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Prevention of money laundering

Money laundering is the activity by means of which the proceeds of criminal activity are introduced into the legal economy, with a view to disguising or concealing their illegal origin. Money laundering harms the legal economy in that it alters the rules and conditions of competition in markets and is a threat to the efficiency and stability of the financial system and to confidence in the financial system.

The system for the prevention of money laundering is based on the following obligations:

• customer due diligence according to a risk-based approach;
• record-keeping of the information acquired in the performance of customer due diligence;
• reporting of suspicious transaction;
• adoption of adequate organizational and procedural arrangements and internal control measures.

An additional anti money-laundering tool, characteristic of Italy's legal system, consists of the provisions that limit the use of cash and bearer instruments in transactions in general.

The scope of anti-money-laundering legislation has been progressively extended beyond banks and financial intermediaries to other persons engaged in activities considered to be particularly exposed to the risk of money laundering (professionals such as lawyers, notaries and accountants and some categories of non-financial business such as antique dealers, casinos and real-estate agents).

The anti-money-laundering provisions are contained in a diversified set of international, European and domestic primary and secondary legislative sources.

At international level, a fundamental contribution to legislative harmonization has been provided by the Financial Action Task Force (FATF), the main international body active in combating money laundering, terrorist financing and the proliferation of weapons of mass destruction. The FATF drew up an internationally recognized set of standards, the 40 Recommendations, supplemented in 2001 by the 9 Special Recommendations on combating the financing of international terrorism.

The matter was completely revised in February 2012 with the adoption of the International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation, summarized in a new set of 40 Recommendations.

In addition, there are a number of Conventions drawn up by other competent international organizations (including the United Nations and the Council of Europe).

The Egmont Group, which brings together the financial intelligence units of the various countries, has performed a key role in defining the FIUs' core functions and is involved above all in strengthening the mechanisms of cooperation among FIUs. At Community level, EU Council Decision 2000/642/JHA sanctioned the definition of financial intelligence unit and laid down the principles and rules for exchange of information between FIUs.

The Community legislation on the prevention of the use of financial system for the purpose of money laundering and terrorist financing is contained in Directive 2005/60/EC of the European Parliament and the Council (the Third Anti-Money-Laundering Directive), implemented by Commission Directive 2006/70/EC. In the European context, studies are being conducted for a revision of the Third Anti-Money-Laundering Directive in light of the weaknesses that have emerged during its application and of the new FATF standards.

Within Italy, action to prevent and combat money laundering and terrorist financing is governed, at the level of primary legislation, by Legislative Decrees 231/2007 and 109/2007.