Reform of anti-money laundering regulation

Italy has recently implemented the EU Directive no. 2015/849 (IV Anti-Money Laundering Directive) on the prevention of the use of the financial system for the purposes of money laundering or terrorism financing and has accordingly reformed the existing regulation (Legislative Decree no. 231/2007) by the Legislative Decree no. 90 dated May 25, 2017, approved by the Italian Government on May 24 and published on June 19, 2017, in the Gazzetta Ufficiale no. 14, whose relevant provisions will come into force on 4 July.

The decree redefines expressions like “money laundering” (which includes operations like transfer, concealment or concealment of the real nature or origins, the purchase of any asset carried out being aware of the origin from criminal activity, although performed outside the national territory) or “terrorism financing” which now regards any activity directed, by any means, to the supply, collection, brokering, in whatever way, of funds and economic resources destined to terrorism.

Anti-money laundering duties concern a large audience of individuals, corporations and professionals including, among others, banking and financial intermediaries other financial operators (including trustee companies and credit intermediaries); accountants, accounting experts, any other person providing accounting and tax services; public notaries and lawyers; statutory auditors; real estate agents; mediators, and out-of-court credit collections companies.

The new regulation also confirms the applicability of the anti-money laundering provisions to the "gaming service providers", whose regulation is contained in the "new" Title IV of the Decree 231.

Furthermore, according to one of the most significant amendments to the existing regulation, anti-money laundering duties will also concern any banking and financial intermediaries and insurance companies which operates on "cross-border" basis in Italy, which means financial entities having their registered office and central administration in another Member State of EU without a branch on the Italian territory.

The system for preventing money laundering is based on cooperation between financial and other institutions and the administrative and law enforcement authorities.

The main anti-money laundering duties relate to:

1. Customer due diligence
2. Data retention duties
   and
3. Reporting duties.

At this regard, the obliged entity shall:

1. carry out an adequate client and/or beneficial owner due diligence in case of ongoing business relationship or occasional transaction involving the transfer or the handling of payment of an amount equal to or higher than 15,000 Euro or in any case, i) in case of doubts concerning the truthfulness of the data obtained or suspects of money-laundering or terrorism financing regardless of any exemption applicable; ii) clients located in high risk countries identified by the European Commission; iii) cross-border correspondence with a corresponding credit institution or financial institution in a third country; iv) ongoing professional relationships or transaction performance with clients and in case of politically exposed persons.
2. shall retain a copy of the documents collected during the customer's due diligence, indicating: i) the relevant date of the establishment of the business relationship; ii) personal data of the customer and/or the beneficial owner iii) the scope and nature of the legal relationship or of the transaction in place; iv) means of payment used by the customer.
3. shall submit without delay a suspicious transaction report to the UIF (Financial Intelligence Unit for Italy) when they become aware of, suspect or have reasonable grounds to suspect that terrorism financing or money laundering are in process or terrorism operations are being carried out or attempted, or whatever funds, regardless of their size, come from criminal activity.

Professionals are exempt from their obligation to report any information received from a client as a consequence of the examination of the relating legal position or the completion of defense in a proceeding before a judicial authority.

In case the obliged entities are unable to comply with the customer due diligence, they shall neither carry out occasional transactions nor establish business relationships.

The new legislation has tightened up the sanctions against those who have participated in money laundering and terrorism financing activities as well as professionals or institutions in relation to the violation of their duties of customer due diligence, data retention and reporting.