Italy’s Anti-Money Laundering and Counter-Terrorist Financing Efforts Face Challenges

Rome - Italy has made significant strides in combating money laundering (ML) and terrorist financing (TF), but its efforts remain plagued by coordination issues, limited resources, and a lack of criminalization of self-laundering.

Coordination Issues and Limited Resources

According to a recent report, the Italian authorities have not yet developed a nationally coordinated AML/CTF strategy that is fully informed by the ML/TF risks identified in the National Risk Assessment (NRA). Supervisors have not fully adapted their tools and operational practices to reflect these risks, and the Financial Intelligence Unit (UIF) could improve its policies and activities.

• Better coordination between law enforcement agencies (LEAs) and prosecutors is needed.
• Limited resources are a hindrance to effective investigations and prosecutions.

Lack of Criminalization of Self-Laundering

The report also highlighted the need for criminalizing self-laundering, which remains a significant challenge in Italy’s AML/CTF efforts. While LEAs have the skills to take down ML networks, current efforts focus mainly on sanctioning predicate offenses and confiscating related assets, rather than standalone ML cases or those generated by foreign predicate offenses.

Awareness of ML Risks

Italy’s financial sector has a good understanding of ML risks, but this awareness is not as widespread within other sectors, such as designated non-financial businesses and professions (DNFBPs). The country’s criminal judicial system is also complex and lengthy, which can undermine the effectiveness of investigations and prosecutions.

Institutional Framework

Italy has a comprehensive institutional framework for LEAs responsible for investigating ML, TF, and predicate offenses. These agencies have access to a broad range of financial and other information, but more granular statistics on investigations, prosecutions, and convictions would help the authorities better gauge their performance.

Terrorist Financing

In terms of terrorist financing, Italy’s anti-terrorism investigative activities are focused on detecting and disrupting cells, with parallel financial investigations. While there have been some convictions for terrorist activities in recent years, none of these investigations found evidence of TF activities.

• Italy has effectively implemented targeted financial sanctions (TFS) and controls on dual-use goods under relevant international agreements to mitigate the risk of proliferation financing.
• However, efforts focus more on the risks emanating from Iran, and additional outreach to the financial and non-financial sector would strengthen the system.

Conclusion

Overall, while Italy has made progress in combating ML/TF, its efforts remain hindered by coordination issues, limited resources, and a lack of criminalization of self-laundering. The country must continue to work on improving its AML/CTF framework to effectively combat these threats.