Anti-Money Laundering Regulations in Italy

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Historical Origins

When it comes to combating financial crimes, investigators start their analysis by first identifying the persons and which financial transactions have been carried out, e.g. the country of origin, the amount of money transferred, the sender, the recipient, and the reasons for the transfer. All this information is produced by obliged persons by carrying out a series of operations enacted by the Anti-Money Laundering legislation. in fact, this is the main measure to counter the multiple illegal conducts having as an object the distorted and illegal use of money. The experience of contrast, in the Italian system, has changed over time constantly confronting internal and external difficulties, it is probably thanks to these operational experiences that it has become an excellent tool to combat crimes.

The Italian Anti-Money Laundering function has its origins in two States, in the 1930s in the United States and later in Italy. It is known how the origin of the word "money laundering", is famous thanks to the American Mafioso, but of Neapolitan origin, Alphonse Gabriel called "Al Capone," who, by means of commercial activities such as Italian laundries and pizzerias, cleaned, transferred, concealed and re-introduced into the lawful market the (illicit) money which was the object of various crimes: such as alcohol smuggling (use and trade banned in the United States by the Volstead Act, 1919- to 1933), prostitution, gambling, and bribery.

American investigators and prosecutors at the time were not aware of this technique and its purpose, and there was no specific provision in the American Criminal Code dealing with this type of economic crime. It was only after the Al Capone affair, in 1930 or so, that the crime of money laundering was codified, and the offense was subsequently incorporated into current criminal law throughout the world. What does this offense consist of? It consists of three conducts, or rather three phases: Placement, layering, and immersion.

In parallel, several criminal organizations known as Mafia Ndragheta, Camorra, Cosa Nostra, and Sacra Corona Unita operate in the Italian peninsula. In particular, what makes the fight against money laundering in Italy significant is given by two important elements: the constant regulation on the subject and the EU impulse to contrast economic crimes and the professional experience of these mafia-like organizations in identifying and freezing illicit deposits. This allowed at the end of the 90s some judges, in particular, two: Giovanni Falcone and Paolo Borsellino, to coin by means of the Palermo Convention (of 2000) a modus to understand the illicit flows of money by means of a simple but important indication: Follow the Money. So true is this that it is narrated that these two magistrates traced the illicit flows by analyzing the current accounts and bank deposits, and following the money flows, they discovered that they belonged to members believed to be in the employ of the various mafia organizations, so these judges were able to reconstruct backward the criminal scheme and the provenance of the money. The fight against money laundering involves, as it does in all States, several credit supervisory authorities (Bank of Italy, FIU, Guardia di Finanza, and CSF - Financial Security Committee).

Italian Legislation

The first legislation to combat the phenomenon of money laundering dates back to Decree-Law No 143 of 3 May 1991, subsequently converted into Law No 197 of 5 July 1991, with the following wording: "Provvedimenti per la limitazione dell'uso del contante e per prevenire l'uso del sistema."

Guide for anti-money laundering regulations and authorities in Italy

The development of the phenomenon of money laundering has provided for further changes thanks to the introduction of Directive 2001/97/EC of 4 December 2001 (2 AMLD - Second Anti-Money Laundering Directive), implemented in Italy by Legislative Decree No. 26 of 10 June 1991. The evolution of the money laundering phenomenon has provided for further changes thanks to the introduction of Directive 2001/97/EC of 4 December 2001 (2 AMLD - Second Anti-Money Laundering Directive), transposed in Italy by Legislative Decree no. 56/2004, widening the scope of the obliged parties, i.e., the recipients of the anti-money laundering procedures, by including also non-financial entities, considered particularly exposed to the risks of this phenomenon. It also includes professionals such as tax consultants, auditors, real estate agents, commercial lawyers, notaries, and dealers in precious goods, in particular when payment is made in cash and in amounts exceeding €15,000.

Among other innovations, there was certainly the one related to the obligation to identify customers, several collaborations between professionals and investigative authorities are established. Hence, the principle of 'Know Your Customer' is that the consultant/intermediary is allowed to know his customer and provide the competent authorities with 'active cooperation' (which helps, not omits). Finally, the allocation of three types of forms of reporting for suspicious transactions, an activity that requires the obliged parties to send the authorities information on those customers who present anomalies concerning their identity (country of origin, politically exposed persons, etc.) or on what they are transferring: ordinary reporting, simplified reporting, enhanced reporting. The regulatory reference which, however, represents the core of the anti-money laundering legislation, as it regulates the definitions, the subjects involved, the types of changes, the acquisition, the recording, and the storage of anti-money laundering documentation, is undoubtedly given by Legislative Decree 231 of 21 November 2007, implementation of Directive 2005/60/EU (3 AMLD - Third Anti-Money Laundering Directive).

This legislative act also deals exhaustively with the administrative sanctions and economic values inherent in the specific regulatory violation committed by the professional. In addition, this decree established new bodies to control financial flows, such as the FIU of Italy and the (NSPV) Nucleo Speciale di Polizia Valutaria of the Guardia di Finanza, an economic police body under the Ministry of Economy and Finance. A further breakthrough came with Legislative Decree No. 90 of 2017, which implemented the Directive of 2015/849/EC regarding the "prevention of the use of the financial system for the purpose of money laundering and terrorist financing." With Article 2(2) of Legislative Decree No 90 of 2017, the legislator paid greater attention to the customer in question, the product, the nature, and the type of activity carried out. Subsequently, the Fifth Anti-Money Laundering Directive, Directive 2018/843/EC, is transposed with Legislative Decree 125 of 2020, a text that introduces new obliged parties such as digital payment services. Finally, we are waiting for the transposition of the Sixth Anti-Money Laundering Directive (6AMLD), published in the Official Journal on 12 November 2018, EU/2018/167, the deadline for its transposition having expired on 3 December. This act provides for important changes in the prosecution of the offense of money laundering, placing greater severity, in the 1930 Italian criminal code.

6AMLD Money Laundering 22 Predicate Offenses

Italian Criminal Code

Italy was one of the first countries to introduce money laundering as a criminal offense. This legislation dates back to the Law Decree of 21 March 1978, no. 59, art.3; later converted with amendments into law on 18 May 1978, no. 191, introducing the Italian penal code system, art. 648 bis of the Penal Code. Which punished with imprisonment from 4 to 10 years and with a fine from 1 million to 20 million for anyone ("except in cases of complicity in the offense") who performed acts or deeds aimed at replacing money or valuables from such offenses with money or other valuables.

In light of this conduct, it is also necessary to mention, for logical and regulatory reasons, Article 648 of the Criminal Code - receiving stolen goods, and then Article 648 bis.1 - self-laundering. The characteristics of the offense of money laundering are:

  • Multiple offenses because it is a crime against property and the State.
  • Of concrete danger: pursuant to Article 648 bis of the Criminal Code. it hinders the reconstruction of the paper trail, i.e. of the paper trail leading from the apparently legitimate asset, through the passages and the washing operations, to the discovery of the original criminal origin of the asset or of the money.
  • Predicate offense: The commission of this offense requires the commission of a previous offense (different from this one, which is terrorism financing - FT).
  • The general intent of the agent: it is necessary that the agent intends and carries out the action of cleaning, concealment, and remission of the money in order to commit the criminal offense of money laundering.

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