaction report. Principles repeated in BoI regulation on CDD. - Criterion 10.20 — (NA) - No specific provisions addressing the case where pursuing CDD may “tip-off” the customer. - General provisions on failure to complete CDD and filing of STRs apply (see criterion 10.19). ### Weighting and conclusion (summary of criteria status) - Italy meets criteria: 10.1 to 10.8, 10.10, 10.12, 10.14, 10.16, 10.17, and 10.19. - Italy largely meets criteria: 10.9, 10.11, and 10.13. - Italy partially meets criteria: 10.15 and 10.18. - Criterion 10.20 is NA. *Source: _cr1643 - section 5 of the BoI regulations on CDD specifies a range of what are considered to be reliable* ### 10.9 and 10.11, and partially meets criteria 10.13, 10.15, and 10.18. Criterion 10.20 is not applicable. ### _cr1643 - 10.9 and 10.11, and partially meets criteria 10.13, 10.15, and 10.18. Criterion 10.20 is not applicable. ### Recommendation 11 — Recordkeeping - Legal basis: AML Law of 2007 (as amended); BoI regulations (effective January 1, 2014); IVASS regulations (effective January 1, 2015); Civil Code articles 2214–2220. - Criterion 11.1 (Met): FIs must retain copies of all transactions of €15,000 or more for a period of ten years; exception: transactions through financial or payment agents (all transactions retained) and customers exempt from CDD (see criterion 10.18). - Criterion 11.2 (Met): CDD data retention for 10 years after business relationship end; includes date of establishment, CDD data on customer and beneficial owner, names/addresses of persons authorized to operate accounts; does not apply to customers benefiting from article 25 exemption. - Criterion 11.3 (Met): Documents must be admissible in court; Article 37 requires a “single electronic archive”; BoI regulations specify format/structure. - Criterion 11.4 (Met): Recordkeeping objective includes facilitating ML/TF investigations and analysis by UIF, GdF, DIA; BoI regs require availability to competent authorities for criminal proceedings at all stages. - Weighting/Conclusion: Italy meets all criteria of R.11 and is rated compliant. ### Recommendation 12 — Politically Exposed Persons (PEPs) - Legal basis: Article 28(5) AML Law; Technical Annex defines PEP (includes beneficial ownership principle); one-year post-office time limit for foreign PEPs (with continued RBA possible). - Criterion 12.1 (Met): Four FATF steps for foreign PEPs required. - Criterion 12.2 (Largely met): No AML Law provision for domestic PEPs or persons in international organizations; BoI and IVASS regulations require FIs they supervise to have procedures for domestic PEPs; international organization coverage incomplete. - Criterion 12.3 (Largely met): Family members and close associates of foreign PEPs covered; BoI/IVASS regs extend this to domestic PEPs; international organization persons not covered. - Criterion 12.4 (Partially met): Insurance sector provisions generally follow AML Law; no specific provisions on identifying beneficial owner of beneficiary or handling payouts to higher-risk beneficiaries. - Weighting/Conclusion: Meets 12.1; largely meets 12.2 and 12.3; partially meets 12.4. Italy is largely compliant with R.12. ### Recommendation 13 — Correspondent Banking - Criterion 13.1–13.3: All three partially met. - Key issues: - Article 28(4) AML Law requires FATF four steps but only for non-EU correspondents; BoI regs extend EU exemption to “equivalent third countries.” - Payable-through accounts measures apply only to non-EU respondent institutions. - Prohibition on correspondent accounts with shell banks exists (Article 28(6)) but no explicit obligation to ensure respondent institutions do not permit use by shell banks. - Materiality: Exemption for EU/equivalent third countries is material given Italian banks’ international engagement. - Conclusion: Italy is partially compliant with R.13. ### Recommendation 14 — Money or Value Transfer Services (MVTS) - Legislative framework: Transposition of PSD via amended CLB; BoI Supervisory Regulations on Payment Institutions and Electronic Money Institutions; MEF MD 256/2012. - Criterion 14.1 (Met): BoI licenses Italian payment institutions; minimum capital requirement for PIs €20,000; BoI conducts on-site exams for PI branches; BoI publishes lists and engages with home supervisors for EU PIs. - Criterion 14.2 (Met): Unauthorized payment services penalized: imprisonment six months to four years and fine €2,066–10,329; BoI administrative sanctions €5,165 to 51,645; article 55(9 bis) AML Law enables confiscation of tools; authorities used sanctions in 42 cases affecting 99 persons since 2010. - Criterion 14.3 (Met): Banks, e-money institutions, and PIs are subject to AML Law and BoI regs (Internal Controls March 2011; CDD January 2014; record keeping April 2013). - Criterion 14.4 (Met): Agents required to be registered per article 128 quater (6) CLB; OAM conducts fit-and-proper checks and inspections; BoI authorizes use of agents. - Criterion 14.5 (Met): Agents covered by AML Law; CDD for transactions less than €15,000 required (article 15 (4)); BoI requires MVTS to monitor transactions including agents’ activity; EU PIs subject to home supervisor responsibilities; article 42(3) AML Law requires central contact point for STRs by EU PIs with multiple agents. - Weighting/Conclusion: Italy meets all criteria and is compliant with R.14. ### Recommendation 15 — New Technologies - Criterion 15.1 (Largely met): National risk assessment completed July 2014 (electronic money vulnerabilities reviewed); no specific legal requirement/mechanism to identify/assess ML/TF risks from new products/business practices; BoI March 2011 reg requires AML function assessment “in advance” of new products but not explicit ML/TF risk assessment obligation; IVASS Reg 20/2008 article 19 bis requires attention to risks from new products (not AML/CFT specific). - Criterion 15.2 (Largely met): BoI regs and AML Law require CDD commensurate with product risk; FIs required to demonstrate appropriateness of CDD; BoI CDD regs require ECDD where product source of higher risk. - Conclusion: Italy largely meets 15.1 and 15.2; Italy is largely compliant with R.15. ### Recommendation 16 — Wire Transfers - Implementation: EU Regulation 1781/2006 applies; BoI supporting regs Dec 2012; EU Regulation not yet updated to revised FATF R.16. - Ordering FIs: - Criterion 16.1–16.3 (Partially met): EU Regulation omits requirement to obtain beneficiary name/account in cross-border transfers; intra-EU transfers not treated as cross-border; cross-border batch files not required to contain full beneficiary info. - Criterion 16.4 (Met): Verification of originator info required only for cross-border transfers > €1,000; article 15 AML Law requires CDD when suspicion regardless of thresholds. - Criterion 16.5–16.6 (Met): Compliance retained for earlier elements; article 36 AML Law grants authorities access to records. - Criterion 16.7 (Largely met): EU Regulation retention of originator records for five years; BoI record-keeping regs require retention of beneficiary name/company and other beneficiary details where known. - Criterion 16.8 (Partially met): Absence of beneficiary information not grounds for prohibition to execute transfers. - Intermediary FIs: - Criteria 16.9–16.10 (Largely met): EU Reg compliant for prior standards but intermediary may not receive beneficiary info. - Criterion 16.11 (Partially met): No EU Reg provisions on intermediary role for identifying missing info; BoI Instructions require reasonable measures for technical limitations. - Criterion 16.12 (Not met): No provisions on intermediary institution responding to missing originator/beneficiary information. - Beneficiary FIs: - Criterion 16.13 (Partially met): EU Reg imposes nothing for missing beneficiary information. - Criterion 16.14 (Met): Beneficiary identity verification not required by EU Reg; article 49(1) AML Law prohibits cash transfers > €1,000 between two persons. - Criterion 16.15 (Partially met): Beneficiary institution may reject or ask for originator info but cannot suspend pending receipt; beneficiary info omissions not covered. - MVTS Operators: - Criterion 16.16 (Met): EU Reg applies to all payment service providers. - Criterion 16.17 (Partially met): EU Reg silent where both originating and beneficiary institutions are controlled by same MVTS. - Targeted Financial Sanctions: - Criterion 16.18 (Met): Wire transfers subject to EU Regulations and domestic measures giving effect to UNSCRs 1267, 1373, and successor Resolutions. - Weighting/Conclusion: Italy meets 16.4–16.6, 16.14, 16.16, 16.18; largely meets 16.7, 16.9, 16.10; partially meets 16.1–16.3, 16.8, 16.11, 16.13, 16.15, 16.17; does not meet 16.12. Italy is partially compliant with R.16. ### Recommendation 17 — Reliance on Third Parties - Criterion 17.1 (Met): Article 29 permits reliance on third parties for initial CDD core elements but retains ultimate responsibility; article 34 requires third parties to make core information immediately available; foreign third parties permitted only when subject to equivalent CDD provisions. - Criterion 17.2 (Partially met): Article 30 permits reliance on intermediaries in Italy or another EU country or banks in countries deemed “equivalent” by MEF list based on common understanding; this presumption of EU equivalence (rather than country-specific risk assessment) is not compliant with FATF standards. - Criterion 17.3 (NA): No provision to rely on group companies in non-equivalent countries; procedures have universal application. - Conclusion: Meets 17.1, partially meets 17.2, 17.3 NA. Italy is largely compliant with R.17. ### Recommendation 18 — Internal Controls and Foreign Branches/Subsidiaries - Criterion 18.1 (Largely met): BoI March 10, 2011 reg requires an AML/CFT compliance function, AML officer to be independent/stable; training and internal audit required; no statutory requirement for screening employees at hiring. IVASS Reg 41/2012 requires suitable administrative organization, ongoing training, independent AML function. - Criterion 18.2 (Met): BoI reg requires group-wide AML approach, access to group databases, information flows; IVASS Reg 41 requires group CDD standards and group AML head access to databases. - Criterion 18.3 (Largely met): Article 11(4) AML Law requires branches/subsidiaries in non-EU countries to apply measures equivalent to Directive on CDD and record keeping or notify supervisor and adopt additional measures; requirement limited to CDD and record keeping (not full ML/TF programs). - Conclusion: Meets 18.2; largely meets 18.1 and 18.3. Italy is largely compliant with R.18. ### Recommendation 19 — Higher-Risk Countries - Criterion 19.1 (Met): Article 28(1) requires ECDD in elevated ML risk; Article 28 7 bis authorizes MEF to issue list of countries with ML/TF risk based on FATF/FSRB/OECD decisions or information exchange difficulties. - Criterion 19.2 (Met): MEF and BoI publish notifications advising FIs/DNFBPs to apply EDD for jurisdictions in FATF Public Statement. - Criterion 19.3 (Met): System exists for informing FIs of weaknesses and to apply countermeasures; Italy can adopt countermeasures when called by FATF or independently. - Conclusion: Italy is compliant with R.19. ### Recommendation 20 — Reporting of Suspicious Transactions (STRs) - Criterion 20.1 (Largely met): Article 41(1) requires reporting to UIF when “they know, suspect or have grounds to suspect that ML or TF is being or has been carried out or attempted”; does not explicitly extend to predicate offenses of ML. Reporting must be “without delay” via RADAR. UIF/competent authorities issue guidance and indicators. - Criterion 20.2 (Met): Reports required regardless of amount; attempted ML/TF must be reported; article 41 covers activities beyond transactions (e.g., account opening requests). - Conclusion: Meets 20.2; largely meets 20.1. Italy is largely compliant with R.20. ### Recommendation 21 — Tipping-Off and Confidentiality - Criterion 21.1 (Largely met): Article 41(6) provides protection from secrecy/professional secrecy liabilities for good-faith reports; protection does not explicitly extend to suspicions related to predicate offenses. - Criterion 21.2 (Met): Article 46 prohibits disclosure that an STR has been made; allows intra-group communication under equivalent measures; violations punishable by imprisonment six months to one year or fine €5,000 to €50,000 (article 55(8)). - Conclusion: Meets 21.2; largely meets 21.1. Italy is largely compliant with R.21. ### Recommendation 22 — DNFBPs: Customer Due Diligence - Coverage: AML Law articles 10–14 extend to casinos, real estate brokers, lawyers, notaries, accountants, and certain dealers in precious objects; TULPS provides additional coverage for dealers in precious metals/stones; some internet gambling covered; certain precious metals/stone dealers fall outside standard due to cash limits (€1,000 cash prohibition). - Criterion 22.1 (Largely met): CDD extended to DNFBPs; casinos may meet CDD via reporting transactions > €2,000 or identifying persons on entry; dealers in precious metals/stones—CDD not fully covered. - Criterion 22.2 (Largely met): Recordkeeping provisions extended; dealers in precious metals/stones must maintain register for five years (TULPS) but not full R.11 document set. - Criterion 22.3 (Partially met): PEP coverage extended to DNFBPs but domestic PEPs not covered; international organization persons not covered. - Criterion 22.4 (Not met): No specific DNFBP requirements for assessing ML/TF risks from new services/products; no guidance/regulation. - Criterion 22.5 (Largely met): Reliance on third parties provisions apply to DNFBPs. - Conclusion: Largely meets 22.1, 22.2, 22.5; partially meets 22.3; does not meet 22.4. Italy is largely compliant with R.22. ### Recommendation 23 — DNFBPs: Other Measures - Criterion 23.1 (Largely met): STR obligations in article 41(1) apply to DNFBPs; not explicitly required to report suspicions related to predicate offenses; MoI/MoJ decrees provide anomaly indicators for certain DNFBPs. - Criterion 23.2 (Partially met): AML Law does not clearly designate competent authorities for DNFBP secondary regulations on internal controls; ministerial decrees provide training requirements but not comprehensive internal control frameworks. - Criterion 23.3 (Met): Higher-risk country requirements apply to DNFBPs via AML Law and MEF Circulars. - Criterion 23.4 (Largely met): Tipping-off/confidentiality obligations apply; do not explicitly extend to predicate offense suspicions. - Conclusion: Meets 23.3; largely meets 23.1 and 23.4; partially meets 23.2. Italy is largely compliant with R.23. ### Recommendation 24 — Transparency & Beneficial Ownership of Legal Persons - NRA: 2014 NRA assessed ML/TF risks for joint-stock companies (non-listed), SRLs, unlimited liability companies by shares, recognized associations, foundations; listed companies/cooperatives treated separately. - Basic information: - Criterion 24.3 (Met): All companies registered in Business Register; register includes name, legal form, addresses, management, administrators, auditors, activity; associations/foundations register of legal persons required. - Criterion 24.4 (Largely met): Companies must maintain shareholder registers; no general requirement to keep shareholder info within Italy except for SRLs (articles 2470 Civil Code; 16.12 undecies LD No. 185/2008). - Criterion 24.5 (Largely met): Notaries/chartered accountants validate incorporation and changes; transfer/authentication requirements described; notaries/accountants subject to AML Law. - Beneficial ownership: - Criterion 24.6 (Largely met): Mechanisms include Business Register filings, information held by FIs/DNFBPs via CDD (articles 18/19 AML Law), CONSOB disclosures for listed companies, company-held documents, GdF and tax authorities access. - Criterion 24.7 (Largely met): Measures to ensure accuracy include CDD obligations, customer obligation to provide updated information, notary/accountant verification; administrators must update Business Register within 30 days. - Criterion 24.8 (Met): General obligations and criminal sanctions ensure cooperation with authorities (article 2384 Civil Code; article 371 bis CC). - Criterion 24.9 (Largely met): Corporate books must be deposited/maintained for 10 years after dissolution (article 2496 Civil Code); FIs/DNFBPs maintain CDD documents for ten years (article 36 AML Law). - Other criteria: 24.10 Met; 24.11 Met (two bearer share types dematerialized); 24.12 Met (nominee arrangements constrained by publicity rules/power of attorney requirements); 24.13 Largely met (sanctions exist but some fines low); 24.14 Largely met (public registers accessible online; cross-border access variable); 24.15 Partially met (no formal mechanism to monitor quality of assistance received). - Weighting/Conclusion: Meets 24.1, 24.2, 24.3, 24.8, 24.10, 24.11, 24.12; largely meets 24.4, 24.5, 24.6, 24.7, 24.9, 24.13, 24.14; partially meets 24.15. Italy is largely compliant with R.24. ### Recommendation 25 — Transparency & Beneficial Ownership of Legal Arrangements (Trusts/Fiduciaries) - Criterion 25.1–25.7 (Met): Foreign trusts and fiduciaries are addressed via AML Law article 19(1)(b) and Technical Annex; CONSOB requires disclosures when trustees hold significant shareholdings; trustees/nominees subject to CDD and recordkeeping; trustees/nominees subject to sanctions (article 55; imprisonment 6–12 months and fines €500–€5,000; fiduciaries fines €2,600–€13,000). - Criterion 25.8 (Largely met): Failure to provide timely access to info sanctioned variably: UIF fines €5,000–€50,000 (article 57 para. 5); GdF questionnaire non-response fine €258–€2,065; BoI info provision fines €2,580–€129,110; false info to public prosecutor imprisonment up to five years (article 371 bis CC). - Conclusion: Italy meets most criteria and largely meets 25.8. Italy is largely compliant with R.25. ### Recommendation 26 — Regulation & Supervision of Financial Institutions - Criterion 26.1 (Met): Supervisors oversee AML Law compliance: BoI (banks, e-money, payment institutions, Poste Italiane SPA, financial intermediaries, Cassa Depositi e Prestiti SPA), IVASS (insurance), GdF Special Foreign Exchange Unit (bureaux de change); UIF verifies STR reporting compliance. - Market entry (26.2 Met): ECB/SSM authorizations for significant banks; BoI authorizes PIs, EMIs, non-bank lenders; OAM authorizes agents; CONSOB and IVASS authorizations defined. - Fit-and-proper (26.3 Met): CLB/CLF/Insurance Code provisions and OAM controls for agents. - Risk-based supervision (26.4 Met; 26.5 Largely met; 26.6 Met): FSAP (January 2013) and supervisors apply RBA; BoI designing new AML/CFT risk-based supervision model; supervisory tools need improvement to provide comparative risk data across institutions. - Conclusion: Meets 26.1–26.4, 26.6; 26.5 largely met. Italy is largely compliant with R.26. ### Recommendation 27 — Powers of Supervisors - Criterion 27.1–27.3 (Met): Supervisors have oversight, inspection, and information-request powers (Articles 7(1), 53(1), 53(5) AML Law); OAM supervises loan brokers/finance agents. - Criterion 27.4 (Largely met): Administrative pecuniary sanctions €5,000–€500,000 available (Articles 56–58 AML Law) but generally applicable to legal persons only; supervisors may use CLB/CLF/P&C Code powers for natural persons; monetary limits and certain removal powers limited. - Conclusion: Meets 27.1–27.3; largely meets 27.4. Italy is largely compliant with R.27. ### Recommendation 28 — Regulation & Supervision of DNFBPs - Casinos (28.1 Met): Casino establishment reserved to state/municipalities; GdF supervises AML/CFT compliance for casinos; FSC oversight on adequacy of casino AML/CFT systems. - DNFBPs other than casinos (28.2 Met): Article 8(1) AML Law designates professional colleges/associations and GdF for supervision; GdF supervises exporters of gold, trust companies, real estate brokers, etc.; AAMS authorizes electronic gaming operators. - Coverage (28.3 Met): GdF supervises commerce in antiques, auction houses, art galleries, custody/transport of valuables. - Supervisory powers/sanctions (28.4 Partially met): GdF has inspection powers; administrative sanctions exist for certain failures; PIE auditors subject to administrative sanctions €10,000–€200,000; except for PIE auditors, DNFBPs not subject to administrative sanctions for failure to perform CDD. - RBA (28.5 Partially met): GdF uses RBA focusing on high-exposure reporting persons but lacks a comprehensive supervisory methodology; CONSOB has RBA for PIE auditors. - Conclusion: Meets 28.1–28.3; partially meets 28.4–28.5. Italy is largely compliant with R.28. ### Recommendation 29 — Financial Intelligence Units (UIF) - UIF established within BoI (LD 231/2007); operational since January 1, 2008. - Criterion 29.1 (Largely met): UIF is central agency for receipt/analysis/dissemination of STRs under AML Law; lacks explicit powers in relation to predicate offenses. - Criterion 29.2 (Met): UIF receives STRs from all obliged entities; FIs submit monthly aggregated data; UIF has access to Customs declarations for cross-border currency ≥ €10,000. - Criterion 29.3 (Partially met): UIF can request additional data from reporters and access registry of accounts, tax registry, public registers, open-source/commercial databases; UIF lacks legal powers to access law enforcement information directly; receives monthly feedback from GdF and DIA. - Criterion 29.4–29.6 (Met): UIF conducts operational/strategic analysis; transmits reports to GdF-NSPV and DIA without delay; uses secure electronic transmission with two-factor authentication and encryption. - Criterion 29.7 (Met): UIF operates with autonomy and independence per LD 231/2007 and BoI Regulation (updated July 2014). - Criterion 29.8 (Met): UIF is long-standing Egmont Group member and actively participates. - Conclusion: All criteria met except 29.1 largely met and 29.3 partially met. Italy is largely compliant with R.29. ### Recommendation 30 — Law Enforcement & Investigative Authorities - Institutional framework: Prosecutors lead investigations; police assist (articles 51, 108 Constitution; 358–378 CPC). - Main police bodies: Guardia di Finanza (GdF), Arma dei Carabinieri, Polizia di Stato, Direzione Investigativa Antimafia (DIA); all competent to investigate ML/TF/predicate offenses. - Powers and procedures: - Criterion 30.2–30.5 (Met): Judicial police may investigate ML/TF and predicate offenses, identify/trace proceeds, seize property, and coordinate via SDI; prosecutors lead investigations; customs handle cash transport declarations; ANAC established for corruption prevention (no law enforcement powers). - Conclusion: Italy meets all criteria and is compliant with R.30. ### Recommendation 31 — Powers of Law Enforcement and Investigative Authorities - Broad powers (31.1–31.4 Met): Judicial/competent authorities can obtain documents, perform searches/seizures, access bank/tax data, use undercover operations, wiretaps, computer data interception, and utilize the Bank Current Accounts Database (Archivio dei rapporti finanziari) and UIF info; GdF and DIA have direct database access in certain contexts. - Conclusion: Italy meets all criteria and is compliant with R.31. ### Recommendation 32 — Cash Couriers (Cross-Border Currency Controls) - Declaration system in place via LD 195/2008 transposing EU Regulation 1889/2005. - Criterion 32.1–32.4 (Met): Written declaration required for cross-border transport of cash/BNI ≥ €10,000; Customs/GdF authorized to investigate violations. - Criterion 32.5 (Largely met): Administrative sanctions: minimum €300 for false declaration; 10–30 percent fine where undeclared amount ≤ €10,000; 30–50 percent where > €10,000; data suggests sanctions not sufficiently dissuasive. - Criterion 32.6 (Met): Customs must notify UIF when ML/TF indicators emerge; UIF has MOU access to Customs database. - Criterion 32.7–32.11 (Met): Domestic coordination flows to GdF/IRA; seizure procedures and international exchange mechanisms available; free movement of capital preserved; criminal sanctions/seizures available where linked to ML/TF. - Conclusion: All criteria met except 32.5 largely met. Italy is largely compliant with R.32. ### Recommendation 33 — Statistics - Criterion 33.1 (Largely met): Comprehensive statistics maintained for STRs (UIF), ML/TF investigations/prosecutions/convictions (MoJ/ISTAT/DIA/GdF), frozen/seized/confiscated property (multiple authorities, consolidation challenges), and administrative cooperation/MLA (UIF good stats; MoJ lacks MLA/extradition stats). - Conclusion: Italy largely compliant with R.33; improvements needed for MLA/extradition and ML/TF prosecutions/convictions data granularity and consolidation. ### Recommendation 34 — Guidance & Feedback - Criterion 34.1 (Largely met): BoI/IVASS/CONSOB indicators and operational guidance issued (BoI 2010; BoI/UIL operational guidelines 2009 on proliferation financing); UIF publishes annual reports/typologies; Notaries’ Council issued Operational Guideline (August 2014). - Gap: Limited guidance to DNFBPs (except PIE auditors and notaries) and need for stronger UIF–GdF coordination to improve STR quality/quantity from DNFBPs. - Conclusion: Italy largely compliant with R.34. ### Recommendation 35 — Sanctions - Criminal and administrative sanctions exist (Title V AML Law): - Criminal fines/penalties for CDD/recordkeeping failures (article 55): fines €2,600–€13,000; imprisonment 6–12 months and fine €500–€5,000 for failure to provide information on purpose/nature; other penalties specified. - Administrative sanctions: Article 56 provides €10,000–€200,000 for supervised institutions; Article 57 allows sanctions expressed as percentage (1–40 percent) for failure to report STRs; other administrative ranges €5,000–€500,000 for specific breaches. - BoI/CLB/CLF/Insurance Code provide powers including dissolution of management bodies and revocation of authorizations (subject to MEF/ECB contexts). - Criterion 35.1 (Partially met): Sanctions framework exists but monetary/admin sanctions for FIs may be insufficiently dissuasive; limitations on sanctioning natural persons directly by supervisors; uncertainty on application for banks supervised by ECB. - Criterion 35.2 (Largely met): BoI can impose sanctions €10,000–€200,000 on legal persons; broader procedural enforcement can target responsible natural persons via CLB/CLF mechanisms; criminal sanctions available per article 55. - Conclusion: Partially meets 35.1; largely meets 35.2. Italy is partially compliant with R.35. ### Recommendation 36 — International Instruments - Criterion 36.1–36.2 (Met): Italy is party to four key conventions (Palermo, Merida, 1999 Strasbourg) and has implemented relevant provisions (e.g., extended corruption/embezzlement scope, asset allocation rules, ANAC establishment). - Conclusion: Italy is compliant with R.36. ### Recommendation 37 — Mutual Legal Assistance (MLA) - Criterion 37.1 (Met): Legal basis for broad MLA via Constitution, CPC articles 696+, and various laws/treaties. - Criterion 37.2 (Largely met): MoJ is central authority for MLA; Schengen member states can communicate directly with judicial authorities; no case management system to monitor requests. - Criterion 37.3–37.8 (Met): CPC framework applicable in absence of treaties; grounds for refusal narrow and do not include tax/confidentiality; dual criminality rules clarified by jurisprudence; powers available to execute requested measures provided they do not conflict with Italian legal principles. - Conclusion: Italy largely compliant with R.37 (meets criteria except 37.2 due to lack of case management). ### Recommendation 38 — MLA: Freezing and Confiscation - Criterion 38.1–38.4: Italy can provide MLA for freezing/confiscation; non-conviction-based confiscation assistance available under Anti-Mafia Code (articles 24/25); bilateral coordination mechanisms for seizure/confiscation not in standing arrangements (case-by-case), but legal mechanisms for devolution (article 740 bis CPC) exist. - Conclusion: Meets criteria except 38.3 largely met (no standing coordination arrangements). Italy is largely compliant with R.38. ### Recommendation 39 — Extradition - Criterion 39.1 (Met): ML and TF extraditable; extradition governed by Constitution and CPC; limitations include political offenses and death-penalty concerns (absolute guarantee required); Italian citizens extraditable only under conventions Italy is party to. - Case management: No case management system in place; timing not provided. - Conclusion: Italy meets criteria and is compliant with R.39. *Source: _cr1643 - 10.9 and 10.11, and partially meets criteria 10.13, 10.15, and 10.18. Criterion 10.20 is not applicable. — IMF PDF (https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr1643.pdf)* ### 2. If the case for which extradition is requested is provided for the death penalty under the law of the foreign state, ### 2. If the case for which extradition is requested is provided for the death penalty under the law of the foreign state, ### Extradition where death penalty is applicable - Extradition may be granted only if the state gives the same insurance, is considered sufficient both by the court and by the Ministry of Justice, that the death penalty will not be imposed or, if already imposed, will not be executed. ### European Arrest Warrant (EAW) and Italy’s implementation - EAWs may only be issued for offenses that carry a maximum penalty of 12 months or more imprisonment, or where the prison sentence to be enforced is at least four months long. - Once issued, EAWs become automatically applicable in all EU member states. - There is no exception for political, military, or revenue offenses, and no exception clause allowing a state to refuse to surrender one of its nationals. - The general requirement for dual criminality is removed for a range of offenses, including money laundering, and the categories of predicate offenses listed in the standard and terrorism. - The mandatory grounds for refusal under the EAW Framework decision do not appear to be unreasonable or unduly restrictive. - The law that implemented the framework decision into Italy’s domestic legal framework only provides for these mandatory grounds for refusal (i.e., it does not include optional grounds for refusal which could potentially have narrowed the scope of extradition). ### Criterion 39.2 — (Met) - Italian nationals may only be extradited to a country that is not an EU member in instances where this is explicitly provided for in the international conventions or other agreements that Italy is party to, except in the case of political offense, in which case the extradition will be denied (articles 26 of the Constitution and 13 of the CC). Within the EU, extradition may occur amongst Member States under the EAW, regardless of nationality. - In instances where extradition is not possible, article 9 of the CC provides that the accused should be prosecuted by the competent Italian authorities. - Pursuant to article 13 of law No. 69/2005, the arrest of an individual must be referred to the court within 48 hours. ### Criterion 39.3 — (Met) - For the dual criminality requirement to be fulfilled, it is not necessary that the foreign denomination of a crime find its exact counterpart in the Italian legislation; it is sufficient that the facts upon which the request is based be punishable as an offense in both countries (Court of Cassation, Sentence No. 19406/2012). This is a general principle which applies with both EU and non-EU states. - Pursuant to article 7 of the EAW law, the EAW may be executed without testing for dual criminality in a number of cases including ML, its predicate offenses, and TF. - For non-EU states, the dual criminality requirement is fulfilled when the two offenses have fundamental elements in common (Court of cassation, Sentence No. 40169/2010). ### Criterion 39.4 — (Met) - Simplified extradition mechanisms are in place amongst all EU member states in the context of the EAW as described above. ### Weighting and Conclusion on R.39 - Italy meets all the criteria. - Italy is compliant with R.39. ### Recommendation 40 — Other Forms of International Cooperation: General Principles - In its third MER, Italy was rated compliant with these requirements. - On the basis of article 9.3 of the AML Law, the UIF has the power to exchange information and cooperate with foreign counterparts based on reciprocity in relation to suspicious transactions. - The AML Law does not explicitly authorize the UIF to exchange information related to the predicate offenses. It does not explicitly exclude it either, and the UIF exchanges information on ML-related predicate offenses in practice. - The UIF is required to safeguard the confidentiality of information. - The UIF can exchange the information related to STRs and make use of specifically requested information in the possession of DIA and the Special Foreign Exchange Unit of the GdF. - The EU legislation, namely Council Decision n. 2000/642/JHA of October 17, 2000 (Concerning arrangements for cooperation between FIUs of the Member States in respect of exchanging information”), is also directly applicable. - The UIF’s capacity to cooperate includes both spontaneous and upon-request exchanges. - The UIF could consent to its information being further used or disseminated by foreign counterparts to which it is forwarded (Council Decision 2000/642/JHA). - Article 4(3) of Council Decision establishes that the UIF may refuse to divulge information which could lead to impairment of a criminal investigation being conducted in the requested Member State or, in exceptional circumstances, where divulgation of the information would be clearly disproportionate to the legitimate interests of a natural or legal person or the Member State concerned, or would otherwise not be in accordance with fundamental principles of national law. - Any refusal to grant consent should be appropriately explained under the Council Decision. - The UIF can grant consent to its foreign counterparts to further use and share the information provided for law enforcement and prosecutorial purposes. - The UIF can consider passing information to foreign authorities which are not UIFs (“diagonal” cooperation). In such cases, the diagonal exchange is performed indirectly, namely, the foreign UIF is always appraised and information is channeled through it. ### Criterion 40.2 — (Met) - The UIF is empowered to respond to foreign requests by providing all information available and obtainable through its domestic powers. This includes information gathered from external databases and from any obliged entity. - All such financial and administrative information may be provided based on the same scope as applicable for domestic analysis. - Article 9.4 of the AML Law empowers LEAs to cooperate and exchange information with their counterparts in other countries in relation to investigations concerning ML and TF cases as resulting from STRs and UIF analysis, based on an MOU with the UIF. - Articles 6, 7, and 69 of the CLB provide BoI with a legal basis to cooperate with other supervisory authorities from EU and non-EU members states with respect to institutions subject to that law. - Article 4 of the CLF provides a legal basis for BoI and CONSOB to cooperate with authorities in EU and non-EU member states with respect to the supervision of capital market licensees. - Article 10 of the LD N. 209/2005 provides IVASS with a legal basis to cooperate with EIOPA and the other European supervisory authorities, the Joint Committee, the ESRB, the institutions of European Union and the supervisory authorities of individual member states. - BoI, IVASS, and CONSOB do not need an MOU to cooperate with an EU supervisor and can, therefore, cooperate spontaneously upon request. - Supervisors can cooperate with supervisors of non-EU states provided that the supervisors are subject to confidentiality requirements equivalent to those set out in EU law and relevant Italian implementing provisions. - On occasion, supervisors develop bilateral MOUs as a basis for cooperation with non-EU authorities. - Under EU law, receiving supervisory authorities are subject to strict confidentiality requirements. - Information is shared with non-EU supervisors on the condition that equivalent confidentiality requirements are in place. - Supervisors inform foreign authorities in instances in which a third party is seeking the onward transmission of information received from the foreign authority and seeks to obtain approval for such onward transmission. ### Criterion 40.3 — (Met) - UIF can cooperate with foreign counterparts, without any need for bilateral or multilateral agreements. - Article 9.3 explicitly empowers the UIF to “conclude memoranda of understanding” with foreign counterparts. - The UIF has so far entered into 24 MOUs with a broad range of foreign counterparts. - Article 7 (6) of the CLB does not require the BoI to have a formal agreement in place to facilitate the sharing of information with supervisors in member states. - Article 7 (7) provides that cooperation with competent authorities from non-member states must take place within the framework of a cooperation agreement and subject to the existence of confidentiality requirements equivalent to those established in EU law and Italian implementing regulations. - Article 7 (7) does not require the formalization of a written cooperation agreement; cooperation and information exchange may occur with non-EU supervisors in the absence of a formal written cooperation agreement, provided that the conditions for an effective mutual cooperation are met. - Formal written cooperation agreements tend to be concluded in cases of particular interests; negotiation and conclusion of formal written agreements requires a certain time (on average, not less than nine months). *Source: _cr1643 - 2. If the case for which extradition is requested is provided for the death penalty under the law of the foreign state,* ### conclusion of a formal written agreement the BoI is allowed to exchange information with its foreign ### _cr1643 - conclusion of a formal written agreement the BoI is allowed to exchange information with its foreign ### Exchange of information framework and practices - The BoI opens negotiations for formal written agreements only after a positive assessment of conditions for effective cooperation. - Procedures to stipulate operational law enforcement MOUs, at bilateral or multilateral level, are intended to be as quick as possible and to involve the widest array of interested parties. - The BoI commits to give feedback on requests by the foreign authority which provided assistance/information and, on its own initiative, informs foreign authorities of matters relevant to their supervisory functions. - To provide feedback or information to non-EU authorities, the BoI must be satisfied that: - (i) such feedback/information is used only for lawful supervisory purposes within the authority mandate, and - (ii) the underlying information is kept confidential. - The BoI takes steps to ensure that a foreign authority’s use of feedback is limited to supervisory purposes and that equivalent confidentiality protocols are observed. ### UIF international cooperation and limitations - Criterion 40.4—(Met): UIF provides feedback to foreign counterparts on the use and usefulness of received information, particularly when forwarded to law enforcement agencies and prosecutors (based on prior consent). - Criterion 40.5—(Met): The AML Law does not envisage conditions for the UIF to decline or limit cooperation with foreign counterparts; no requests have been refused. UIF may decline only when disclosure: - “could lead to impairment of a criminal investigation (...) or, in exceptional circumstances, where divulgation of the information would be clearly disproportionate to the legitimate interests of a natural or legal person or the Member State concerned or would otherwise not be in accordance with fundamental principles of national law” (article 4(3) of the Council Decision). - This waiver has not been applied so far. - Criterion 40.6—(Met): UIF requests and uses foreign information for intelligence purposes related to analysis of suspicions only. Prior consent is always sought from the counterpart when sharing information with a third party (typically LEAs or prosecutors) or using it for further purposes (Article 9.3. of the AML Law). - Criterion 40.7—(Met): STR-related information exchanged is protected under the same confidentiality regime as domestic STRs (article 9.3 of the AML Law). - Criterion 40.8—(Met): UIF has the capacity to obtain the same information for foreign requests as it would for domestic reports (Article 6.6. of the AML Law). UIF can access a wide variety of sources and treat international requests as equivalent to domestic STRs. ### Legal bases and safeguards for supervisors and cross-border sharing - Article 7 (6) of the CLB: BoI must fully cooperate by sharing information with authorities and committees of the EFSF for their functions. - Article 7 (7) of the CLB: BoI can, within cooperation agreements and equivalent confidentiality obligations, exchange supervisory information with competent authorities in non-member states. - Article 4 of the CLF: Does not place undue restrictions on sharing information; Article 4 (5 bis) allows sharing with non-EU authorities provided requisite provisions regarding professional secrecy are in place. - For EU supervisors receiving information from BoI: strict confidentiality requirements under EU law; receiving authority must seek BoI consent before passing information to a third party. - The BoI employs measures to determine if an equivalency test is met before sharing information with competent non-EU authorities. - Article 10, paragraphs 7 and 8, Decree-Law n. 209/2005: information received by IVASS from other EU/non-EU Authorities may not be forwarded to other Italian authorities and third parties without prior consent of the providing Authority. ### Exchange of information between FIUs, supervisors, and LEAs - Criterion 40.9—(Largely met): UIF provides cooperation on ML and TF based on article 9.3 of the AML Law and Council Decision 2000/642/JHA. The AML Law lacks an explicit reference to UIF’s power to exchange information related to predicate offenses. - Criterion 40.10—(Met): UIF provides feedback to foreign counterparts upon request. Initial feedback is always provided in response to spontaneous disclosures. - Criterion 40.11—(Met): UIF can exchange all information held in its database and can share information gathered from GdF and DIA. - Criterion 40.12—(Met): See criterion 40.2 text (procedural provisions enabling cooperation). - Criterion 40.13—(Met): Articles 7 of the CLB, 4 of the CLF, and 10 (7) of the Private Insurance Code allow BoI, CONSOB, and IVASS to share any information with EU and non-EU authorities for their functions. - Criterion 40.14—(Met): The same provisions permit sharing with committees of the ESFS for performance of their functions. - Criterion 40.15—(Met): See Criterion 40.8 (authority to conduct inquiries and provide information on behalf of foreign counterparts). - Criterion 40.16—(Met): Subject to EU and Italian law, BoI must seek consent of the requested supervisor before sharing information other than with EU supervisors. Article 7 (6) and (7) outline consent requirements and limitations for onward disclosure. - In practice, where consent to onward disclosure from a non-EU originator is denied, the BoI either: (i) refrains from onward disclosure, or (ii) where professional secrecy cannot be invoked, undertakes legally permissible action to resist the request and may inform the requester that disclosure may affect cooperation and mutual trust. - Criterion 40.17—(Met): LEAs can exchange domestically available information with LEAs of EU Member States, including identification and tracing of assets (Council Framework Decision 2006/960/JHA). The International Police Co-operation Service in the MoI ensures exchanges via Interpol, Europol and SIRENE and acts as Assets Recovery Office (ARO). - Criterion 40.18—(Met): LEAs may use their domestic powers, including investigative techniques, to conduct inquiries and obtain information on behalf of foreign counterparts. - Criterion 40.19—(Met): LEAs can form joint investigative teams upon a judicial authority’s request under bilateral/multilateral agreements and MOUs. A legislative proposal to allow creation of joint investigative teams has been tabled in Parliament. Italy participates in frameworks for Rapid Border Intervention Teams and Frontex cooperation (Council Regulation (EC) 2007/2004; Regulation (EC) No 863/2007; Regulation (EU) No 1168/2011; Regulation (EU) No 1052/2013). - Criterion 40.20—(Met): UIF, LEAs, and supervisors are authorized to exchange information indirectly with non-counterparts. ### Weighting, conclusion, and compliance outcome - Italy meets all FATF R.40 criteria except: - 40.1 — largely met - 40.9 — largely met - Minor deficiencies: - UIF does not have explicit powers to share information related to predicate offenses. - Overall assessment: Italy is largely compliant with R.40. ### Summary of Technical Compliance — Key Deficiencies (selected) - Recommendation 1 — LC - Exemptions regarding CDD measures not based on an assessment of low risk. - GdF had less success ensuring supervised persons/entities understand, assess and mitigate ML/TF risks. - No secondary legislation for DNFBPs on RBA, except PIE auditors and notaries (guideline enforced by the profession). - Recommendation 2 — LC - A national strategy and prioritized action plan informed by the recently completed NRA has not yet been formulated. - No explicit powers to the FSC to deal with PF issues. - Recommendation 3 — LC - Amounts of fines for ML and self-laundering for natural persons are not sufficiently dissuasive. - Recommendation 6 — LC - No system for active notification to financial institutions and DNFBPs of newly listed persons. - Recommendation 7 — PC - Legislation does not guarantee implementation without delay. - No system for active notification to financial institutions and DNFBPs of newly listed persons. - Recommendation 8 — LC - Fragmented monitoring system not focused on TF risks. - Policies to promote transparency and integrity of the sector could be improved. - No specific point of contact and procedure to respond to international requests of information related to NPOs. - Recommendation 10 — LC - No requirement to identify the settlor of a trust. - No requirement for insurers to identify the beneficial owner of higher risk beneficiaries that are legal persons or arrangements. - No requirement to implement specific risk management procedures for transactions before identity verification is completed. - Statutory exemptions from full CDD measures for a specified range of customers. - Recommendation 12 — LC - Obligations with respect to domestic PEPs not extended to DNFBPs. - No requirements for persons holding prominent positions in international organizations. - No requirement to determine whether the beneficial owner of a beneficiary of a life insurance policy is a PEP. - Recommendation 13 — PC - Requirements do not apply with respect to EU-based correspondent institutions. - Recommendation 15 — LC - AML law does not require institutions to identify the risk in new products and practices. - Recommendation 16 — PC - No requirement to obtain, verify or record information on the beneficiary of a wire transfer. - Very limited requirements for intermediary institutions. - Recommendation 17 — LC - No proper assessment of country risk when determining where a third party may be based. - Recommendation 18 — LC - No requirement for screening of employees at hiring. - Measures for foreign branches and subsidiaries limited to CDD and record keeping. - Recommendation 20 — LC - Reporting of suspicious transactions does not extend to predicate offenses to ML. - Recommendation 21 — LC - Tipping-off and confidentiality requirements do not extend to reporting related to predicate offenses to ML. - Recommendation 22 — LC - No requirement for identification of domestic PEPs for DNFBPs. - No specific regulations or guidance for DNFBPs on new technologies. - Recommendation 23 — LC - DNFBPs not explicitly required to report suspicions related to predicate offenses associated to ML. - Tipping off and confidentiality requirements do not explicitly extend to reporting of suspicions related to predicate offenses. *Summary derived from the provided IMF evaluation text.* ### 24. Transparency and beneficial ### 24. Transparency and beneficial ownership of legal persons ### Major compliance findings (Recommendations 24–40) - Recommendation 24 (Transparency and beneficial ownership of legal persons) — LC - No mechanism for monitoring the quality of assistance received from other countries. - Minor deficiencies: No requirement to maintain relevant information in Italy, except for SRLs; no mechanism to ensure that transfers of shares conducted by banks and stockbrokers (even though there are no stockbrokers currently operating in Italy) are reflected in a timely manner; beneficial ownership of legal persons with foreign ownership cannot always be determined on a timely basis; possible delay in the filing of changes in the ownership of joint stock companies that are not listed; No obligation to maintain corporate books of associations, and foundations after dissolution; sanctions available for failure to comply with some but not all relevant obligations; possible delays in international cooperation. - Recommendation 25 (Transparency and beneficial ownership of legal arrangements) — LC - Insufficient sanctions for failing to grant competent authorities timely access to information. - Recommendation 26 (Regulation and supervision of financial institutions) — LC - Supervisory tools currently in use do not provide comprehensive data on the inherent risk faced by institutions and the risk mitigants used. - Recommendation 27 (Powers of supervisors) — LC - The inability to impose administrative sanctions on natural persons and to remove directors and managers and the relatively low level of sanctions that can be applied to legal persons are weaknesses in the sanctions regime. - Recommendation 28 (Regulation and supervision of DNFBPs) — LC - The absence of administrative sanctions for DNFBPs in general and for casinos with respect to the failure to meet record keeping requirements are weaknesses. - The lack of a supervisory methodology that provides GdF with good quality and comprehensive information on persons’ inherent ML/TF risk and risk mitigants used is also of concern. - Recommendation 29 (Financial intelligence units) — LC - No power to access LEA information. - Narrow dissemination to a limited number of LEAs. - Recommendation 30 (Responsibilities of law enforcement and investigative authorities) — C - This recommendation is fully met. - Recommendation 31 (Powers of law enforcement and investigative authorities) — C - This recommendation is fully met. - Recommendation 32 (Cash couriers) — LC - The administrative sanctions do not appear to be dissuasive. - Recommendation 33 (Statistics) — LC - No statistics related to MLTF MLA and extradition. - Not sufficiently comprehensive statistics related to ML investigations, prosecutions and convictions. - Recommendation 34 (Guidance and feedback) — LC - There is need for more guidance to DNFBPs from the UIF on STRs and from the BoI on ML/TF risk. - Recommendation 35 (Sanctions) — PC - The monetary sanctions which can be applied by BoI are relatively low and unlikely to be dissuasive. - Financial sector supervisors cannot impose pecuniary administrative sanctions in excess of $200,000. (Sanctions in excess of this amount can be applied by the MEF subject to notice by supervisors.) - The BoI’s administrative sanctions can only be applied to legal persons but not to an institution’s Board of Directors or senior management, and it does not have the direct power to remove these persons from office. - There is uncertainty on whether sanctions available under the CLB can be applied to banks supervised by the ECB. - Recommendation 36 (International instruments) — C - This recommendation is fully met. - Recommendation 37 (Mutual legal assistance) — LC - There is no case management system in place to monitor progress on requests. - Recommendation 38 (Mutual legal assistance: freezing and confiscation) — LC - There are no arrangements for coordinating seizure and confiscation actions with other countries. - Recommendation 39 (Extradition) — C - This recommendation is fully met. - Recommendation 40 (Other forms of international cooperation) — LC - UIF does not have explicit powers to share information related to the predicate offenses. ### Policy implications and priorities (from findings) - Strengthen mechanisms to monitor quality of international assistance and timeliness of corporate ownership filings. - Require maintenance of relevant ownership information for entities beyond SRLs. - Establish mechanisms to ensure transfers of shares conducted by banks and stockbrokers are reflected in a timely manner. - Enhance sanctions framework to allow administrative sanctions on natural persons and higher pecuniary sanctions for legal persons and senior management where appropriate. - Improve supervisory tools and methodologies to provide comprehensive data on institutional inherent risk and risk mitigants, including for DNFBPs. - Expand UIF powers to access LEA information and to share information related to predicate offenses. - Develop a case management system to monitor MLA requests and arrangements for cross-border coordination of seizure and confiscation. ### Key governance notes - Financial sector supervisors’ pecuniary administrative sanctions cap: $200,000. - BoI administrative sanctions apply only to legal persons and cannot remove Board members or senior management directly. - Uncertainty exists regarding applicability of CLB sanctions to banks supervised by the ECB. --- ### Annex II. Overview of Italy’s Anticorruption Measures ### Institutional and preventive measures - National Anti-Corruption Authority (ANAC): central role in preventing corruption among public administrations and state-owned/controlled companies by ensuring transparency of their management. - ANAC supervises and monitors public procurement contracts/agreements, has authority to monitor procurement procedures, and to sanction violations of regulation in the area of public contracts. - ANAC monitors the expenditure process in accordance with Legislative Decree n. 229 of 2011 aimed at making expenditure for public works efficient by improving decision-making and financial resource management. - All financial transactions related to public work, services and supplies are to be recorded on dedicated bank accounts and must be made through (bank/post) wire transfers. - Payment instruments must include, in respect of each transaction, the Codice Unico di Progetto (CUP) and the Codice Identificativo della Gara (CIG) issued by ANAC to ensure traceability. ### Repressive system changes — key laws - Law n. 190 dated 6 November 2012 (Legge “Severino”): - New definition of “concussion” criminalizes exclusively the conduct of the public official who forces a person to pay a sum of money or other benefit which are not due. The minimum term of imprisonment has been increased to six years. - New offence “undue inducement to give or promise money or other benefit.” Public official or person in charge of a public service punished by imprisonment from three to eight years. The private person who has been induced to pay is now also punished by up to three years of imprisonment. - Article 318 of the Penal Code replaced by the new offence of corruption of a public official in the exercise of the performance of the duties of his/her office, increasing sanctions from previously six months to three years to now from one to five years of imprisonment. - Increased sanctions: corruption in the performance of acts in breach of official duties (“corruzione propria”) now from 4 to 8 years; corruption in judicial proceedings now from 4 to 10 years; abuse of office now from 1 to 4 years; misappropriation of public property or public funds (“Peculato”) minimum term increased. - New offence of “trading in influence” punished with imprisonment from one to three years. - Law n. 69 dated 29 May 2015 (entry into force 14 June 2015): - Increases penalties for embezzlement, corruption, judicial corruption, and inducement to provide/promise gains. - Ancillary punishment introduced: payment of a sum equal to the amount improperly received by a public official or person in charge of a public service in favor of the administration (to be issued upon a case-by-case basis). - Public Prosecutor must inform the ANAC President of the indictment charges in prosecutions for specified crimes including trading in influence, disruption in auction and disruption in contractor selection. - "False corporate accounting" crime reformulated: punishable by one to five years’ imprisonment; in listed companies imprisonment is from three to eight years. - Amendments introduced to administrative liability of entities to cover new criminal offences related to false corporate accounting. --- ### Annex III. Italian Companies Classified by Size of Capital - Limited liability companies (SRL) — Capital Registered - 10–15 k E. 715,237 - 15–20 k E. 38,729 - 20–25 k E. 58,922 - 25–50 k E. 108,346 - 50–75 k E. 82,206 - 75–100 k E. 44,471 - 100–150 k E. 77,776 - 150–200 k E. 1,979 - 200–250 k E. 2,146 - 250–500 k E. 5,506 - 500 k–1 ml E. 6,125 - 1–1.5 ml E. 3,209 - 1.5–2 ml E. 1,314 - 2–2.5 ml E. 995 - 2.5–5 ml E. 1,774 - more than 5 ml E. 8,534 - Grand Total 1,157,269 - Joint stock companies (SPA) — Capital Registered - 100–150 k E. 4,471 - 150–200 k E. 1,066 - 200–250 k E. 1,357 - 250–500 k E. 3,817 - 500 k–1 ml E. 5,819 - 1–1.5 ml E. 4,625 - 1.5–2 ml E. 2,054 - 2–2.5 ml E. 1,875 - 2.5–5 ml E. 4,055 - more than 5 ml E. 6,298 - Grand Total 35,437 --- ### Annex IV. Anti-Mafia Measures — Seizures and Confiscations (Direzione Nazionale Anti-mafia data) ### Assets seized over January 1, 2013–November 30, 2013 (by region; in €) - Table highlights (exact entries preserved): - TOTAL: 4,148 immovable assets, 1,447,785,574 value; 1,397 registered movable assets, 27,270,222 value; 3,733 movable assets (firms, securities, shareholding assets, money amounts, banking deposits), 1,394,657,588.84 value; 9,278 total assets; 2,869,713,384.84 TOTAL VALUE - Examples by region (preserved exact numbers): - CALABRIA: 622 immovable assets, 206,461,502; 147 registered movable assets, 2,877,500.00; 420 movable assets, 324,692,869.00; 1,189 total assets; 534,031,871.00 TOTAL VALUE - CAMPANIA: 964 immovable assets, 535,997,504; 356 registered movable assets, 5,584,905.00; 957 movable assets, 285,177,465.00; 2,277 total assets; 826,759,874.00 TOTAL VALUE - SICILY: 1.219 immovable assets, 344,380,555; 340 registered movable assets, 6,990,958.00; 579 movable assets, 454,927,024.00; 2,138 total assets; 806,298,537.00 TOTAL VALUE - ABROAD: 5 immovable assets, 7,806,000.00; 5 registered movable assets, 20,000.00; 9 movable assets, 8,054,825.00; 19 total assets; 15,880,825.00 TOTAL VALUE ### Assets confiscated between January 1, 2013 and November 30, 2013 (by region; in €) - Table highlights (exact entries preserved): - TOTAL: 1,740 immovable assets, 507,977,521.00 value; 613 registered movable assets, 24,614,272.40 value; 2,146 movable assets, 2,408,617,712.54 value; 4,499 total assets; 2,941,209,505.94 TOTAL VALUE - Examples by region: - SICILY: 361 immovable assets, 109,976,114.00; 150 registered movable assets, 4,104,338.00; 509 movable assets, 1,708,536,138.00; 1,020 total assets; 1,822,616,590.00 TOTAL VALUE - LOMBARDY: 74 immovable assets, 17,687,223.00; 31 registered movable assets, 1,600,522.00; 1,082 movable assets, 449,487,744.00; 1,187 total assets; 468,775,489.00 TOTAL VALUE - ABRUZZO: 10 immovable assets, 3,237,600.00; 28 registered movable assets, 592,500.00; 7 movable assets, 15,658,624.00; 45 total assets; 19,488,724.00 TOTAL VALUE - ABROAD: 0 immovable assets, 0.00; 7 registered movable assets, 2,880,000.00; 2 movable assets, 27,500.00; 9 total assets; 2,907,500.00 TOTAL VALUE --- ### Annex V. DIA Seizures and Confiscations; GdF Seizures ### DIA seizures and confiscations (€ millions) - Seizure — Anti-Mafia Measures / Activity of judicial police / Total - 2010: Anti-Mafia Measures 3266.8; Activity of judicial police 179.3; Total 3446.1 - 2011: Anti-Mafia Measures 568.8; Activity of judicial police 196.3; Total 765.1 - 2012: Anti-Mafia Measures 984.3; Activity of judicial police 292.1; Total 1276.4 - 2013: Anti-Mafia Measures 1146.6; Activity of judicial police 105.4; Total 1252 - Confiscation — Anti-Mafia Measures / Activity of judicial police / Total - 2010: Anti-Mafia Measures 130.2; Activity of judicial police 99.7; Total 229.9 - 2011: Anti-Mafia Measures 484.3; Activity of judicial police 539.4; Total 1023.7 - 2012: Anti-Mafia Measures 1772.7; Activity of judicial police 26.6; Total 1799.3 - 2013: Anti-Mafia Measures 2716.3; Activity of judicial police 47.4; Total 2763.7 - Notes: - This table is a consolidation of statistics maintained by DIA over different time periods. Some seized assets may be double counted because they may be carried over from previous years. - Seizures related to ML are part of the anti-mafia measures and judicial activities, and therefore were not added under the total. ### Seizing related to GdF investigations (€ millions) - Yearly totals by category (exact entries preserved) - 2013: - MONEY LAUNDERING article 648 bis CC: Seizing based on the criminal proceeding (including per equivalent) 46.00; Seizing per disproportion (article 12 sexies Law Decree 306/92) 38.85; Anti-mafia measures (Legislative decree 159/11) -; Total amount 84.85 - article 648 ter CC: 3.00; 69.46; -; 72.46 - article 416 bis CC: 388.30; 136.96; 1,678.42; 2,203.68 - Corruption: 66.00; 12.34; 13.17; 91.51 - Tax crimes: 116.60; Not applicable; -; 116.60 - 2014: - MONEY LAUNDERING article 648 bis CC: 456.10; 17.21; 71.05; 544.36 - article 648 ter CC: 6.10; 115.77; 8.89; 130.76 - article 416 bis CC: 6.20; 91.98; 3,111.07; 3,209.25 - Corruption: 115.90; 11.57; 222.87; 350.34 - Tax crimes: 233.40; Not applicable; 196.81; 430.21 - Note: The table shows the seizures and confiscations measures proposed by the GdF in 2013 and 2014 for ML (article 648 bis CC) and for use of money, assets or property of illegal provenance (article 648 ter CC) as well as for corruption and tax crimes—all amounts are in euros. *Source: _cr1643 - 24. Transparency and beneficial* ### Annex VI. Number of alleged cross-border transportation ### Annex VI. Number of alleged cross-border transportation violations and the amounts seized (2013) ### Reported violations and amounts seized (by agency) - Customs Agency: Number of violations 5,143; Amounts seized 45,773,162 - Guardia di Finanza: Number of violations 250; Amounts seized 923,403 - Total: Number of violations 5,393; Amounts seized 46,696,565 ### Number of violations defined with the payment and the amounts paid - Customs Agency: Number of violations 4,943; Amounts seized 2,808165 - Guardia di Finanza: Number of violations 229; Amounts seized 285,940 - Total: Number of violations 5,172; Amounts seized 3,094,105 --- ### Annex VII. Italy-Switzerland cross-border movements of cash Source: Customs Agency and Monopoly ### Annual declarations, values, interventions, and violations - 2010 - Inbound: Total Declarations 1,433477,540,070; Total Interventions 372 - Outbound: Total Declarations 1,001886,127,762; Total Interventions 79 - Total: Total Declarations 2,4341,363,667,832; Total Interventions 451 - 2011 - Inbound: Total Declarations 1,266617,199,125; Total Interventions 514 - Outbound: Total Declarations 747511,184,211; Total Interventions 114 - Total: Total Declarations 2,0131,128,383,336; Total Interventions 628 - 2012 - Inbound: Total Declarations 1,367740,431,803; Total Interventions 677 - Outbound: Total Declarations 779456,327,265; Total Interventions 159 - Total: Total Declarations 2,1461,196,759,068; Total Interventions 836 - 2013 - Inbound: Total Declarations 1,172661,275,054; Total Interventions 1,019 - Outbound: Total Declarations 587541,503,125; Total Interventions 147 - Total: Total Declarations 1,7591,202,778,179; Total Interventions 1,166 - 2014 - Inbound: Total Declarations 1,060698,260,225; Total Interventions 1,166 - Outbound: Total Declarations 532690,499,060; Total Interventions 151 - Total: Total Declarations 1,5921,388,759,285; Total Interventions 1,317 --- ### Annex VIII. Authorities’ Response ### Context and assessment timeframe - The report provides an assessment of the anti-money laundering and combating the financing of terrorism (AMLCFT) measures in place in Italy at the date of the on-site visit (end of January 2015), including the risk scenario identified at that time. - Since then, the terrorist threat has increased substantially, and Italy is more seriously exposed to religious terrorism. The terrorist financing threat has increased as well, although not with the same intensity. ### Steps taken by Italy in response to increased TF and terrorism risks - In February 2015 new anti-terrorist regulations were adopted to tackle directly foreign terrorist fighters - FTFs and to strengthen the coordination in the Judiciary. - The Italian Financial Intelligence Unit (FIU) and the Guardia di Finanza have created specific units and procedures to ensure swift and in-depth analysis and investigation of TF-related STRs, including effective coordination with the Judiciary. - Information on individuals reported in TF-related STRs are timely shared by Guardia di finanza with the other LEAs in charge of counter terrorist activities, and the Strategic Counter-terrorism Analysis Committee (CASA) has established an ad-hoc working group aiming at monitoring FTFs and returnees (in October 2015 87 individuals, out of whom 18 deceased, and 12 returnees). - The UIF has launched an ad-hoc initiative on the analysis of transfers – through the banking channel – from Italy towards ISIL-occupied or controlled territories, and more strategic TF analysis is being developed. ### Private sector engagement and STR reporting - The private sector has a full understanding of the increased level of TF risks and is collaborating closely with the authorities: in 2015 the FIU received 197 TF-related STRs – i.e. almost 3 times the number of STRs received in 2014. *Annexes VI–VIII, Italy report (excerpts).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr1643.pdf_