By Italy, which has one of the largest economies in the world, criminalizes money laundering and terrorist financing. While the service sector constitutes a large part of the Italian economy, the industrial sector also has a certain share in the economy. If we examine Gross Domestic Product, GDP in Italy is 2.084 trillion USD. Italy aims to actively pursue its “Anti-Money Laundering” policies in order to protect this economy from financial crime threats.
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AML Regulators of Italy
The Ministry of Treasury of Italy and the Bank of Italy are Italy’s competent bodies in the fight against financial crime. Italy’s AML regulators are responsible for taking measures to prevent financial crime risks. In addition, Italy is a member of FATF and the European Union. Italy carries out AML regulations in accordance with FATF and European Union recommendations.
AML Requirements in Italy
Italy has clearly stated the AML obligations of companies with AML laws and regulations. For this reason, organizations under AML liability have to meet AML compliance by fulfilling their AML obligations while performing their services. Although some requirements vary from sector to sector, generally organizations under AML liability have to fulfill their “know your customer, customer due diligence, enhanced due diligence and risk-based approach” obligations.
What is Risk-Based Approach in AML?
According to FATF and European Union anti-money laundering regulations, the AML policies of organizations under AML obligation should be based on a risk-based approach. The risk-based approach enables businesses to fulfill AML controls by considering all risks. In addition, according to the risk-based approach, businesses have to check their customers periodically as risks may change over time.
Know Your Customer in Italy
Know your customer (KYC) is one of the key components of anti-money laundering (AML). It is mandatory for businesses under AML obligation to implement know your customer procedures in the customer onboarding process. In this process, businesses operating in Italy collect customer information and check the accuracy of customer information.
Customer Due Diligence in Italy
Another important AML requirement is customer due diligence (CDD). Customer due diligence procedures ensure that customer risks are detected. In this process, companies detect potential risks and threats in their customers with sanction screening, PEP screening and adverse screening. People in Sanction, PEP and adverse media data are defined as high-risk customers. For this reason, CDD procedures are important for determining high-risk customers in customer account opening processes.
Enhanced Due Diligence in Italy
Enhanced due diligence (EDD) is the next step of customer due diligence (CDD). EDD procedures are applied to medium and high-risk customers after CDD procedures. All risks are investigated in detail and if there is a suspicious situation, they are reported to financial intelligence units.