Financial Crime News wanted to find out more about how Italy was tackling illicit finance, the role of organised crime and the response, not just from the public sector but also from the private sector and why Italy has a much better record than most other countries when it comes to prosecutors’ activity, money laundering convictions and asset confiscations. To seek answers to these questions, FCN asked Michele Valeriani, Chief Anti Financial Crime Head at Generali, the largest insurance company in Italy and among the top 10 largest insurance companies in the world, for his thoughts on these and much more besides. For the PDF Full Interview CLICK HERE: FCN : M Valeriani – 15:11:2021 Pd
1 – FCN: What are the main financial crime related threats and vulnerabilities facing Italy?
MV: According to Italy’s National AML Risk Assessment (NRA) published in 2018, the main criminal activities of concern were corruption, extortion, tax offences, usury, drug trafficking, bankruptcy & corporate offences. These were followed by crimes being related to gambling, smuggling & counterfeiting, sexual exploitation & illegal waste trafficking. Organised crime remains the most dominant of criminal behaviours, with Mafia groups posing an “unparalleled” threat, evolving their approach over time. The recently published Organised Crime Index 2021 highlights the cocaine trade and human trafficking as most prevalent among Italian organised crime groups followed by people smuggling, arms trafficking and illegal waste trafficking.
Italian money laundering methods and techniques include cash based money laundering, from illegal activities such as trafficking in drugs, but also counterfeit goods & human trafficking, but also infiltration and use of business sectors, loan sharking, and trade based money laundering. In particular, the use of cash and the un-observed economy are the dominant factors contributing to the overall country’s risk level. To be noted, in addition, the increasing use of cyber channels to commit offences, such as fraud, typically used to launder funds, for example through online activities and using virtual currency.
In 2019, the Bank of Italy’s (BOI) Financial Intelligence Unit (UIF) identified domestic and foreign real estate transactions, money transfers, small cash businesses, private banking, gambling, the art trade, and NPOs as the primary avenues for money laundering.
According to the NRA, the overall money laundering threat rating for Italy was assessed as “Very Significant”, with the inherent risk also evaluated as “Very Significant”. In all, 6 sectors were considered as “Very Significant” and particularly vulnerable for money laundering. They were lawyers, real estate agencies, other fiduciary service providers (investment and asset management), foreign electronic payment and money institutions, cash-for-gold operators and chartered and expert accountants. The rationale for increased vulnerability relates to the sectors exposure to infiltration by criminal groups and their perceived role and/or importance in supporting:
Financial transactions, including providing higher risk products such as correspondent and private banking or international wires, remittances or cash.
Anonymity in financial transactions, which is particularly the case for some e-money products, virtual currencies, and unregulated crowdfunding platforms;
Use of cash, for example particular cash intensive business types, for example the gaming and betting sector; and
Involvement in establishing or maintaining corporate entities or other legal structures, where identification of and access to beneficial ownership information is limited or not transparent.
Though the use of cash is the most frequently used form of payment in shops in Italy (with differences from North to South) and is more popular in Italy than in many other EU countries, controls over the possession and use of the €500 euro denomination note and strong controls in the financial sector have to some extent mitigated this risk. The FIU has recently (since January 2021) even advised that FIs should stop reporting low value cash related STRs. Nevertheless, cash intensive businesses are a target for infiltration by organised crime to launder cash proceeds. Particular cash intensive sectors identified in the NRA are gambling operations, clubs, restaurants, bars, and hotels. Other sectors attractive to organised crime include construction, wholesale and retail trading and scrap and waste management. It has to be noted, (according to the NRA) that the controls and continuous enforcement actions implemented against money laundering lowered significantly the risk that Italy is used with money laundered from abroad.
Whilst progress has therefore been made on reducing the threat of cash based money laundering, the next focus is more on trade based money laundering (TBML – over/under- invoicing, multiple invoicing, ghost shipping, etc.) and the associated tax evasion and fraud threats (issue of invoices for non-existent transactions, assignment of non-existent credits, international VAT fraud and, more in general, international tax fraud / evasion).
Overall, as per the Follow Up Report about the implementation of ML/CFT measures in Italy undertaken by the FATF in 2019, the country “has made progress in addressing the technical compliance deficiencies identified in its MER and has been upgraded on 8 Recommendations”, was deemed Compliant for 18 and Largely Compliant for 20 of the FATF 40 Recommendations.
Financial Crime Resources Covering Italy – 2021
To see the Italy 2 page Country Financial Crime Dashboard published in 2021 by FCN See HERE:
For more details including a comprehensive Threat Assessment covering italy published in 2021 See HERE:
To see the comparative analysis of 10 peer countries including Italy based on 400 KPI7KRI Metrics and 11 Key Findings See HERE:
2. FCN: Is the prevalence of corruption and organised crime the biggest concern?
MV: Despite progress made to tackle corruption, with indicators suggesting real progress has been achieved, history shows that progress can also slow and is affected by those in high office. For example, TI’s corruption perception index still scores Italy at 53/100, the lowest score across Western Europe, though this is an improvement from its original score in the first ever CPI in 1995 where Italy’s equivalent score was 29.9/100. Italy’s score peaked in 2001 at 55/100, falling back to 39/100 in 2010 & 2011 before incremental year on year improvements with scores at 50/100 or above since 2017.
As with corruption, complacency in combatting organised crime is to be avoided, as many successes can be recalled, for example, the number of reported mafia associations were counted at 153 organisations in Italy in 2005, each classified as mafia crime groups, whereas by 2018, this number had reduced to 93, though by 2019 the number was back up to 160.
Organised crime in Italy can never be underestimated and in particular appears to be able to continue to adapt to survive. As Italy is the birthplace of the original mafia groups they remain powerful, like the Calabria-based ’Ndrangheta, considered by many as one of the most potent and influential organised criminal groups in the world. Other powerful mafia groups in Italy are the Cosa Nostra in Sicily and the Camorra, a Campania-based mafia, as well as the Sacra Corona Unita and Società Foggiana, based in Basilicata and Apulia respectively, and the Spada and Casamonica clans from Rome and it’s surrounding neighbourhoods.
According to the Organised Crime Index 2021, “While the traditional mafia groups in Italy have extensive access to weapons, their employment of violence has declined in recent decades as the groups strive to remain under the radar of law-enforcement and state authorities. All major mafia groups in the country are involved in a significant number of different criminal markets, as well as being deeply entrenched in the legal economy through their infiltration into the construction, food-distribution, agri-food, healthcare and renewable-energy sectors, among others. As a result of the strengthening of anti-mafia measures in Italy, mafia groups have turned to other European countries to launder their illicit proceeds, and none more so than the ’Ndrangheta, the group most integrated into financial systems across Europe. Finally, mafia groups in Italy are heavily entrenched within the democratic and political system in the country and have been from the very beginning of their existence. Mutually beneficial agreements between mafiosi and local politicians are regularly struck, and the infiltration of criminal actors within local political structures is widespread, as evidenced by the number of local administrations dissolved every year as a result of mafia infiltration.”
So whilst corruption and organised crime will always be a concern, methods evolve, such that there is less actual violence, including Mafia related killings, down from an average of 100 a year at the start of this decade and reducing to an average of less than 50 a year for 2017.
3. FCN: How has Italy responded to the threat from organised crime?
MV: Powerfully. Also considering the social impact of these crimes within Italian society, the Italian authorities have fought it very strongly. Let’s go back to 1982, after the murders of Carlo Alberto Dalla Chiesa (General of the Carabinieri corp), and Pio La Torre (member of the Italian Chamber of Deputies and of the “Anti Mafia Commission”), the Italian Parliament passed the so- called Rognoni – La Torre, introducing for the first time the predicate offence of ‘mafia-type association’ in the Criminal Code, long promoted by La Torre. This new law also introduced broad based asset forfeiture measures that targeted no longer just the individual but also in particular the mafia and their assets. In 1992 after the Italian Supreme Court rejected legal challenges that the law was unconstitutional, anti mafia prosecutors Giovanni Falcone was murdered by the Sicilian mafia. He had some years earlier successfully investigated, prosecuted and had convicted 19 leading mafia bosses, 338 mafiosi being sentenced to life for the bosses and 2,665 years imprisonment in total. One of the most important factors in the trial was proving that the Mafia was not a collection of separate gangs but a single organisation, thereby establishing that the top tier of Mafia members were complicit in all the organisation’s crimes. Another anti mafia prosecutor Paolo Borsellino was also murdered in 1992 a few weeks after Falcone’s death also by the mafia.
In it’s leader column on July 26th, 1992, the Milan-based daily newspaper Corriere della Sera declared, “we have seen another judge die, we have seen the state mishandled by an angry crowd, we have seen the lire and the stock market give way. Above all, in this last week – seven incredible days – we have palpably felt the growing public uneasiness. Citizens demand action from a state that so far appears impotent in the face of organised-crime. But frankly they doubt that the counteroffensive is possible, led by a political class delegitimised by its own actions, by corruption, thievery, by the immorality brought to light by the magistrates.”
Fighting for its political life the government took a series of dramatic steps to restore its credibility including passing Italy’s first comprehensive witness protection program, offering sentence reductions in exchange for the support of mafiosi prepared to testify and a strengthening of the resolve of the government judiciary and prosecutors to go after the mafia. The government also decided to send 7,000 Italian army troops to Sicily acknowledging that the government wanted to restore full control on the region. The government reaction to tackle the mafia was in large part because of the constant pressure created by public demonstrations in Sicily and the rest of Italy. Rather than being cowered by the murders of Falcone and Borsellino, those in opposition to the mafia rose up and realised it was high time to fight back, with the magistrates murders having the opposite effect from that the mafia had expected.
Today responsibility for tackling financial crime as well as organised crime is shared between the 70,000 strong Guardia di Finanza (G. di F. or GdF), and the anti mafia (AMF) directorates. The GDF is an Italian law enforcement agency under the authority of the Minister of Economy and Finance. It is a militarised police force responsible for dealing with financial crime and smuggling; it has also evolved into Italy’s primary agency for suppressing the illegal drug trade. The AMF Directorate operates both at national and at district levels through anti-mafia prosecutorial offices, which have significant investigatory tools. The symbolic value of specialised investigations, prosecutions, and trials acts as demonstrative deterrent, which affects perceptions and assessments of the fight against organised crime. To prove a point, only this month, an Italian court has sentenced 70 members of the Ndrangheta, with 6 of those convicted receiving the maximum 20-year sentence that prosecutors had asked for, as part of a continuing multi year case which involves 355 alleged mafiosi and corrupt officials.
4. What are the main emerging financial crime threats?
MV: Likewise other countries, as more activity transfers online, financial frauds facilitated by cybercrime are on the rise as is the use of cryptocurrency.
PWC’s Global Economic Crime Survey Italian Addendum 2016” reports that, “in Italy about one in five organisations (21%) claimed to have been a victim of economic and financial frauds”. “In Italy, asset misappropriation is still the most common type of economic crime which represents about 70% of all frauds declared (65% in 2014), with a 5% increase. Bribery and corruption show the most significant increase. In 2016, 23% have been a victim of this crime, a 10% increase from 2014 (13%). In third place, Cybercrime is the most dangerous crime, affecting 20% of respondents (22% in 2014)”. It also reported that “7% of Italian organisations suffered losses between 5 million and 92 million Euro in the previous 2 years“.
According to the Commander General of the Guardia di Finanza, Gen. Zafarana, earlier this year – during his hearing at the Finance Commission of the Chamber of Deputies, made it clear – “how criminality tends to exploit more and more the anonymity offered by cryptocurrencies,” and that GDF is working hard to keep on top of this.
Whilst not emerging as such, tax offences continue to evolve. According to the last FATF Report on Italy published in 2016 (2016 FATF MER), “Tax evasion (i.e., income tax evasion and VAT fraud) is by far the single most important source of proceeds of crime. Tax and excise evasion (around 75% of total proceeds of crime). By value, most tax evasion takes place in northern Italy; tax evasion in the southern regions, while more widespread, tends to involve smaller amounts.”
According to the NRA, the amount estimated for tax evasion was €86.4 billion, being the average annual value for the period 2011-16, down from €140 billion of the previous analysis. Of this new figure, the estimate for tax evasion due to non-payment of taxes, and errors in completing tax returns, is €13.2 billion. It is likely that a significant amount of funds undeclared to the Italian tax authorities are held offshore, with Italians typically favouring Switzerland, Monaco, San Marino & Liechtenstein. According to a 2018 OC in EU report, the national industrial association claimed that the total tax and contribution evasion in 2015 amounted to €122 billion — about 7.5% of GDP.
Finally, when considering emerging risks, the effects of COVID 19 have to be considered. Whilst organised crime takes advantage from a growing economy, they are also a beneficiary when economies experience significant downturns, and just as they benefited from the last economic crises, there is evidence that the crises created by Covid 19 also benefited organised crime in Italy, through for example many opportunities for fraud, from misuse of government programmes, money lending, and takeover of bankrupt once legitimate businesses.
5. FCN: Italy’s performance in terms of asset recoveries and money laundering convictions are much more positive than anywhere else – how has this been achieved?
MV: First of all, as highlighted already, the fight against financial crime is particularly intense in Italy because of the events of 1982 and of 1992 in particular and targeting the money is a key element of Italy’s anti mafia strategy, pursued aggressively by Italian Prosecutors, using the many investigatory tools at their disposal, for many decades. The experience gained over this time has allowed the Italian system to progressively improve and to mature, and is not waiting for outside policy makers to impose standards on Italy, but instead is showing:
Robust policy cooperation and coordination across relevant authorities where Italy has also a track record of fast local transposition of AML EU directives;
Comprehensive activity of Law enforcement agencies (e.g., for combating the organised crime and also specifically the financial crime and the smuggling with the strong involvement of the “Finance Police”, the GDF, & the Anti Mafia Directorate having access to, using, and developing high quality financial intelligence);
Supported by the Independent Financial Intelligence Unit, under the Italian Central Bank, also benefiting from intelligence and information from the Financial sector (mainly the traditional banks) which invested heavily in AML capabilities, training of employees and a corporate culture that understand the importance of AML in the broader context of Italy’s national security.
The Italian FIU was described in the 2016 FATF MER as “a well-functioning financial intelligence unit. It produces good operational and high quality strategic analyses that add value to the STRs.” According to the 2019 Annual report, the FIU received 105,789 suspicious transaction reports, 7,759 more than the previous year, and sums of money reported16 within STRs totalled €84 billion in 2013 (5.25% of Italian GDP), and €164 billion in 2014 (10.25% of GDP).
The most STRs in 2019 were reported from Lombardy (19.8%), followed by Campania (12.2%) & Lazio (10%). The Italian UIF (FIU) is staffed with 152 people in 2019, an increase from 146 in 2018, and 142 in 2017. This is also an increase from 121 staff in 2012, and 130 in 2014. STRs related to terrorism finance were also filed and included in these numbers. In 2013, 131 STRs were reported representing 0.2% and in 2014 93 STRs representing 0.13%.
According to the 2016 FATF MER, “Intelligence disseminated by the UIF generally leads to successful investigations into ML/TF and related predicate offences by recipient agencies”.
An IMF Report published in February 2016 provided great insight into the work of the Italian FIU and the effect of STR’s and their contribution to fighting financial crime. According to the IMF Report, 71,661 STRs were filed with the Italian FIU in 2014. These STR’s involved an estimated 323.9 million transactions valued at €21.4 billion. The main offences identified in these STR’s were tax evasion, fraud, participation in organised crime, drug trafficking, illegal disposal of toxic waste and human trafficking.
In 2014 of 85,581 STR’s analysed, 28,220 (33%) led to further investigations, 8,355 (10%) led to investigations with positive outcomes, with 6,049 (7%) STRs absorbed into existing legal proceedings, 931 (1.1%) STRs requested to be used by prosecutors and 588 (0.7%) to commence new legal proceedings or investigations. In 2014 STRs led to the identification of 755 criminal violations of which 66 related to money laundering, 115 to non compliance with AML/ CFT Laws and Regulations, 276 from fiscal violations, 43 from fraud, 13 from loan sharking, 31 from illegal unlicensed financial activity and 35 from falsifications. In addition 449 additional organised crime investigations were triggered by STRs in 2014, with 143 against the Cosa Nostra, 105 against the Camorra, 187 against the Ndrangheta & 10 against the Apulian and 4 others.
Compared to a number of it’s European peers:
- Italy spends an estimated 1.6% of GDP (2018) on law and order, (police courts and prisons) which exceeds the EU average of 1.5% and most other large EU countries, including Germany & France (both at 1.3%), Belgium (1.5%) and the same as the Netherlands & Spain (both at 1.6%). Taking the FIU as an example to compare staffing levels, the Italian FIU employs 152 persons, with a staff to STR ratio of 1:697, better than 1:4,856 in the UK, 1:1,462 in the Republic of Ireland, but worse than France at 1:543 & Germany 1:263.
STR conversion rates in Italy (an indicator of the usefulness and usage of STRs through further dissemination) is at an estimated 33%, well above the estimated 10% average for the EU as estimated by Europol in 2014 (10.89%).
Italy reported 4,927 money laundering related convictions in 2012 (based on the last comprehensive assessment published in the 2016 FATF MER), from 14,688 persons prosecuted for ML, tax crimes and corruption (success rate of 34%). Most recently available figures elsewhere reveal convictions for ML for the UK at 1,400 and 111 for Spain.
Italy also reported significant asset confiscations. For the period 2010 to 2014, assets seized averaged €3.162 billion and assets confiscated averaged €1.498 billion, with the total value of assets seized overall in 2013 at €5.484 billion and in 2014 €4.675 billion (based on figures reported in the 2016 FATF MER). In 2019, the Interior Minister, Lamorgese, reiterated that “the fight against the mafia was a high priority” as she revealed to Parliament that almost €3 billion (£2.6 billion) assets, including businesses, property and furniture, had been either seized or confiscated from the mafia since the beginning of the year. In 2018, mafia assets totalling €9 billion were seized or confiscated, up from €5.4 billion in 2017. Based on these figures, Italy is likely one of the most successful countries in the world, with asset recovery figures likely above 10% of estimated criminal proceeds, and equivalent seizure figures for countries across Europe are less than €250 million a year at best and likely well below 1% of estimated criminal proceeds.
Italy’s overall imprisonment rate is larger than many at 90 people per 100,000 people (2021), whereas the rate in France is 87 & Germany is 69 though not as high as in the UK at 114 or Spain at 122.
6. FCN: What role do financial institutions play in contributing to the successes seen against illicit crime in Italy?
MV: A fundamental one; I should say “the” fundamental one, as far as accepting a role as the “sentinels” on the ground, detecting and reporting suspicious activity to the FIU and co operating with law enforcement agencies in their investigations, as well as seeking to maintain a well-established, safe, and respected financial system.
Italy was one of the very first countries to introduce money laundering as a criminal offence, dating back to 1978, which introduced via Article 648 of the Penal Code, punishing with imprisonment from 4 to 10 years and with a fine from 1 million to 20 million lire anyone (“except in cases of complicity in the offence”) who performed acts or deeds aimed at replacing money or valuables from such offences with money or other valuables. In 1991, Italy implemented the recommendations from FATF, including requiring Financial Institutions to adopt AML programmes, and have made necessary changes to implement EU AML Directives, including extending AML obligations in 2004 (implementing EU 2nd MLD) to non-financial entities, considered particularly exposed to money laundering. Further legislative changes prohibited transfer of cash or bearer securities between private individuals when the value exceeds €12,500, including professionals such as tax consultants, auditors, real estate agents, commercial lawyers, notaries, and dealers in precious goods, in particular when payment is made in cash and in amounts exceeding €15,000.
These have been updates and today various categories of professionals are covered including notaries, lawyers, accountants, auditors and auditing firms and non-financial operators, providers of business and trust services; subjects dealing in antiques and art or who act as intermediaries in the trading of such items, also when this is carried out by art galleries or auction houses when the sums involved, even when split up or in connected transactions, are equal to or more than €10,000; subjects that keep or trade works of art or that act as intermediaries to trade them, if this activity is carried out in free ports and the value of the transaction, even if split, or of connected transactions, is equal to or more than €10,000; credit recovery, custody and transport of cash, securities and valuables; professional gold traders, subjects engaging in civil mediation, estate agencies, also including intermediaries for leasing properties and, in that case, limited to transactions in which the monthly rental is equal to or more than €10,000. Most recently as of 2020 digital payment services are also coming under the scope of money laundering laws as well as are those exchanges involved in cryptocurrency.
The Italian financial sector, and in particular the banking sector has been involved in combatting money laundering for 3 decades, with the banks and insurance companies in particular having a good understanding of the ML risks they face. They are also implementing necessary measures to mitigate ML risks, increasing the sensitivity and awareness of all employees, and fostering a hostile culture towards money laundering enterprise wide and not just within the Compliance/ AFC teams, and especially in the business and front office units.
Nevertheless, effectiveness ratings reported by FATF in its 2016 FATF MER rated IO4 Preventative Measures as having only a “Moderate” level of effectiveness, as well as having the same rating for IO3 Supervision. This despite, FATF reporting in 2016 that, “FIs generally have a good understanding of ML threats that they face, and the larger banks appear to be strongest in their mitigation efforts”, and that “CDD measures are well embedded in the financial sector.” Supervisors were encouraged by FATF, to improve co operation domestically among supervisory authorities, and with home country supervisors, as well as improving the understanding of different inherent money laundering risks for those they regulate
7. FCN: Why doesn’t Italy have a formal PPP like many other countries such as the UK, Germany and the Netherlands?
MV: While a formal public private partnership program to fight money laundering is not in place in Italy, other informal exchanges and joint initiatives are running or being established to improve the information sharing from private to public sector, converting AML/CFT reporting from the private sector into effective outcomes against crime.
As a practical example, in July 2021 the Bank of Italy published a paper (No. 629 – Principled data access: building public-private data partnerships for better official statistics) promoting a set of principles under which the public and the private sector can form partnerships to leverage data routinely collected by the private sector to increase the efficiency and effectiveness of public service and policymaking.
I expect Italy will follow others in establishing formal Financial Information Sharing Partnerships (FISPs) fighting financial crime, and that by working even closer together overall effectiveness of the Italian AML/CTF regime can be further enhanced.
8. FCN: What effect will the planned EU AML reforms have on the fight against financial crime in Italy?
MV: Italy has been largely timely in implementing the EU level reforms on AML, however, as Group Anti Financial Crime Officer of one of the largest international Financial Institutions across the EU, I believe that that the planned EU reforms will have a fundamental role in resolving regulatory differences, and facilitating a centralised supervision in the AML/CTF matters
These developments should facilitate greater consistency and as such lead to increased integration, and more common rule books which mean financial institutions will be able to define policies and procedures at a group level and see those accepted and implemented at a local level, enabling high standards to be deployed but with greater simplicity and less burden.
The EU reforms, including both the ones from the European Commission and also the latest guidelines from the EBA, will further push and increase the focus on KYC/CDD/ EDD and Customer Risk Rating measures. FIs will also need to intensify their efforts in knowing who their clients are (also including the adoption of the UBOs registry), including those relationships around their customers.
Furthermore, at Board and Senior Management level there will be an even greater attention to these increased risks and expectations from those in the C Suite as well as in the Compliance Leadership team including in particular those leaders responsible for managing ML/TF risk.
9. FCN: What further improvements would help Italy further improve effectiveness in fighting financial crime?
MV: There is growing consensus that the current framework for fighting financial crime is not as effective as it could be, and that more needs to be done at both international and national levels to help identify and stem the flow of illicit proceeds. The new EU AML package improves the harmonisation of EU AML/CTF rules and the EU as a result will have greater tools to supervise the regulated sector and encourage FIUs to better co operate and fulfil their responsibilities. Over and above these changes I’d recommend:
(i) Improving further the use and the quality of data. Today, data on customers and their transactions is too fragmented, with each institution holding different data sets on the same customer or counter-parties with criminals benefiting from this gap to abuse products and services offered by financial institutions. The sharing (with necessary arrangements and safeguards and adhering to the data protection regulatory requirements) of common particular datasets, for example types of STRs, or Higher Risk Customers, or suspected fraud cases for legitimate AML/CTF purposes, such as preventing and detecting financial crime, with other financial institutions, would be a big step forward.
(ii) Accelerating the full implementation of a robust beneficial ownership registry, which is able to be accessed by financial institutions and provides verified information to match information provided by customers.
(iii) Promoting and acceptance of new technologies at the national and supranational level, including artificial intelligence/machine learning to improve important processes, both on customers and transactions, on fraud and other financial crimes.
(iv) Additional guidance from Authorities, in particular deeper threat assessments and feedback so that AML/CTF programmes can flex further to differentiate and so mitigate threats beyond the generic ML descriptions, especially as far as national priorities are concerned, but also recognising the international dimension too.
(v) Clearer and more balanced expectations on FIs. The spectrum of actions and attention needed to effectively fight financial crime threats has never been as important as it is now. Still the operating environment is full of challenges, not least faced by FIs navigating globalisation changes and digitalisation, and a multitude of traditional but evolving financial crime threats as well as emerging ones and significant regulatory change. COVID 19 also has and still is an important factor to consider which has multiple effects, for example: remote working, remote client relationship making the KYC process more difficult, misuse of online financial services/virtual assets, fake COVID-19 fundraising campaigns, etc. Supervisors need to balance strict regulatory compliance obligations to promoting truly risk based intelligence and evidence led responses by FIs not only judging them on what they may have missed but also on what they have found. In this way FIs will also be incentivised to present detect report and co operate even more with Law Enforcement and so to encourage overall effectiveness as opposed to focussing just on technical compliance with AML laws and regulations.
10. FCN: Any Final thoughts?
MV: Italy can be seen as an example and a reference point in the fight against financial crime which includes organised crime, through its own difficult history facing up to the threats organised crime can pose to societies if not confronted. That Italy introduced very early laws to criminalise money laundering in 1978, introduced the crime of mafia association and provided legal authority for asset confiscation in the absence of a criminal conviction in 1982 and one of it’s cities gave its name to the UN organised crime convention in 2000 (the Palermo convention) speaks of a long enduring struggle.
In the same way, that Italy have been pioneers in the design of a complex system, positive results can be reported, certainly comparable to many other countries. These are merits and advantages that, though it is always good to remember, Italy has achieved through strict necessity.
All financial crime fighters, today owe a responsibility to those that achieved hard fought successes and so we too now need to show we are up to the task of defending the gains made, never forgetting the price that has been paid by far too many to get this far. There is much to learn from Italy’s journey, not least that it’s certainly not over in the fight against financial crime.
15th November, 2021
Michele Valeriani is the Chief Anti Financial Crime Head at Generali, the largest insurance company in Italy and among the top 10 largest insurance companies in the world. He joined Generali in April 2021 from UniCredit where he was the Global Head of Anti Financial Crime and Group Bank Secrecy Act Officer 2019-2021 as well as previously holding numerous FCC and Compliance leadership positions at Unicredit since 2013. Michele started his career in London in 2004 in the Investment Banking Division of Deutsche Bank AG, within the European M&A, ECM and DCM desks, joining Bain & Company in 2006 in charge of debt restructuring and financial modelling for companies in distressed situations. He graduated in Economics from Bocconi University with major in Finance, [with foreign studies] at the New York Leonard Stern Business School and International Business at the Copenhagen Business School. He holds an MBA in Finance & Management with honours from the IE Business School in Madrid and completed an Executive Program on Leadership and Digital technologies at Insead, Paris & IMD, Lausanne.
