The Bank of Italy (the Bank) makes foreign currency and euro transactions in non-SEPA countries on behalf of central government bodies; these include the management of letters of credit (also known as documentary credit).
Payments are made through a network of correspondent banks, subject to the provision of funds and based on detailed information sent by paying entities mostly via digitally signed flows, or otherwise via certified email (PEC).
The Bank also uses a 'multicurrency' service provider to process payments in a currency quoted by the ECB, for which it has no correspondent account.
The Bank's operations are run in compliance with international standards, with a special focus on anti-money laundering and counter-terrorism financing, as well as on the rules relating to requests from individual countries for payment reconciliation purposes (see FAQs on the countries adopting the Purpose Payment Code; only in Italian).
A letter of credit is a special form of payment used by the central government bodies to settle the purchase price of goods and services from foreign suppliers. In the case at hand, it consists of a binding letter from the Bank guaranteeing that a beneficiary will be paid, on behalf of central government bodies, upon presentation of supporting documents.
To obtain a letter of credit, central government departments are required to provide the necessary funds by issuing a payment order.
The payment is made subsequently upon presentation of supporting documents by the beneficiary in accordance with the terms of the letter of credit. The Bank uses a network of foreign correspondent banks for payment transactions.
