A comprehensive review of the effectiveness of Italy's measures to combat money laundering and terrorist financing and its level of compliance with the FATF Recommendations. Assessment conducted by the International Monetary Fund (IMF)

1. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016 1
Anti-money laundering and counter-
terrorist financing (AML/CFT)
measures in Italy
Fourth Round Mutual Evaluation
Key findings, ratings and priority actions
February 2016
www.fatf-gafi.org/publications/mutualevaluations/documents/mer-italy-2016.html

2. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
Key findings
 Italy has a mature and sophisticated AML/CFT regime, with
correspondingly well-developed legal and institutional
framework. It is nonetheless confronted with significant risk
of money laundering (ML) stemming principally from tax
crimes and activities most often associated with organised
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. 2

3. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
Key findings
 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.10-Feb-16 3

4. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
Key findings
 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.
10-Feb-16 4

5. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
Key findings
 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 organised crime groups, and foreign legal
arrangements operating in Italy pose a minor but growing
challenge.
10-Feb-16 5

6. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
Ratings – Effectiveness (1/3)
6
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which Italy
has achieved
this objective
1. ML and TF risks are understood and, where appropriate,
actions co-ordinated domestically to combat ML and TF
Substantial
2. International co-operation delivers appropriate information,
financial intelligence, and evidence, and facilitates action
against criminals and their assets
Substantial
3. Supervisors appropriately supervise, monitor and regulate
financial institutions and designated non-financial
businesses and professions (DNFBPs) for compliance with
AML/CFT requirements commensurate with their risks.
Moderate
4. Financial institutions and DNFBPs adequately apply AML/CFT
preventive measures commensurate with their risks, and
report suspicious transactions.
Moderate

7. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016 7
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which Italy
has achieved
this objective
5. Legal persons and arrangements are prevented from misuse
for money laundering or terrorist financing, and information
on their beneficial ownership is available to competent
authorities without impediments
Substantial
6. Financial intelligence and all other relevant information are
appropriately used by competent authorities for money
laundering and terrorist financing investigations.
Substantial
7. Money laundering offences and activities are investigated
and offenders are prosecuted and subject to effective,
proportionate and dissuasive sanctions
Substantial
8. Proceeds and instrumentalities of crime are confiscated. Substantial
Ratings – Effectiveness (2/3)

8. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016 8
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which Italy
has achieved
this objective
9. Terrorist financing offences and activities are investigated
and persons who finance terrorism are prosecuted and
subject to effective, proportionate and dissuasive sanctions.
Substantial
10. Terrorists, terrorist organisations and terrorist financiers are
prevented from raising, moving and using funds, and from
abusing the non-profit sector.
Moderate
11. Persons and entities involved in the proliferation of weapons
of mass destruction are prevented from raising, moving and
using funds, consistent with the relevant United Nations
Security Council Resolutions.
Substantial
Ratings – Effectiveness (3/3)

9. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
10-Feb-16
9
Ratings – Effectiveness
0
8
3
0
High
Substantial
Moderate
Low

10. 10-Feb-16
10
Ratings – technical compliance
(1/5)
AML/CFT POLICIES AND COORDINATION
1. Assessing risks & applying a risk-based approach LarLarLarLar Largely compliant
2. National cooperation and coordination LarLarLarLar Largely compliant
MONEY LAUNDERING AND CONFISCATION
3. Money laundering offence LarLarLarLar Largely compliant
4. Confiscation and provisional measures ComCo ComCo Compliant
TERRORIST FINANCING AND FINANCING OF PROLIFERATION
5. Terrorist financing offence ComCo ComCo Compliant
6. Targeted financial sanctions related to terrorism & terrorist financing LarLarLarLar Largely compliant
7. Targeted financial sanctions related to proliferation ParPa ParPa Partially compliant
8. Non-profit organisations LarLarLarLar Largely compliant

11. 8-Feb-16
11
Ratings – technical compliance
(2/5)
PREVENTIVE MEASURES
9. Financial institution secrecy laws ComCo Co Co Compliant
Customer due diligence and record keeping
10. Customer due diligence LarLarLarLar Largely compliant
11. Record keeping ComCo Co Co Compliant
Additional measures for specific customers and activities
12. Politically exposed persons LarLarLarLar Largely compliant
13. Correspondent banking ParPa Pa Pa Partially compliant
14. Money or value transfer services ComCo Co Co Compliant
15. New technologies LarLarLarLar Largely compliant
16. Wire transfers ParPa Pa Pa Partially compliant

12. 8-Feb-16
12
Ratings – technical compliance
(3/5)
PREVENTIVE MEASURES (continued)
Reliance, Controls and Financial Groups
17. Reliance on third parties LarLarLarLar Largely compliant
18. Internal controls and foreign branches and subsidiaries LarLarLarLar Largely compliant
19. Higher-risk countries ComCo ComCo Compliant
Reporting of suspicious transactions
20. Reporting of suspicious transactions LarLarLarLar Largely compliant
21. Tipping-off and confidentiality LarLarLarLar Largely compliant
Designated non-financial Businesses and Professions (DNFBPs)
22. DNFBPs: Customer due diligence LarLarLarLar Largely compliant
23. DNFBPs: Other measures LarLarLarLar Largely compliant

13. 8-Feb-16
13
Ratings – technical compliance
(4/5)
TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS
24. Transparency and beneficial ownership of legal persons LarLarLarLar Largely compliant
25. Transparency and beneficial ownership of legal arrangements LarLarLarLar Largely compliant
POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEAS
Regulation and Supervision
26. Regulation and supervision of financial institutions LarLarLarLar Largely compliant
27. Powers of supervisors LarLarLarLar Largely compliant
28. Regulation and supervision of DNFBPs LarLarLarLar Largely compliant
Operational and Law Enforcement
29. Financial intelligence units LarLarLarLar Largely compliant
30. Responsibilities of law enforcement and investigative authorities ComCo Co Com Compliant
31. Powers of law enforcement and investigative authorities ComCo Co Com Compliant
32. Cash couriers LarLarLarLar Largely compliant

14. 8-Feb-16
14
Ratings – technical compliance
(5/5)
POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND
OTHER INSTITUTIONAL MEASURES (continued)
General Requirements
33. Statistics LarLarLarLar Largely compliant
34. Guidance and feedback LarLarLarLar Largely compliant
Sanctions
35. Sanctions ParPa Pa Pa Partially compliant
INTERNATIONAL COOPERATION
36. International instruments ComCo Co Co Compliant
37. Mutual legal assistance LarLarLarLar Largely compliant
38. Mutual legal assistance: freezing and confiscation LarLarLarLar Largely compliant
39. Extradition ComCo Co Co Compliant
40. Other forms of international cooperation LarLarLarLar Largely compliant

15. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
10-Feb-16
15
Ratings – technical compliance
10
26
4 0
Compliant
Largely compliant
Partially compliant
Non compliant

16. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
Priority Actions for Italy to
strengthen its AML/CFT System
 LEAs should place more efforts on pursuing ML investigations and
prosecutions that focus on risks associated with self-laundering,
standalone money laundering, and foreign predicate offenses, and
the abuse of legal persons. Sanctions need to be strengthened.
 The UIF should be authorised to access law enforcement
information, and additional administrative databases (e.g., real
estate), and to disseminate analysis beyond DIA and GdF to other
relevant LEAs and agencies, and more selective in its
disseminations. The GDF and DIA should in turn provide better
feedback to the UIF.
 A national coordination mechanism amongst Italian LEAs and
customs should be established to identify travel routes, flights,
ships, and concealment methods that are considered highly used
by cash couriers. Customs should enhance its activities in targeting
proceeds of crime, including tax offenses, transported by cash
couriers and share suspicious cases with the UIF.
10-Feb-16 16

17. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
Priority Actions for Italy to
strengthen its AML/CFT System
 More granular statistics should be collected and maintained on
financial investigations and international cooperation in order to
be better able to measure performance.
 Regulatory and supervisory authorities are recommended to:
– Work with the financial sector and DNFBPs to improve the
understanding and implementation of requirements to
identify beneficial owners.
– Work closely with the financial sector to help improve the
latter's understanding of the typologies of tax crimes, and the
reporting of related suspicious transactions.
– Issue secondary legislation or encourage the development of
enforceable guidance to ensure coverage of all the DNFBP
sectors, and engage in an outreach.
10-Feb-16 17

18. Anti-money laundering and counter-terrorist financing measures in Italy – Mutual Evaluation Report – February 2016
Priority Actions for Italy to
strengthen its AML/CFT System
 Financial sector supervisors and the GdF should improve
supervisory tools, the inputs for which should include good
quality and consistent data on the inherent risks to which
entities/persons are exposed, and the type of risk management
practices they have in place. Sanctions for noncompliance need
to be strengthened.
 The OAM should strengthen cooperation with home country
supervisors of PI agents who operate in Italy under an EU
passport.
10-Feb-16 18