It was published in the Italian Gazzetta Ufficiale no. 140 of 19 June 2017 the Legislative Decree 25 May 2017, no. 90 which completely redrafts the Decree 231/2007, fully implementing the EU Directive 2015/849 (IV Anti-Money Laundering Directive) on the prevention of the use of the financial system aimed at money laundering and terrorist financing.
The main news of the provision which will come into force on 4 July are:
Money Laundering :
The decree defines the notion of “money laundering” including the following types of procedures:
1) Conversion or transfer of property knowing that such property is derived from criminal activity or from an act of participation in such activity in order to conceal or disguise the illicit origin of the ownership or to assist anyone who is involved in the commission of such activity to evade the legal consequences of his action;
2) Concealment or dissemblance of the real nature, source, location, disposition, movement, ownership or rights of assets, being aware that such goods are derived from criminal activity or an act of participation in such activity;
3) Purchase, possession or use of property knowing at the time of receipt that such property was derived from criminal activity or participation in such activity;
4) Participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counseling the commission of any of the actions mentioned in the foregoing points.
Money Laundering shall be regarded as such even when the activities which generated the property to be laundered were carried out outside the national boundaries.
Terrorist financing :
The expression means the provision or collection of funds, by any means, directly or indirectly, with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out any terrorist acts.
Obliged Entities :
1) Banking or financial intermediaries (the Decree lists different types of companies included in this category; e.g. Banks, Poste Italiane, Sim, Sgr);
2) Other financial operators (including Trust Companies and Credit Brokers);
3) Professionals in individual, associate or corporate form (e.g. Accountants and Labor Consultants);
4) Other natural or legal persons acting in the exercise of their professional activities (business associations, trade associations and CAFs);
5) Notaries and Lawyers: when they participate whether by acting on behalf of and for their client in any financial or real estate transaction, even by assisting in the planning or execution of such transactions in the following activities:
– Transfer of any right of immovable property or economic activity to any right;
– Management of money, financial instruments or other goods;
– Opening or management of bank accounts, deposit accounts and securities accounts;
– Organization of the necessary contributions to the establishment, management or administration of companies;
– Establishment, management or administration of companies, corporations, trusts or similar legal entities;
6) Statutory auditors and legal auditing firms;
7) Other non-financial operators included the entities who practice the following activities:
– Trade of ancient items, auction houses, art galleries;
– Professional Operators in Gold Business;
– Real estate agents;
– Civil brokers;
– Extra-judicial recovery of credits on behalf of third parties;
– Custody and transport of cash, securities or values by security guards, etc .;
– Gambling Services Holders.
Control Authorities :
The competences of the authorities involved in the prevention and repression of money laundering are regulated by:
– Ministry of Economy and Finance;
– Financial Security Committee;
– Sector Supervisory Authorities;
– Financial Information Unit (UIF);
– National Anti-mafia and Counterterrorism Directorate;
– Special Police Department of the Guardia di Finanza.
An active role is attributed to self-regulatory bodies that promote and control the fulfillment of anti-money laundering rules.
Main Obligations :
– Customer due diligence;
– Reports of suspicious transactions;
– Objective Communications;
The obligation to verify the client and the beneficial owner is activated in the following cases:
– Establishment of an ongoing working relationship or a job assignment for occasional professional services;
– In the case of an occasional transaction required by the client, involving the transmission or handling of payment means of an amount equal to or greater than 15,000 Euro, regardless of whether it is carried out with a single operation or with more than one operation, in order to realize a fractional operation which consists of a transfer of funds exceed 1,000 Euro.
In any case, the obliged entities must verify the client and the beneficial owner:
– When suspected of money laundering or terrorist financing, regardless of any exemption or applicable threshold;
– When there are doubts on the veracity or adequacy of data previously obtained for identification.
For banks, Poste Italiane SpA, electronic money and payment institutions, the obligations of customer due diligence are observed when they act as intermediary or are involved in the transfer of cash or bearer bonds, in euro or foreign currency, carried to any title between different parties, of a total amount equal to or greater than 15,000 Euro.
Obligations of verifications are not observed with regard to the transmission of statements coming from tax liability or fullfilment of obligations in relation to personnel management.
Content of customer due diligence obligations :
The obligations for customer due diligence are implemented by means of:
– Identification of the client and verification of his identity through an identity document or other equivalent identification document, as well as on the basis of documents, data or information obtained from a reliable and independent source;
– Identification of beneficial owner and verification of his identity;
– Acquisition and evaluation of information on the purpose and nature of the ongoing working relationship or the professional service;
– Constant control of the relationship with the client through the examination of his working activity, verification and updating of data and information;
The activities of identifying and verifying the identity of the client, the executor and the beneficial owner are implemented prior to the establishment of the ongoing relationship or assignment for occasional professional services or prior to the execution of the occasional professional service.
In case of a low risk of money laundering or terrorist financing, the verification of the identity of client, executor and beneficial owner may be postponed at a later stage (within 30 days) after the establishment of the relationship or the assignment of a professional service. This is possible only if it is necessary to better manage the activity or if the verification of the identity is impossible. The obliged entities must abstain and evaluate if it is correct to make a report.
For professionals, limited to cases in which they analyze the client’s legal position or carry out his defense or represent him in a judicial proceeding, even through an assisted negotiation agreement, including advice on the possibility of bringing it or avoiding it, it is provided the exemption from the obligation to verify the identity of the customer and the beneficial owner until the provision of the assignment.
Fulfillment of obligations :
– Identification of the client and the beneficial owner, in front of the same client or the executor, employees or associates of the obliged entity: identification consists of the acquisition of data provided by the client by means of an document identity or another equivalent document, a copy of it is enclosed in paper or electronic format. The client must also provide under his own responsibility the information required to enable the beneficial owner to be identified.
A number of cases indicate when the identification requirement is deemed as absolved, even without the physical presence of the client.
– The verification of the identity of the client, the beneficial owner and the executor requires the verification of the authenticity of the identification data contained in the documents acquired at the time of identification, when there are doubts, uncertainties or inconsistencies; a proof of it is the consultation of the public system for the prevention of identity theft referred to in Legislative Decree no. 64/2011;
– The acquisition and evaluation of information on the purpose and nature of the ongoing working relationship or of the professional service;
– Constant control during the ongoing relationship or professional service is carried out through the analysis of the operations carried out or the activities identified during the duration of the relationship, in order to verify that they are coherent with the knowledge that the obliged entity has about the client and his risk profile, including, if necessary, the source of the funds.
Simplified measures of customer due diligence :
In front of low risk of money laundering or terrorist financing, simplified measures of customer due diligence are provided for the extent and frequency of the obligations imposed on the obliged entities. To this end, obliged entities also take into account a number of low risk indices in relation to different kinds of clients, products, services, operations or distribution channels, geographic areas, etc.
Enhanced customer due diligence :
In case of high risk of money laundering or terrorist financing, the obliged parties apply a number of strengthened measures of customer due diligence.
The decree identifies a rage of risk factors, referring to the following elements:
– Clients: Ongoing relationships or professional services established or carried out under abnormal circumstances;
– Clients resident or domiciled in high risk geographic areas;
– Structures used for the transfer or deposit of money derived from criminal activity;
– Economic activities characterized by high use of cash, etc.;
– Products, services, operations or distribution channels: e.g., services offered to customers with large assets; products or operations that could favor anonymity; payments received by third parties without any obvious connection with the client or with his business, etc.;
– Geographical Areas: Third countries without effective anti-terrorism and terrorist financing prevention measures in accordance with FATF recommendations;
– Third countries that authoritative and independent sources consider to be characterized by high levels of corruption or permeability to other criminal activities;
– Countries subject to sanctions, embargo etc. issued by national and international organizations or which finance or support terrorist activities or in which terrorist organizations operate.
Supervisory authorities and self-regulatory organizations may identify additional risk factors to be considered. In this case, they may establish additional strengthened measures of adequate verification.
Adequate verifications must be strengthened in the following cases:
– Clients resident in high risk third countries identified by the European Commission;
– Cross-border correspondence with a credit or financial institution in a third country;
– Ongoing relationships, professional services or operations with clients and beneficial owners who are politically exposed.
Obligation to report suspected operations :
Obliged entities must submit a suspected operation report to the UIF (Financial Intelligence Unit for Italy), when they know or have convincing reasons to suspect that terrorist financing or money laundering operations have been carried out or attempted.
The decree specifies how to presume the “suspect”, on the basis of anomaly index processed and updated by UIF.
Except in specifically indicated cases, the operation can be carried out after the report.
The report contains data, information, description of the operation and the reasons for the suspect.
The following entities are exempt from the obligation to report suspected operations :
Professionals for the information they receive from their client during the examination of their legal position or their defense or representation before a judicial authority, even by means of assisted negotiation procedures, including advice.
For professionals, suspected operation reporting must be sent directly to the UIF or self-regulatory organizations (in this case, a special ministerial decree will establish the procedures in order to guarantee the privacy of professionals).
As soon as self-regulatory organizations receive the reporting from their members, they must send it to the UIF without the name of the informer.
Measures to protect the identity of the reporting person :
In order not to frustrate the reporting obligations and expose the reporting person, a number of measures have been provided to protect his identity:
– Obliged entities and self-regulatory bodies must take all appropriate measures to ensure privacy and identity of the reporting person;
– The judicial authority must take all the necessary measures to ensure that the identity of the reporting person remains confidential; the informer’s name cannot be included neither in the file of the Public Prosecutor’s Office nor in the hearing’s file, and its identity cannot be disclosed unless the Judicial Authority imposes otherwise with a reasoned decision and guaranteeing the adoption of any precaution capable of protecting the reporting person if it is necessary for the purposes of the investigation of violations;
– In the event of a complaint or criminal offence report, the reporting person’s identity is not mentioned, although known.
Prohibition of communications regarding to suspicious transaction reporting :
Obliged entities must not give to the interested client or third parties any information about the report, the transmission of additional data required by the UIF or the presence of inquiries about money laundering or terrorist financing.
It is worth mentioning that the professional’s attempt to deter a client from engaging in illegal activity is not a violation of the prohibition of communication provided in this article.
Obligation to abstain :
Obliged entities who cannot carry out customer due diligence must abstain from establishing, carrying out or continuing the relationship, professional service and operations. They must also consider whether a suspected operation has to be reported.
Professionals are exempt from the obligation to abstain only where they analyze the legal position of their client or execute the defense of their client or have representation tasks in proceedings before a judicial authority or in relation to such proceedings; the exemption is also extended to consultancy about the question of whether or not to start a proceeding.
The obligation to abstain also applies, directly or indirectly, in relation to the services of trust companies, trusts, public limited companies with head offices in high risk third countries.
Objective Communications :
Obliged entities, subject to prior obligations, will have to transmit to the UIF periodically data and information identified on the basis of objective criteria, concerning operations at risk of money laundering or terrorist financing that will be used to investigate suspicious transactions and carry out analysis of phenomena or types of money laundering or terrorist financing (the subsequent publication will include instructions on the type of data and transmission mode).
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