The Financial Action Task Force (FATF) has published its Mutual Evaluation Report (MER) on Italy, assessing the effectiveness and technical compliance of the Italian framework to combat money laundering and terrorist and proliferation financing (AML/CTF/CPT) (available here).

Overall, the MER recognises that Italy has a robust, mature and enforcement-driven system, particularly effective in tackling complex money laundering linked to organised crime. At the same time, FATF identifies a number of weaknesses, notably in beneficial ownership transparency, sanctions effectiveness and supervisory coverage in parts of the non-financial sector, which will require targeted remediation over the coming years.

The FATF focuses on a number of aspects within the MER divided by main areas of evaluation and compliance with the 40 FATF Recommendations for AML/CTF/CPT.

The main FATF findings include:

• Limited use of pecuniary sanctions and lengthy sanctioning timelines (up to two years), all of which undermine deterrence;
• Insufficient transparency on beneficial ownership (UBO) due to the suspension of the national register and the absence of effective alternative mechanisms;
• Not sufficiently proportionate or dissuasive sanctions for non-compliance with the filing of UBO information;
• Weaker risk understanding and compliance in the CASP sector;
• Delays in UN-to-EU transposition of targeted financial sanctions, relying on database searches that do not fully meet FATF expectations.

Authored by Jeffrey Greenbaum, Elisabetta Zeppieri, and Rebecca Carbone.