FAFT Wants Italy to Strengthen Money Laundering Protections

A global financial crime watchdog wants Italy to get tougher on money laundering.

The Financial Action Task Force (FATF) released an assessment Thursday (April 23) of the Italian government’s anti-money laundering, counter-terrorist financing and proliferation financing (AML/CFT/CPF) measures.

While the regulator largely found that the country’s protections and approaches were adequate, it did note some places where there is room for improvement.

“There have been a significant number of prosecutions and convictions, particularly in the context of organised crime and for stand-alone money laundering, and a significant amount of illicit assets pursued and confiscated by Italian authorities,” FAFT said in its report.

“However, sanctions applied for money laundering are on the lower end of the spectrum considering Italy focuses on prosecuting money laundering relating to organized crime.”

The report also said that Italy’s financial institutions, virtual asset service providers “Designated Non‑Financial Businesses and Professions” have a good understanding of their terrorist financing and proliferation financing targeted financial sanctions (TFS) obligations and proper processes to ensure compliance with the relevant TFS lists.

However, FAFT said that Italy “needs to ensure new designations for terrorist financing-TFS are systematically implemented without delay by all natural and legal persons.”

Italy’s finance ministry released a statement calling the FAFT’s findings an “overall favorable assessment” of its measures.

“Compared to the previous evaluation in 2016, the FATF notes a significant strengthening of the institutional and operational framework, as well as improved capabilities in detecting and countering illicit financial activities,” the ministry said.

Meanwhile, American banking regulators have recently released a proposal that implements changes required under the Anti-Money Laundering Act of 2020.

As PYMNTS wrote earlier this month, a closer reading of the proposal shows that it keeps the traditional structure of AML programs in place. Banks need to have internal controls, independent testing, appoint a designated compliance officer and offer ongoing training.

“What seems on a glide path for change is how those components must operate. Internal controls must be risk-based and ‘reasonably designed’ to identify, assess and mitigate risks tied to customers, products and geographies,” the report said.

“Banks must also update programs as their business changes. A new product, a new customer segment or expansion into a new market requires a reassessment of risk and, where necessary, redesign of controls.”