The banknotes and coins that are put into circulation by the monetary authorities follow a 'cash cycle' within the economic system, which involves various players:
- the Bank of Italy and the Ministry of Economy and Finance, which are responsible for issuing banknotes and coins respectively;
- banks and Poste Italiane SpA, which constitute the network for distributing to and collecting from the general public and other market operators;
- cash in transit/cash management companies, which make possible the distribution, collection and processing of cash;
- commercial distribution and specifically large retail chains, an important location for collecting cash;
- people, who contribute to the circulation through cash transactions.
As part of the national cash cycle, banks and cash in transit/cash management companies are considered as 'cash handlers', since they have greater responsibility in the professional handling of the banknotes and coins that they put back into circulation ('recirculation').
A specific regulatory framework has been drawn up at Eurosystem level, which requires cash handlers to check the authenticity and fitness to circulate of the banknotes and coins that they receive and that they intend to put back into circulation. These checks are designed to detect suspected counterfeits promptly and to ascertain the good quality and condition of banknotes and coins in circulation. Any suspected counterfeits are withdrawn and sent to the relevant authorities [Bank of Italy for banknotes and the Istituto Poligrafico e Zecca dello Stato (state printing works and mint) for coins].
These rules (see Regulation (EC) 1338/2001 and ECB Decision 2010/14) have been transposed into Italian law (Article 8 of Decree Law 350/2001).
The Bank of Italy has regulatory and supervisory powers, as well as the power to impose sanctions on all cash handlers involved in the recirculation of banknotes. In addition, through Legislative Decree 90/2017, which transposes the Fourth Anti-Money Laundering Directive (Directive (EU) 2015/849), the Bank has taken on the role of the sectoral anti-money laundering supervisory authority for non-financial operators that handle cash; in order to be able to operate, they must be entered in a special register that the Bank keeps.
Setting up recirculation activities
Non-financial operators that are licensed as cash handlers under Article 134 of the TULPS (Consolidated Law on Public Security) must be entered in the abovementioned register, which the Bank of Italy manages and updates. To be entered in the register, the following is required: key managers must satisfy professionalism and integrity requirements, partners must satisfy integrity requirements and operators must have a suitable organizational setup, both for banknote recirculation and for anti-money laundering purposes.
Banks and other entities that intend to engage in cash handling (see 'Measures for cash handlers') must inform the Bank of Italy in advance, using a certified email address (PEC) to send Attachment 4 of these 'Measures' to the Currency Circulation Management Directorate, at gcm@pec.bancaditalia.it (see the 'Recirculation carried out by other cash handlers' section).
Statistical reports
All cash handlers use the CASH-IT portal to send data on recirculation every six months. Operators entered in the register also send quarterly reports with the data requested for anti-money laundering purposes (see the 'Statistical reports' section).
Controls on recirculation
Banknotes
The Bank of Italy carries out checks on the recirculation of banknotes according to procedures established by the ECB. Specifically, the banknotes that cash handlers distribute to the public via automated teller machines (ATMs) or other customer operated machines must first have had their authenticity and quality checked, using equipment whose correct functioning has been verified by a Eurosystem national central bank (details are available on the ECB website).
The Bank of Italy, which has regulatory powers over cash handling, has established that cash handlers must adopt operational procedures for cash handling, an appropriate internal control system and measures to safeguard the security of banknotes, and must have staff with professional skills suitable for the work carried out and that continually undergo training.
The Bank of Italy carries out on- and off-site checks to verify compliance with the abovementioned requirements. The monitoring of cash recirculation is also carried out based on the information and data that operators send on a regular basis (see the 'Statistical reports' section).
As well as regulatory and supervisory powers over cash handlers, the Bank of Italy also has the power to impose sanctions in the event of non-compliance with the obligations provided for by law.
Coins
The checks on the recirculation of coins must be carried out according to the procedures established by the European Union.
The Ministry of Economy and Finance has regulatory and supervisory powers over cash handlers, as well as the power to impose sanctions in the event of non-compliance with the obligations provided for by law. Inspections are carried out by the Istituto Poligrafico e Zecca dello Stato.
Anti-money laundering checks
Legislative Decree 90/2017 gave the Bank of Italy the power to regulate, inspect, and impose sanctions, also in the field of anti-money laundering, on operators entered in the register kept by the Bank.
In order to implement the new measures, the Bank has set out requirements for the organization, procedures and internal controls for anti-money laundering, which supplement those already envisaged for recirculation. It has also drawn up the obligations for customer due diligence and for the storage of data and information.
