Prevention And Defense Of Money Laundering Cases In Italy

1. INTRODUCTION

1.1 Money Laundering

The geographical location and physical make-up of Italy has meant that it is a prime entry point into Europe for smugglers of drugs and other contraband. This has provided a high level of income for the long established organised criminal clans which operate in the country, which also derive funds from various other criminal activities chief amongst which are fraud, corruption, extortion, prostitution and illegal gambling. The organisational and territorial nature of the organised criminal clans means that much of the funds derived from such activities are channelled into commercial activity.

The focus of Italy's legislative efforts against money-laundering (known as riciclaggio) has been on organised crime and the banking industry, although the law is of general application. In fact, money-laundering has become a controversial issue, amongst prosecutors and judges, not to mention the media, in connection with the alleged proceeds of both criminal and "terrorist" activities, which means that money laundering cases must be defended vigorously if the rights of the defendants are to be effectively preserved.

1.2 Legislation

There has been specific anti-money laundering domestic legislation in Italy for over 20 years1, but developments throughout the 1990's caused the law to become increasingly far-reaching and sophisticated. Italy has signed and ratified both the UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988 and the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime of 1990. Further, Italy has implemented Council Directive 91/308/EEC of 10th June 1991 on the prevention of the use of the financial system for the purpose of money laundering.2

Since 1997, the primary responsibility for matters relating to anti-money laundering has lain with the Anti-Money Laundering Department of the Italian Foreign Exchange Office (Ufficio Italiano dei Cambi- UIC)3, which acts in conjuction with other bodies such as the Bureau of Anti-Mafia Inveastigation and the Guardia Di Finanzia. The UIC receives suspicious-transaction reports and actively investigates not only those reports it receives but also instances where there has been an improper failure to make a report. It is responsible for, inter alia, keeping the register of financial intermediaries (who are the only persons allowed by law to carry out certain financial transactions)4, enforcing sanctions for administrative violations of various anti-money laundering financial regulations, drafting opinions on matters of special interest and is responsible for liaison with the international organisations engaged in the fight against money-laundering. It therefore has a wide-ranging and proactive role and has been furnished with a broad range of powers with which to pursue its objectives.5

Italy has been the subject of two FATF mutual evaluations. The first of these, in June 19936 noted the need for the strong co-ordination between the numerous bodies involved in the enforcement of anti-money laundering legislation. The second mutual evaluation report in June 19987 noted that the UIC is likely to provide such co-ordination. This reported noted several "weaknesses" in what it referred to as a "fundamentally sound" system. The first of these was the need for training and supervision in non-bank financial institutions not subject to supervision to improve their reporting of suspicious transactions. The second was the need to extend anti-money laundering provisions to individuals or companies operating in sectors which are particularly vulnerable to being used for money laundering purposes. As to the first weakness, time will tell what improvements have been made. However, legislation has now been passed to remedy the second weakness.8

In 19969, the number of suspicious transactions reported was 3218, the number of convictions for the two chief offences of money laundering totalled 12510.

2. PRIMARY LEGISLATION

2.1.1 The Specific Offences

There are three offences provided for by the Italian Penal Code which relate directly to money laundering activities. The first of these is that of "ricettazione", or receiving, under Art. 648 of the Penal Code, in which it is stated that whoever acquires, receives or hides money or other things which are the proceeds of any crime or is involved in such activity, for the purpose of acquiring a profit for himself or another person will be guilty of an offence.

The second offence is that of "riciclaggio" or the recycling of the proceeds of crime and is found in Art. 648-bis of the Penal Code11. The Article states "save in cases of complicity in the offence, whosoever replaces or transfers money, goods or other proceeds of an intentionally committed crime, or commits other acts in relation to such [money, goods or proceeds] so as to obstruct the identification of their criminal provenance..."will be guilty of the offence.

The third specific offence is found in Art. 648-ter 12 of the Penal Code, the article being entitled "the investment of money, goods or proceeds of illegal provenance"13. The Article makes it an offence to invest money, goods or other proceeds of crime in any economic or financial activity.

It is important to note that guilt can arise in relation to all three of these offences even if the person/s who committed the offence/s from whence the proceeds came may not be charged or may not be punishable.14 This would therefore suggest that in fact it is irrelevant where the "original" offence took place.

All three of the offences are all crimes, and do not require the money, goods or other proceeds to come from a specific offence before liability can arise for the various activities described in the Penal Code. It is therefore irrelevant what the "original" offence was, for the purposes of liability, but not punishment15.

2.1.2. Actus Reus

The actus reus for each offence differs. For the receiving offence under Art. 648, it is the acquiring, receiving or hiding, or being involved in such actions, of money or things which come from a crime.

The recycling offence under Art. 648-bis requires the substitution or transfer of money, goods or other profits of an intentional offence or the doing of "other acts" in relation to the money etc. The actus reus is therefore very broadly defined in this offence.

This is less true for the offence under Art. 648-ter. The article here requires that the money, goods or other profits of an intentional offence, are invested in economic or financial activity. It should be noted that this Article seems intended to catch all activity which does not fall within the ambit of the other two offences, as it requires that the conduct not be covered by either of the other sections16 There is no definition of "economic or financial...