Italy’s Financial Sector: A Mixed Bag on Money Laundering Risks
Rome, Italy - Italy’s financial sector has made significant progress in understanding and preventing money laundering (ML) and terrorist financing (TF), but there are still areas that require improvement.
Effective Measures by the Banking Sector
According to a recent report by the International Monetary Fund (IMF), Italy’s banks have implemented effective measures to prevent ML and TF. Banks have demonstrated a good understanding of ML threats and have customer due diligence (CDD) measures in place. This includes:
- Conducting thorough background checks on customers
- Monitoring transactions for suspicious activity
- Implementing robust anti-money laundering (AML) programs
Mixed Understanding among Other Sectors
However, the understanding of ML/TF risks within other sectors is more mixed. The DNFBP (designated non-financial businesses and professions), including lawyers and accountants, have poor reporting practices and are less attuned to ML/TF risks.
- These sectors are more vulnerable to ML and TF due to their limited understanding of the risks involved
- There is a lack of consistency in CDD processes among these sectors
Challenges with Cash Reporting Requirements
Italy’s authorities have been criticized for not doing enough to prevent large-scale abuses of cash reporting requirements. Remittance services, provided by agents acting on behalf of companies with EU passporting arrangements under the Payment Services Directive, have been found to be particularly vulnerable to ML and TF.
Supervisory Challenges
The report notes that Italy’s financial sector supervisors generally have a good understanding of ML/TF risks, but their supervisory tools could be improved. The country’s central bank, Bank of Italy (BoI), is currently developing a new risk-based supervisory methodology, which will provide more comprehensive data on the nature and quantum of inherent risk at the level of individual institutions.
Conclusion
While Italy’s financial sector has made progress in preventing ML and TF, there are still areas that require improvement. To combat these risks effectively, the country’s authorities must work to enhance cooperation among domestic supervisory authorities and with home country supervisors.