Financial Crime World

Italy Seeks to Crush Financial Crime with New Investigation Techniques and Laws

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Rome, Italy - As Italy’s economy begins to recover from the pandemic-induced slowdown, authorities are stepping up efforts to combat financial crime, particularly tax fraud and money laundering.

Combating Financial Crime

The European Public Prosecutors Office (EPPO) has launched several large-scale cross-border investigations into tax evasion and VAT-related offenses, with Italian courts handling over 30 cases. The Italian authorities have been focusing on a range of criminal activities, including:

  • Tax evasion
  • Credit fraud
  • Corruption

These crimes have plagued various sectors such as:

  • Healthcare
  • Construction
  • Retail
  • Transportation
  • Distribution
  • Sport
  • Logistics

Strengthening Transparency and Accountability Systems

Italy’s 2022 Corruption Perceptions Index score of 56 out of 100, as reported by Transparency International, highlights the need for continued efforts to address corruption. Authorities are adopting more proactive measures to combat corruption, including:

  • Strengthening transparency and accountability systems
  • Promoting whistleblowing
  • Imposing sanctions and seizures

New Whistleblowing Regime

A new whistleblowing regime was implemented in Italy this year, requiring public and private entities with at least 50 employees or those that adopt an Organizational Management and Control Model under Legislative Decree 231/2001 to establish internal reporting channels for employees and other stakeholders. Failure to comply can result in penalties.

Expanded List of Criminal Offenses

Italy has also expanded its list of criminal offenses triggering corporate criminal liability, including:

  • Bid rigging
  • Obstruction in the selection of a contractor
  • Fraudulent transfer of value

These additions are part of wider reforms aimed at combating fraud in public procurement and other financial crimes.

Impact on Companies

The introduction of new predicate offenses is expected to lead to an increase in investigations associated with public contracts. Companies adopting an Organizational Management and Control Model under Legislative Decree 231/2001 should review their internal control and risk management systems to ensure compliance.

Companies will need to:

  • Deal with the potential risks of retaliation, discrimination, or defamation against whistleblowers
  • Adopt specific procedures for receiving, managing, and verifying reports
  • External resources may be required to investigate reports, and corrective action may be necessary to strengthen internal controls

EPPO Investigations

The European Public Prosecutor’s Office (EPPO) has been conducting various investigations across the EU, with over 30 cases referred to Italian courts. EPPO’s investigative activity has focused on VAT-related offenses in several areas, including:

  • Electronic devices and technologies
  • Agricultural funding fraud
  • Ties to organized crime

Conclusion

As Italy continues its efforts to combat financial crime, it is clear that the country is committed to rooting out corruption and tax evasion, and to holding companies accountable for their actions. The new laws and investigation techniques are expected to lead to increased transparency and accountability in business practices.