FATF Status

Italy is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The latest follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Italy was undertaken by the Financial Action Task Force (FATF) in 2019. According to that Evaluation, Italy was deemed Compliant for 18 and Largely Compliant for 20 of the FATF 40 Recommendations.

US Department of State Money Laundering assessment (INCSR)

Italy is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Overview

According to the International Monetary Fund, in 2021 Italy’s economy ranked eighth largest in the world and the third largest in the Eurozone.  Italy has a sophisticated anti-money laundering (AML) regime and has made good progress in establishing the legal, regulatory, and operational frameworks called for by international standards.  However, increasingly agile and complex organized criminal enterprises and a flourishing black-market economy pose significant risks to the financial system.  According to the Italian National Statistics Institute report, the blackmarket accounted for 11.3 percent of GDP, or approximately $235.5 billion (€203 billion), an increase of 2.68 percent over the previous year.  Tax crimes also represent a significant risk and have been identified as accounting for 75 percent of all proceeds-generating crime in Italy. 

While on the rise, customer due diligence (CDD) and suspicious transaction reporting (STR) remain weak among non-financial sectors, and regulations and enforcement are inconsistent.  Italy adopted laws implementing the Fifth European Union (EU) AML Directive with decree no. 125/2019.  CDD provisions require firms to focus on non-face-to-face operations and impose additional procedures to confirm the identification of clients

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          56

World Governance Indicator – Control of Corruption             69

Corruption is a major problem in Italy. The integrity of public officials is marred by their relationships with organised crime and businesses. Public procurement, particularly infrastructure, presents a very high risk of corruption, as it involves large resources and exposes companies to organised crime. Extortion, active and passive bribery, bribing a foreign public official, fraud and money laundering are criminalised under the Criminal Code of the Italian Republic. The anti-corruption laws broaden the scope and punishment of corruption offences, and are generally implemented effectively. Italy is a signatory to the OECD Convention and has rejected the exception for facilitation payments. For further information - GAN Integrity Business Anti-Corruption Portal

The eighth largest in the world, Italy’s economy is globally competitive in the areas of business and financial services, agricultural and food production, fashion, design, tourism, and industrial production including of vehicles and ships. Italy’s economy proved resilient to high energy prices and overall inflation in 2022, growing 3.7 percent. Robust growth in the construction sector, which benefited from tax credits for eco-friendly renovation projects, as well as rebound of the tourism and services sector, helped drive the overall expansion. Russia’s full-scale invasion of Ukraine exacerbated a pre-war trend of rising energy prices. Continuing supply-chain constraints, tighter monetary policy conditions, inflation, and Russia’s full-scale invasion create uncertainty affecting consumer and investor confidence. Italy forecasts its economy, the euro area’s third largest, will grow by 1.0 percent in 2023 and 1.5 percent in 2024. Public debt was 144.4 percent of GDP in 2022 and projected to decline to 141.4 percent in 2024, progressively declining from 155 percent in 2020.

Italy’s National Resilience and Recovery Plan (NRRP), which runs from 2021-2026, combines over €200 billion in EU funds to accelerate the digital and green transitions coupled with wide-ranging reforms addressing the Italian economy’s longstanding drags on growth – namely its slow legal system, convoluted tax administration, and bloated bureaucracy – while rebalancing policies to address gender, youth, and regional disparities. To date, Italy has received €67 billion in EU grants and loans as part of the NRRP. Further disbursements will be dependent on Italy’s achievement of EU-agreed milestones and targets. The government has had difficulty, however, in spending the funds as quickly as planned due to a lack of administrative capacity, a known risk factor that the NRRP seeks to address through reforms and increased capacity of the public administration, and a changing economic landscape following Russia’s full-scale invasion of Ukraine. For U.S. investors, judicial reform and bureaucratic streamlining would minimize uncertainty and create a more favorable investment climate.

Italy is and will remain an attractive destination for foreign investment, with one of the largest markets in the EU, a diversified economy, and a skilled workforce. Italy’s economy is dominated by small and medium-sized enterprises (SMEs), defined as firms with less than 250 employees. SMEs comprise 99.9 percent of Italian businesses. Italy’s relatively affluent domestic market, access to the European Common Market, proximity to emerging economies in North Africa and the Middle East, and centers of excellence in scientific and information technology research, remain attractive to investors. The clustering of industry, the infrastructure, and the quality of life are also among the top reasons international investors decide to start or expand a business in Italy. According to Italy’s Institute of Statistics, in 2020 over 15,600 foreign multinationals employed 1.5 million Italian residents.  Foreign companies account for 18 percent of Italian GDP and 14 percent of investments. Exports of pharmaceutical products, furniture, industrial machinery and machine tools, electrical appliances, automobiles and auto parts, food and wine, as well as textiles/fashion are an important source of external revenue. Sectors which have attracted significant foreign investment include telecommunications, transportation, energy, and pharmaceuticals. The government remains open to foreign investment in shares of Italian companies and continues to make information available online to prospective investors.

Country Links

Financial Intelligence Unit of Italy (UIF)

Bank of Italy

Commissione Nazionale per le Società e la Borsa