FCN Italy Pbd 2021 3

Italy - Threat Assessment - 2021 Page 1 of 57 Italian Republic � !“You may have the Universe - If I May Have Italy” Giuseppe Verdi Section 1 - Executive Summary ...... Page 3

Section 2 - Country Information ...... Page 4

Section 3 - Country Ratings ...... Page 5

Section 4 - FCN Country Ratings ...... Page 7

Section 5 - Key Harms Summary ...... Page 9

Section 6 - Key Threats Summary & Threats in More Detail ...... Page 10

Section 7 - Sanctions & Embargoes ...... Page 31

Section 8 - Terrorism/Terrorism Finance ...... Page 33

Section 9 - Money Laundering ...... Page 36

Section 10 - Response ...... Page 39

Section 11 - Detailed FATF Results ...... Page 50

Section 12 - Remittance & Migration Data ...... Page 51

Appendix 1- Threat Types Risk Ratings ...... Page 52

Appendix 2 - Sources ...... Page 53

Endnotes ...... Page 54

This Threat Assessment for Italy 2021 is produced and published by Financial Crime News and all rights are reserved including copy- right by Metriqa Limited. This TA should not be used for commercial purposes without obtaining frst a licence or express permission from the publisher. The Author and contributors are John Cusack, Ursula M’Crystal, Hannah Cusack & Sophie Giles. Additional thanks go to the many experts that have reviewed and provided comments including from both public and private sectors in Italy.

Italy - Threat Assessment - 2021 Page 2 of 57 Section 1 - Executive Summary �

Grey Lists: Italy is listed by the US as a Country Index (2018): Incidence of 2.4 - 1000 people of Primary Concern in respect of ML & FC, but & government response of “BBB.” is not listed by FATF, or the EU on their “Grey” Sanctions & Terrorism: No Sanctions against lists. the country. Tier 1 (Higher Threat) PPI Index NRA: Italy’s NRA was published in 2018, & rating with a controls score of 884/1,300. Sig- identifed criminal activities considered partic- nifcant trade with Iran. Italy is ranked 59/138, ularly generative of illicit proceeds, being cor- and rated “low” at 3.043/10 in the Global Ter- ruption, extortion, tax evasion & tax offences, rorism Index 2020. usury, drug traffcking, bankruptcy & corporate Tax Evasion: Tax Evasion in Italy is estimated offences. Those of lesser severity were identi- at €86.4 billion a year (2016). fed as gambling, smuggling & counterfeiting, sexual exploitation & illegal waste traffcking. Response & Resilience: Italy’s MER was published in 2016, with a 2019 Follow up report. Corruption: TI CPI - 2020 - ranked 53/179 with Based on a simple scoring model developed an overall score of 52 out of 100, below the by FCN, Italy is rated highly at 80% for techni- Western European and EU average. cal compliance, & 58% for effectiveness. Taking Organised Crime: According to the NRA, or- key areas only, scores are 73% and 50% re- ganised crime remains the most dominant of spectively. Italy is one of the most successful criminal behaviours, with Mafa groups posing countries in seizing and confscating assets, a threat unparalleled by any other EU OCG. with at least €9 billion or 7.3% of estimated criminal proceeds in 2018. Italy is a member Drug Traffcking: Italy has an estimated The Europol Financial Intelligence Public Pri- 554,099 people with illegal drug use disorders vate Partnership (EFIPPP). (2017), representing 1.15% of the population. Overall Ratings: Italy is rated overall “Moder- Fraud: The most prevalent frauds include ate” Risk, scoring 58/100 for fnancial crime fraudulent cross border currency transfers, and money laundering by FCN. The trend is fraud by internal and external parties, forgery, currently rated as “Neutral”. Threats are rated cybercrime, credit card fraud, ATM skimming, “Moderate - High” at 35/100 & Responses identity hacking account, false invoicing and “High” at 81/100. asset misappropriation, being the most common type of economic crime in 2016.

Human Traffcking: US Traffcking in Persons: FCN Rating: “Moderate” Risk 58/100 - Tier 2 country (2019 & 2020); Global Slavery trend “Neutral”

Italy - Threat Assessment - 2021 Page 3 of 57 Section 2 - Country Information - �

People & Geography: Italy’s frst societies ing; food, beverages, tobacco come from emerged around 1200 BC with its capital Germany 16.3%, France 8.8%, China 7.1%, Rome, founded in 753 BC. Despite an even Netherlands 5.6%, Spain 5.3% & Belgium 4.5% population distribution throughout the coun- (2017). try, Rome and other urban areas, such as Milan and Naples, attract denser populations. The Crime: While Italy is on the lower end in the country also boasts a diverse terrain, featuring 2019 World’s Safest Countries list (40/128 -1 mountains in the North and coastal lands and being best)3, as an advanced economy, signif- volcanoes in the South, appealing to tourists cant criminal proceeds are nevertheless gen- from all over the world. Religion is important in erated. Mafa-type Italian organised crime is Italian society, evident in the fact that 83.3% of considered to be a signifcant threat to Italy & its 62 million population are christian, over- the European Union (EU). The Italian Mafa whelmingly roman catholic. Italy counts mi- succeeds through its control and exploitation grants as representing 10.6% of the total pop- of territory & of the community. According to ulation (6.4 million) for 2020 an increase from reports4, “Mafa groups have infltrated almost 3.7% from 20001. every area of business, including healthcare, renewable energy, waste management and Recent History & Leadership: Italy has been tourism, while maintaining a hand in their more at the forefront of European economic and po- traditional construction sector. Gangs have also litical unifcation, joining the European Com- penetrated the food chain, seizing control of munity in 1957, and the euro-zone currency farms, controlling distribution and counterfeit- union in 1999. The 1990s, however, saw Italian ing food products, including cheese, wine and politicians, businessmen and prime ministers olive oil. Their growth beyond Italy also remains implicated in high levels of corruption within strong, especially in Europe and South Ameri- Italy’s political landscape. Italy’s prime minister, ca.” Mario Draghi, formed a government in Feb- ruary 2021. Finance: Italy is an important regional and international fnancial centre, and is among the Economy & Trade: Italy2 is the 3rd largest IMF’s 29 systematically important fnancial cen- economy in the euro zone with a GDP of US$2 tres5. The Italian fnancial system is largely bank trillion (2020 est). The Italian economy is dom- dominated, but insurance and other interme- inated by services at 73,9%, followed by Indus- diaries play a meaningful role and have been try at 23.9% and Agriculture at 2.1%. Exports recently growing.6 Based on assets, Italy has 2 (US$496 billion) of engineering products, Banks in to worlds top 200, with Bank Intesa textiles and clothing, production machinery, Sanpaulo at 27/100, and Unicredit at 34/100. motor vehicles, transport equipment, chemi- In Italy, 94% of people (over 15) have bank ac- cals; foodstuffs, beverages, and tobacco; min- counts, 42% have a credit card, with internet erals, nonferrous metals go to Germany 12.5%, users making payments online at 65%7. Remit- France 10.3%, US 9%, Spain 5.2%, UK 5.2% & tances inbound in 2017 were approx US$9,480 Switzerland 4.6% (2017). Imports (US$433 bil- million (0.5% of GDP) according to the World lion) of engineering products, chemicals, Bank8. See Section 11 below for more details. transport equipment, energy products, miner- als and nonferrous metals, textiles and cloth-

Italy - Threat Assessment - 2021 Page 4 of 57 Section 3 - Country Ratings - �

Information from leading sources produce 40 plus ratings for Italy, covering both threats and responses in fghting fnancial crime, sanctions, proliferation fnance, terrorism & terrorism fnance.

No. Threats Italy � ! No Responses Italy�

1 GDP - Economic Size * 8th largest economy in the world 1 OECD - Global Forum * Compliant GDP per Capita US$2,002,763,000,000 (2019 est - 2.35% Global on Transparency & Exchange Info for Tax Purposes GDP) US$33,328 GDP per Capita (2019)

2 World Economic Forum * 77.0 (2019) (63/141) 2 Global Slavery Index * BBB Security (OC, Terrorism, Homicides, 63/141 (45.1/99.3/99.3/64.1) Country Response Rating (ratings from AAA, AA, A, BBB) Policing)

3 World Economic Forum * 45.1 3 US Dept of State * Tier 2 Organised Crime (117/141) Traffcking in Persons Medium Rated

4 Numbeo Crime Survey 2020 44.26/100 4 Proliferation Index - PPI * 884/ 1300 62/129 (1 being the worst) Controls Moderate Controls score

5 US Institute for Health Metrics and 554,099 (2017 -18.75% since 1990j 5 International Telecommunication Union 0.837/10 Evaluation - 2018 1.15% (2017 - 8% since 1990) Global Cybersecurity Index 2018 (25/176) Illegal Drug Dependency / Disorders * Number/Share

6 Transparency International (TI) Corruption 52/100 6 World Bank Regulatory Quality * 0.95 - 2019 Perceptions Index* (53/179 - 2020) from WB Global Governance Indicators 43/193 (1 being the best)

7 TRACE 31/100 7 TI - Exporting Corruption * Green Rated Bribery Risk Matrix Ranked 36th out of 194 Enforcement of the OECD Anti-Bribery “Active Enforcement” Convention

8 Proliferation Index - PPI Tier 1 8 Freedom House * 90/100 Threat * Highest Threat Level Freedom Index “free”

9 US Dept of State Included in Volume II 9 Heritage Foundation 64.9/100 INCSR Vol I & Vol II * Economic Freedom Index “Moderately Free” 68 out of 178

10 US Dept of State Included 10 Basel AML Index * 4.61/10 Country Reports on Terrorism * 2020 99/141 (1 being the worst)

11 Global Slavery Index 2.4/1,000 11 FIU Egmont Member Interpol / Europol Yes GSI Incidence * Incidence of human traffcking Member (34/50 Countries in Europe)

12 Global Slavery Index 145,000 12 Asset Confscations * Estimated above 1% No of estimated Modern Day Slaves Estimated numbers of modern day slaves over 1% of Proceeds (asset seizures/confscations of at least €9 billion with an estimate of 7.3% in 2018)

13 US Dept of Labor Not included 13 Country National Risk Assessment * Yes Child Labour 2018

14 Global Terrorism Index * 3.043 14 Financial Information Sharing Partnership As part of EFIPP - The Europol Financial Intelligence GTI - Impact “Low” Impact Public Private Partnership

15 IOM Migration 6.4 million migrants 15 Environment Performance Index 71 (10.6% in 2020) 2020 (20/180)

16 Illegal Unreported and Unregulated (IUU) 2.5/5 16 Government Spending on Law & Order * 1.6% of 2018 GDP - IUU Fishing Index * 35/152 Eurostat 2018

17 EU Listing of Countries for Illegal Fishing No 17 Know Your Country 72.41/100 Country Money Laundering Index 97th/245 (1 being the best)

18 US DoS - Wildlife Traffcking * Not Included 18 European Union * N/A Focus / Countries of Concern Third Country Grey List EU Countries are not eligible for this list

19 EUIPO & OECD Counterfeit Goods * 0.152% 19 FATF Standards 80% Propensity of Exports 2016 40 Recommendations*

20 UNODC Thefts Not Included in UNODC Data 20 FATF Standards 58% Per 100,000 people Italian data - 820,000 thefts (2019-2020) 11 IO"s on Effectiveness* (1,322 per 100,000 people)

21 EU List of None Co operative Jurisdictions NA 21 FATF Standards 73% for Tax purposes Core 10 Recommendations

22 Global Financial Integrity Italy is an Advanced Economy 22 FATF Standards 50% Illicit Financial Flows* Core 4 IO"s on Effectiveness

23 Fund For Peace 42.40/120 23 FATF * Counter - Measures No Fragile States Index (36/176) Strategic Defciencies List

* Indicates the information is included in the FCN Country Index

Italy - Threat Assessment - 2021 Page 5 of 57 Section 3 Continued - Threats & Responses Rating Scorecard

The Country Dashboard RAG ratings are established based on the FCN Threats and Responses Rat- ing Scorecard - 2021, set out below.

Threats Responses

No Higher Moderate Lower No Lower Moderate Higher

1 >US0.5 trillion >US$100 billion - 0.5 trillion

2 <50 >50 - <75 >75 2 “CC” “C” “D” “CCC” “AAA” “AA” “A” “BBB” “BB” “B”

3 <50 >50 - <75 >75 3 Tier 3 Tier 2 & T2 Watchlist Tier 1

4 >60 >40 - 60 <40 4 T3 <360 Controls / 1,300 T3 >360-425 Controls /1,300 T3 >426 Controls / 1,300 T2 <426 Controls /1,300 T2 >426-650 Controls /1,300 T2 >650 Controls /1,300 T1 Country <650/1,300 T1 650-975/1,300 T1 >975/1,300

5 >1% >0.75% - 1% <0.75% 5 <0.33 >0.33- 0.66 >0.66

6 <40 40 - 59 60 - 100 6 <0 - -2.5 0-1 >1 -2.5

7 >55 38 - 55 <38 7 Little of No Enforcement Limited/Moderate Enforcement Active Emforcement

8 Tier 1 Tier 2 Tier 3 8 <40 Between 40 - 70 >70

9 Included N/A Not Included 9 O - 59.9 Mostly Unfree/ 60 - 69.9 Moderately Free 70 - 100 MostlyFree/Free Repressed

10 Included N/A Not Included 10 >7 6 - 7 <6

11 >5% >2% - 5% <2% 11 No N/A Yes

12 >1 million >50,000 - 1 million 1% - 5% of est criminal >5% of est criminal proceeds proceeds

13 >10% child labour (4-15 >5% - 10% child labour (4-15 <5% child labour (4-15 ages) 13 No Yes >3 Years Old Yes <3 Years Old ages) ages)

14 >4 -10 >2 -4/10 0-2/10 14 No N/A Yes

15 >US0.5 trillion >US$100 billion - 0.5 trillion 60

16 >2.4 2 - 2.4 <2 16 < 1.5% of GDP >1.5% - 2% of GDP over 2% of GDP

17 Yes Red Card Yes Yellow Card No 17 <50 50-70 >70

18 Focus Countries N/A Not Included 18 Included N/A Not Included

19 >0.3 >0.2 - 0.3 <0.2 19 <50 using FCN Scoring Model Between 50 - 75 using FCN >75 using FCN Scoring Model Scoring Model

20 >1,500 >783 - 1,500 <783 20 <50 using FCN Scoring Model Between 50 - 75 using FCN >75 using FCN Scoring Model Scoring Model

21 Listed Red Listed Amber Listed Green / Unlisted 21 <50 using FCN Scoring Model Between 50 - 75 using FCN >75 using FCN Scoring Model Scoring Model

22 Above 20% of Trade Between 10 - 20% of Trade Below 10% of Trade 22 <50 using FCN Scoring Model Between 50 - 75 using FCN >75 using FCN Scoring Model (with 36 Advanced Econom- (with 36 Advanced Econom- (with 36 Advanced Economies) OR Scoring Model ies) OR ies) OR 1 of 36 Advanced Economies 1 of 36 Advanced Economies 1 of 36 Advanced Economies

23 >80 - 120 >60 - 80 <60 23 No N/A Yes

* Indicates the information is included in the FCN Country Index

FCN Scoring Model

Risk Score Risk Rating Risk Score Risk Rating Risk Score Risk Rating Risk Score Risk Rating Risk Score Risk Rating

High Moderate Low Moderate Threat Moderate Threat Threat High Threat 20 - 39 Low Moderate Moderate Moderate High Low Threat

1 - 19 Low Response Response 40 - 59 Response 60 - 79 Response 80 - 100 High Response High Risk Moderate High Moderate Risk Low Moderate Low Risk Risk Risk

Italy - Threat Assessment - 2021 Page 6 of 57 Section 4 - Financial Crime News (FCN) Country Ratings - �

From all the available information collected and results summarised in Section 3 above, 26 ratings have been selected, covering a broad base of threats and responses in fghting fnancial crime, proliferation fnance and terrorism & terrorism fnance. The results make up the FCN Country Threat / Response & Overall Risk scores for Italy.

FCN Final Ratings - Republic of Italy� !

Financial Crime News 35/100 Financial Crime News “Moderate” Risk - 58/100 Threat Rating “Moderate - High” Threat Overall Financial Crime Rating

Financial Crime News 81/100 Trend Neutral Response Rating “High” Response

Italy - Threat Assessment - 2021 Page 7 of 57 Italy - Threat Assessment - 2021 Page 8 of 57 Section 5 - Key Harms Summary - �

The harms that result from the realised threats • Murder rates were at 555 between faced by Italy from crime, ML, proliferation f- August 2011 - July 2012 and 278 nance and terrorism remain substantial, and for August 2019 - July 2020. warrant a substantive continued response. • Mafa killings in the frst half of 2016 These harms (see Section 6 for details) include: were 34, with 28 carried out by the Campa- • 4% of those surveyed in Italy stated that they nia’n mafa, the Camorra. had witnessed a case of corruption in the last • 1 in 5 organisations (21%) claimed to have 12 months & 41% were personally affected been a victim of economic & fnancial frauds. by corruption in their daily lives. • Italy has an estimated 554,099 people with • Theft rates went from 1.5 million between illegal drug use disorders (2017), represent- August 2011 and July 2012 to 820,000 being 1.15% of the population. tween August 2019 and July 2020. • In young adults (15-34), penetration rates for • Robberies also decreased dropping to drugs were cannabis at 20.9%, MDMA at around 20,000 between August 2019 and 0.8% and cocaine at 1.7%, with an estimated July 2020. The numbers peaked at 44,000 number of high risk heroin users of approxi- between 2012 and 2013. mately 235,000 in 2015. • According to the UNODC, the robbery rate • Italy has a low incidence of human traffcking, for 2017 was 51 per 100,000 people, with with 2.4 in 1,000, but still this gives an esti- Italy ranked 29/97 countries, and mate of approximately 145,000 victims, • Kidnap rates were 0.3 per 100,000 people, & ranking Italy 34 in Europe and Central Asia ranked 37/79 countries (1 being the highest). out of 50 countries assessed.

• Car thefts are highest in Apulia, which • The amount estimated for tax evasion was recorded the highest car theft rate in Italy, €86.4 billion, being the average annual val- with about 697 cases every 100,000 popula- ue for the period 2011-16. Of this fgure, the tion, followed by Catania. estimate for tax evasion due to non-payment of taxes, and errors in completing tax returns, • The drug-induced mortality rate among is €13.2 billion which is many times larger adults (aged 15-64 years) is 7.8 deaths per than the amount the Italian Government million which is lower than the European av- spends (€4.8 billion or 0.252% of GDP - erage of 20.3 deaths per million. 2017) on the entire Italian Justice system (2017).

Italy - Threat Assessment - 2021 Page 9 of 57 Section 6 - Key Threats Summary - �

In this Section 6, the most important criminal Based on estimates from the GTA 2019, Italian threats identifed based on the best available estimates for other major criminal activities in- sources are summarised. clude human traffcking, theft & stolen goods & green crimes. Based on fgures from the GTA12, The National Risk Assessment (NRA), pub- estimates for theft are up to around 5% of lished in 20189, concluded that “The major criminal proceeds, green crimes up to 4%, and criminal behaviours, not only for their fnancial human traffcking/modern slavery (HT/MS) up impact but also for their wider consequences, to 3%. These would generate proceeds from are corruption, extortion, tax evasion and theft at up to €6.4 billion, green crimes at up tax offences, usury, drug traffcking, bank- to €5 billion and HT/MS at up to €3.8 billion. ruptcy and corporate offences”. Other crimes having a lesser degree of severity were identifed as gambling, smuggling and counterfeiting, sexual exploitation and illegal waste traffcking.

Based on sources included in this Italy Threat Assessment, total proceeds are estimated at 6.7% of GDP (mid-point between 1.7% & 12% - see NRA 201810) amounting to €127.3 billion.

This is similar to estimates given in the FCN Global Threat Assessment11 (GTA) for Italy, which estimated overall proceeds of US$136 billion (€112 billion) for 2018.

The largest amounts estimated for criminal activities are for: Estimated funds available for laundering are €97 billion (See 9.3 below) and from trade • Tax Evasion at €86.4 billion (€13 billion based money laundering €14.3 billion, (See for personal tax evasion) 9.4 below). Organised crime (OC) plays a very • Corruption at €19 billion signifcant role in Italy, with some estimates (2010 - 2102/1313) ranging from €26 billion - • Drug Traffcking at €15 billion €138 billion.

• Others at €7 billion

Italy - Threat Assessment - 2021 Page 10 of 57 Section 6 Continued - Key Threats in More Detail - �

In this Section 6, the most important criminal The threat of money laundering is considered markets, are assessed and summarised. to be “Very Signifcant”, while the risk of terrorist fnancing is deemed “Rather Signifcant”. 6.1 National Risk Assessment (NRA): The NRA published in 201814 is the second NRA, 6.2 US INCSR: Italy is identifed as a Major following the frst NRA in 201415 concluded Money Laundering Country (country of prima- that “The major criminal behaviours, not only ry concern) in the 2020 INCSR16. The country for their fnancial impact but also for their wider has been included for the last 5 years. consequences, are corruption, extortion, tax evasion and tax offences, usury, drug traffcking, bankruptcy and corporate offences”. Oth- er crimes having a lesser degree of severity were identifed as gambling, smuggling and counterfeiting, sexual exploitation and illegal The report stated that “In response to the con- waste traffcking. tinuing challenges of money laundering, the Italian government enacted a decree law on Threat NRA 2014 NRA 2018 October 3, 2019 seeking to clarify virtual cur- Bankruptcy & Corporate Very Signifcant Very Signifcant Ofences rency treatment under AML statutes, further Corruption Very Signifcant Very Signifcant empower law enforcement authorities investi- Drug Trafcking Very Signifcant Very Signifcant gating money laundering, and impose addi- Extortion Very Signifcant Very Signifcant

Gambling Very Signifcant Very Signifcant tional CDD obligations on fnancial intermedi-

Illegal Waste Trafcking Very Signifcant Very Signifcant aries. Financial penalties assessed by Italian

Organised Crime Very Signifcant Very Signifcant fnancial sector supervisors against legal and Sexual Exploitation Very Signifcant Very Signifcant

Smuggling & Counterfeit- Very Signifcant Very Signifcant natural persons for AML breaches have been ing increased to be more dissuasive”. Tax Evasion / Tax Of- Very Signifcant Very Signifcant fences Usury Very Signifcant Very Signifcant Volume II of the 2020 INCSR17 provided the Money Laundering Very Signifcant Very Signifcant overview: “Italy"s economy is the ninth largest Terrorism Finance Rather Signifcant Rather Signifcant in the world and the third-largest in the Euro- zone. Italy has a sophisticated AML regime and The NRA assesses the inherent risk in the coun- legal framework, but a continued risk of money try using 4 risk categories: “Non-Signifcant”, laundering stems from activities of organised “Lowly Signifcant”, “Rather Signifcant” and crime and the large, black market economy. “Very Signifcant”. According to the Italian National Statistics Insti- tute, the black market economy accounts for

Italy - Threat Assessment - 2021 Page 11 of 57 12.1% of GDP, or approximately US$235 bil- of 100, falling below the average regional lion (€211 billion). Tax crimes also represent a score of 66/100 for Western Europe and Eu- signifcant risk and have been identifed as ac- ropean Union. counting for 75% of all proceeds-generating crime in Italy”.

“While on the rise, CDD and suspicious transaction reporting remain weak among non-f- nancial sectors, and regulations are inconsis- tent. In early 2019 the government published Italy has improved its score since 2012 and Regulation n. 44 to implement new provisions shown “concrete improvements” by demon- on AML/CFT organisation, procedures, internal strating legislative progress with the “passage controls, and CDD. The new regulations align of anti-corruption laws and the creation of an with EU efforts and require online entities to anti-corruption agency”. adopt controls and procedures”. Political corruption remains a major problem 6.3 Security: According to The World Eco- particularly in Lombardy, Campania and Sicily nomic Forum’s Global Competitiveness Index where corruption perception is at a high lev- 201918, under Pillar 1 Institutions, Italy’s rating el21. Political parties are ranked the most cor- for “Security” is 77.0/100 ranked 63 out of 141. rupt institutions in Italy, closely followed by public offcials and Parliament, according to Transparency International's Global Corruption Barometer in 2013, where 89% of surveyed households considered political parties to be corrupt or extremely corrupt, and that 64% of the surveyed households believe that the level This overall score is made up of scores for or- of corruption has increased, and 61% of sur- ganised crime at 45.1 (ranked 117/141), homi- veyed households fnd government efforts in cide at 99.3 (rate of 0.7/100,000 people) and the fght against corruption to be ineffective22. ranked 20/141, terrorism incidence rate 99.3/100 (ranked 86/141) & police service reli- The 2020 TRACE Bribery Risk Matrix23 rates ability at 64.1/100 and ranked 51/141 (in all Italy at a “low” risk level, ranking it 36 out of cases higher scores are better). 194 surveyed countries, with an overall risk score of 31. The TRACE Matrix equates Italy 6.4 Corruption: The NRA 201819 reports cor- along with countries such as Poland, Spain, ruption as a “very signifcant” threat in Italy. Ac- and Kosovo as a “Democracy with complex cording to Transparency International’s, (“TI”) economy”, which “generally consists of stable, Corruption Perceptions Index 202020, Italy was ranked 53/179, with an overall score of 52 out

Italy - Threat Assessment - 2021 Page 12 of 57 democratic states with complex, diverse payments and gifts are subject to strict limita- economies and fair to weak civil societies”. tions”. It also states that, “The Italian police force poses a moderate corruption risk. Com- According to a 2018 report which mapped the panies report moderate confdence in the reli- risk of Serious and Organised Crime infltration ability of the police forces”. Furthermore, “one- in European Businesses (OC in EU Report)24, third of surveyed citizens believe that bribery “the strong presence of OC, the frequent use of and abuse of power are common among po- cash (especially in some regions), the large ir- lice offcials” and that “authorities have estab- regular economy and public interventions are lished effective mechanisms to investigate ab- acknowledged by scholars and policy-makers use and corruption among police forces, yet as the most important way to generate a per- long delays by courts and prosecutors impede fect environment for corruption to grow”. investigations”. It would appear that despite the establishment A 2017 EU Survey26 found that: of agencies and other actions, that systemic and organised corruption has not been signi- • 4% (EU28 - 5% / IT - 4%) of those surveyed in fcantly mitigated. Corrupt collaboration has Italy stated that they had witnessed a case of been identifed particularly in the public pro- corruption in the last 12 months; curement domain, most notably public works, • 41% (EU28 25% / IT - 41%) were personally waste management, local transport, health affected by corruption in their daily lives; care and social care. • Giving or taking bribes was believed to be The GAN Integrity Business Anti-Corruption most widespread in the following areas: Portal (2017)25 provides the view that “There is a high risk of corruption for businesses operat- • Political Parties (Italy - 66%, EU28- 56%,) ing in Italy. Public procurement, in particular, • PEPs (Italy - 60%, EU28 - 53%) presents a high risk of corruption, as it involves large resources and exposes companies to or- • Police & Customs (Italy - 31%, EU - 31%) ganised crime. The integrity of public offcials is • Banks & FIs (Italy - 42%, EU - 33%) marred by their relationships with 27 organised crime and businesses. Extortion, act- According to an EU report in 2014, it was es- ive and passive bribery, bribing a foreign pub- timated that corruption costs Europe €120 bil- lic offcial, fraud, and money laundering are lion (US$162 billion), or 1% of the EU’s GDP. criminalised under the Criminal Code of the Translated into Italy, this would represent ap- Italian Republic. Anti-corruption laws are gen- proximately €19 billion. erally implemented effectively, but offcials 6.5 Organised Crime: The NRA, states that sometimes engage in corrupt practices with “Organised crime remains the dominant and impunity. There is no exception for facilitation most worrying perpetrators of criminal beha-

Italy - Threat Assessment - 2021 Page 13 of 57 viours, which however, does not exclude the Ports considered most likely used by the Mafa signifcant role of foreign criminal organisa- for transporting contraband are in Ancona (in tions operating in the country. With the exclu- Marche, on the Adriatic coast), Cagliari (in sion of tax evasion, almost the entirety of Sardegna, on the Tyrrhenian coast), Genova (in crimes carried out are for the most part and, in Liguria, on the Ligurian coast) and Gioia Tauro some cases, exclusively attributable to organ- (in Calabria, on the Tyrrhenian coast). In addi- ised - including mafa-style - crime (e.g., drug tion Mafa activities have also been reported in traffcking, extortion, gambling, illegal waste Salerno (in Campania, on the Tyrrhenian coast), traffcking, smuggling and counterfeiting), with in Taranto (in Puglia, on the Adriatic coast), in particularly dangerous effects due to the integ- Livorno (in Toscana, on the Tyrrhenian coast), in ration process and overlapping between or- Napoli (in Campania, on the Tyrrhenian coast), ganised crime and economic crime”. For more Olbia (in Sardegna, on the Tyrrhenian coast) details on specifc crimes see later in this Sec- and in Trieste (in Friuli Venezia Giulia, on the tion 6. Adriatic coast)29.

The NRA summarises the size of organised According to OC in EU Report30, a change in crime in Italy, including estimating a number of strategy by organised crime groups has sources which between 2010 - 2012/13 range emerged in relation to white-collar crimes from €26 billion - €138 billion. where the country’s vulnerabilities related to the following risk factors are exploited: Interpol Italy28 states that “Italy is located at the heart of Europe, surrounded by the Mediter- • The cash-intensity of the economy (espe- ranean Sea and sharing open land borders with cially in some geographic areas); four other European Union countries. This • High levels of tax crimes – including smaller geographic location makes Italy attractive to scale tax evasion, larger scale fscal fraud, local, regional and global organised crime and false invoicing schemes; groups. Mafa-type criminal organisations in Italy operate behind the façade of legitimate • The large underground economy and business, making them increasingly diffcult to prevalence of irregular labour practices; detect. Their primary areas of activity include • Systemic levels of corruption (especially in international drug and arms traffcking, traffck- the public procurement sector); and ing in human beings, people smuggling, money laundering and cybercrime. Italy con- • Anomalies related to business ownership centrates considerable law enforcement re- opacity in some industries and specifc resources on monitoring the growing threat to gions. national security of global terrorism”.

Italy - Threat Assessment - 2021 Page 14 of 57 Section 6 Continued - Organised Crime Summary �

Italy - Threat Assessment - 2021 Page 15 of 57 In a 2013 Europol Threat Assessment of Italian “Mafa groups have infltrated almost every Organised Crime (Europol OC Report)31, it area of business, including healthcare, renew- states that, “Mafa-type Italian organised crime able energy, waste management and tourism, is a clear and present threat to the European while maintaining a hand in their more tradi- Union (EU). The basis of the power of the Italian tional construction sector. Gangs have also Mafas resides in their control and exploitation penetrated the food chain, seizing control of of the territory and of the community. The con- farms, controlling distribution and counterfeit- textualised concepts of family, power, respect ing food products, including cheese, wine and and territory are fundamental to understanding olive oil. Their growth beyond Italy also remains the dynamics of the Mafas. The Mafas are ca- strong, especially in Europe and South Ameri- pable of manipulating elections and installing ca.” their men in administrative positions even far OCGs were becoming increasingly sophisti- away from the territories they control. From that cated, infltrating important economic sec- perspective, the threat they pose is unparal- tors to facilitate laundering leled by any other European Organised Crime Italy Interior Minister - 2019 Group (OCG). Exploiting legislative loopholes The 2020 OSAC33 Italy report advises that “Or- and using the services of corrupt administrators ganised criminal groups such as the Camorra, and professionals, they launder money and $Ndrangheta, Cosa Nostra Sacra Corona Unita, manage it through front companies and straw and non-Italian organised criminal groups are men.” active throughout all of Italy. Italy also has some Ndrangheta has €44 Billion year income, active organised crime elements from the fol- 62% deriving from drug traffcking alone lowing locations: Italian Organised Crime Threat Assessment 2013 • Southeast Europe (Macedonia, Albania, In a recent media article32, the interior minister and Kosovo): cocaine traffcking, launder- of Italy raised concerns that organised crime ing money, migrant traffcking, extortion, groups had used a variety mechanisms to ad- and property crimes; apt while using!#increasingly complex” models of criminal activity. Criminal organisations were • Russia and Eastern Europe (Romania, Bul- becoming increasingly sophisticated, infltrat- garia): money laundering, break-ins, and ing important economic sectors to facilitate the thefts; laundering of their ill-gotten gains. In 2013, a • China: extortion, migrant traffcking, study by the Demoskopia Research Institute blackmail, credit cards, drugs, arms, pros- “claimed the "Ndrangheta made more money titution, and illegal gambling; and than Deutsche Bank and McDonald"s put together, with a turnover of €53 billion (£44 bil- • West and North Africa: false documents, lion)”. cocaine traffcking, and fraud.

Italy - Threat Assessment - 2021 Page 16 of 57 6.6 Drug Traffcking: Volume II of the 2020 Asia and north-western and south-eastern Eu- INCSR34 reports that “Drug traffcking is a pri- rope. The maritime route of illicit drug traffck- mary source of income for Italy"s organised ing is of primary importance for all substances, crime groups, which exploit Italy"s strategic ge- although drugs are also smuggled into Italy by ographic location to do business with foreign air and by land from neighbouring countries. criminal organisations in Eastern Europe, Chi- Cocaine traffckers operating in Italy are sup- na, South America, and Africa.” plied mostly by the Colombian market. Heroin Italy has an estimated 554,099 people35 with from Afghanistan reaches Italy mainly via the illegal drug use disorders (2017), representing Balkan route (the southern branch, mostly by 1.15% of the population. sea (ferries), and the central branch, by land). Criminal groups organise cannabis resin ship- According to the NRA in 2018, drug traffcking ments (mostly of Moroccan origin) from Spain is considered “Very Signifcant” and it is be- to Italy either directly or via other European lieved that the estimate of drug traffcking pro- countries; alternative high-quantity maritime ceeds in 2017 was €15.2 billion, reporting an routes from Libya, Egypt and Turkey have de- increase in the number of people involved in veloped in recent years. Herbal cannabis ar- this illegal market, and that virtual assets have rives by land and sea routes that start in Alba- been identifed in the purchase of drugs. nia. A large proportion of illicit drugs pass

€15.2 billion in drug traffcking proceeds through Italy en route to other EU countries. NRA 2018 Domestic cannabis cultivation is reported, pre- dominantly in southern Italy. New psychoactive According to the European Monitoring Centre substances (NPS) are usually purchased online for Drugs and Drug Addiction (2019)36, Italy “is and are shipped to the country via postal ser- one of the main drug gateways to Europe ow- vices. ing to its geographical position at the centre of the Mediterranean Sea & its long coastline. The Cannabis products are the most seized drugs presence of mafa-type organised crime in Italy, followed by cocaine and heroin. Other groups makes Italy a key destination country for substances (mainly synthetic drugs) are seized bulk quantities of illicit drugs & also a key tran- less frequently. In 2017, a sharp increase in sit country for drugs destined for other Eu- herbal cannabis seizures was recorded, almost ropean & non-European countries. 10 times more than 2 years before. The quantity of cocaine seized has remained stable over The Italian illicit drug market is dominated by the last few years and the quantity of heroin large organised crime structures with well-es- seized has declined steadily since 2008. The tablished international links and operating quantities of the synthetic drugs MDMA/ecsta- bases in principal drug production and traffck- sy, amphetamine and methamphetamine ing regions, such as South America, South-East seized remain low”.

Italy - Threat Assessment - 2021 Page 17 of 57 The European Monitoring Centre for Drugs create fear by punishing those that do not and Drug Addiction in 2019 reported37 that “a comply, and rewarding those that do. third of the Italian population aged 15-64 years Extortion methods extend to demanding had used a psychoactive substance at least money for safe passage on national roads, or once in their lifetime and 1 in 10 had done so requesting subsidies for the distribution of wa- in the last year. The majority of users are male. ter and electricity. Legitimate business owners Cannabis is the most widely used substance, are forced to pay part of their earnings as pro- with 1 out of 10 people having used it at least tection money from both those extorting and once in the last year. The use of cocaine, opi- from others who otherwise would do the same. oids and spice (synthetic cannabinoids) is low- These payments are referred to as “pizzo” er. Among adults reporting the use of illegal payments. Protection rackets often use high psychoactive substances in 2017, 1 in 10 re- levels of violence to achieve their objectives. ported polydrug use. The 2017 school survey among students aged 15-19 years reported 6.8 Loan Sharking: The 2016 FATF MER39 that cannabis is the most used substance highlights the signifcant risk of money laun- among adolescents. One third reported having dering stemming from activities associated used cannabis at least once in their lifetime”. with organised crime, such as loan sharking. This crime is also one of the main proceeds A third of the Italian population aged 15-64 years used a psychoactive substance at generating crimes in Italy (15% of total). Mafa least once in their lifetime clans exert control and gather funds through European Monitoring Centre for Drugs & Drug Ad- the use of loansharking, extortion and usury to diction accumulate funds and exert control. Italian po-

In young adults (15-34), penetration rates for lice forces reported 9,954 cases of extortion to 40 drugs were cannabis at 20.9%, MDMA at 0.8% the judicial authority in 2018 , and in “the and cocaine at 1.7%, with an estimated num- Northern Italian province of Novara, in Pied- ber of high risk heroin users of approximately mont, recorded the highest number of usury 235,000 in 201538. cases per 100,000 inhabitants. More specifcally, the usury rate amounted to 1.4 cases per 6.7 Extortion: According to the Europol OC 100,000 residents. Furthermore, the provinces Report, Mafa groups and OCGs are said to be of Naples, Ascoli Piceno, Teramo, and L'Aquila continually exploring opportunities to control ranked second with one case, respectively”. territories and gain infuence. They extort 41 money from businesses and individuals by In the 2018 UIF Annual Report , the UIF advis- levying taxes / excises in return for security or es that a review was undertaken and it was other services. They exert control on the labour concluded that the reporting institutions expe- market, trade and productive activities and rienced limitations to detect cases of usury, and that reporting levels were low.

Italy - Threat Assessment - 2021 Page 18 of 57 Usury is highlighted as one of the major crimi- The top 3 commercial sectors for infltration by nal behaviours identifed in the NRA, and it the Italian Mafa are construction, wholesale & warns that the “the fnancial crisis has offered retail trade & hotels, bars & restaurants. Other further opportunities for criminality”. sectors to note include agriculture & fshing, mining & quarrying, manufacturing, energy According to Reuters42, “reports of criminal supply, waste & scrap management, transport- loan-sharking rose 9.1%, underscoring concern ation, real estate services, hospitals and resid- that struggling frms and families would have to ential care and clubs and gambling activities. turn to illegal fnancing networks to make ends meet”. Mafa Top 5 Sectors Regions Groups

According to the UK Newspaper, The Guardi- Italian Mafa Construction, Wholesale & Retail Trade, Hotels Bars Sicily, Campania, Lombardi, & Restaurants, Clubs & Gambling, Waste/Scrap Calabria & Lazio. an43, the Italian head prosecutor said that Management Chinese Groups Financial & Insurance activities, Wholesale & Retail Tuscany, Lazio, Lombardi, Veneto, Trade, Real Estate activities, Personal service Campania & Sicily “usury activities by the clans had become in- activities, Manufacturing, Hotels Bars & Restaurants

Russian / Georgian Transportation, Wholesale & Retail Trade & Lazio, Puglia & Tuscany creasingly insistent in recent months, with the Groups Agriculture.

Other OCG’s Wholesale & Retail Trade, Hotels Bars & Restaur- Calabria, Piedmont, Tuscany, ants, Real Estate activities. Support services Liguria & Lombardi bosses taking #advantage of the diffculty en- activities, personal service activities, Financial & Insurance activities, Construction & Transportation. trepreneurs are fnding themselves in during Source: https://www.transcrime.it/wp-content/uploads/2015/11/Project-ARIEL_Final-report.pdf this pandemic”. Mobsters offered them loans with interest rates of over 400%. In the Transcrime OC Infltration of Legitimate

44 6.9 Business Infltration, Bankruptcy & Cor- Businesses in Europe Report 2015 , construc- porate Offences: Infltration of legal business- tion is attractive to organised crime because it es, particularly by Italian organised crime has “characteristics that are particularly attract- groups, is driven by the motivation of generative to OCGs, such as low levels of technology, ing additional profts, or by enabling the con- high territorial specifcity, and high labour in- cealment of criminal activities. Some southern tensity” and “it registers a large presence of Italian regions for example Sicily, Calabria and public resources and is closely connected with Campania have a traditional deep rooted and the procurement process.” almost exclusive presence of Italian mafa in- The wholesale and retail trade sector generally vestments. By contrast, central and northern serves the purposes of concealment of crimi- regions, for example Lazio and Lombardi, reg- nal activities and money laundering. The sec- ister evidence of infltration by both Italian and tor, in fact, is characterised by the presence of foreign organised-crime groups. a wide range of sub-sectors that can be ex-

A mechanism to infltrate companies includes ploited for illegal activities of different kinds, buying insolvent business, or lending to busi- such as counterfeiting (e.g. in the case of the nesses that otherwise become insolvent. wholesale and retail trade of clothing and textiles) or drugs traffcking (e.g. in the case of import/export companies. Also transport

Italy - Threat Assessment - 2021 Page 19 of 57 owned by the infltrated companies can be quented by the Italian public. Not only does used for criminal purposes. this activity generate signifcant legal profts, it also presents an opportunity to launder money Hotels, bars and restaurants are location spe- through this cash only business46. cifc and therefore within OC territories and are cash-intensive businesses. These character- 6.11 Illegal Waste Traffcking: According to istics make them vulnerable to OCG infltra- the NRA both in 2014 and in 2018, illegal tion. In particular, businesses operating in this waste management traffcking is highlighted as sector are used for money laundering and as having a lesser degree of severity, than other covers for criminal activities. Moreover, the in- crimes such as drug traffcking but still con- fltration of bars and restaurants may be in- sidered of “signifcant importance,” and mostly strumental to the establishment of strategic identifed as attributable to organised crime - relations with important persons such as public mafa groups. Reports from Italy47 confrm il- offcials and professional. legal activity is signifcant as, “over nine thousand people were arrested between 2002 and The Transcrime 2015 OC Report 201545, also 2019 for illegal waste traffcking. Additionally, identifed emerging sectors, “like renewable two thousand individuals were arrested for this energy and petrol and gas supply. Criminal in- crime. In illegal waste traffcking in Italy, 1,195 fltration in these sectors may serve different companies and 46 foreign countries were in- purposes, such as control of the territory or the volved. Between 2002 and 2019, almost 54 mil- obtainment of extra profts. For example, the lion tons of waste were seized. Among the presence of EU grants and tax subsidies in the waste seized, there were also industrial lime renewable energy sector makes it particularly and special waste”. attractive to OCGs. At the same time, the process of selecting the locations in which to de- Europol reported48 that “Along with striving to velop renewable energy projects is vulnerable reduce expenses, economic crises and struc- to criminal exploitation, especially in territories tural challenges in different industrial sectors where OCGs have strong infuence and the encourage the proliferation of illegal waste public institutions are weak.” disposal services. This demand causes organised crimes groups (OCGs) to specialise in 6.10 Gambling: Legalising gambling in Italy waste management. Legal business structures was supposed to help curb the infuence of the are an integral aspect of this crime phe- Mafa, who have been long involved in illegal nomenon. However, the companies involved in gambling. Instead, the Mafa have moved into such activities engage in a number of crimes this business too. Estimates suggest that Ital- for which they are usually prosecuted”. ians wager €80 billion a year, with half of that going into 400,000 video slot machines, In 2019, Europol49 launched an operation to housed in places like espresso bars, and fre- address exploitation of businesses by criminals

Italy - Threat Assessment - 2021 Page 20 of 57 who “legally register companies and present 6.12 Counterfeiting & Smuggling (C&S): themselves as $facilitators"!for waste manage- The NRA 2018 includes C&S as a “Very Signi- ment and disposal services asking much lower fcant” threat. prices than other companies on the legal mar- 6.12.1 Counterfeit Goods: In 2018, the ket. The plastic waste they pretend to recycle OECD51 estimated that “the total value of on paper then ends up on illegal dumping counterfeit and pirated Italian goods sold sites. OCGs traffc waste both inside and out- worldwide at over €35 billion for 2013, equiva- side the EU. Plastic waste is typically transferred lent to 4.9% of global Italian manufacturing from one Member State to another to avoid sales. This resulted in over €25 billion in lost disposal fees or other costs associated with the sales by Italian companies in a year when Italy"s proper disposal of waste products in accord- GDP was €1.6 trillion. The fake items were im- ance with EU regulations.” ported mainly from China (50%) and Hong In one operation, waste was traffcked to China Kong (29%), followed by Greece (6%), Singa- (where forged documents were identifed) us- pore (4%) and Turkey (2%). The highest losses ing Slovenia as a transit country. The operation in sales, in euro terms, in the Italian wholesale recorded approximately 560 illegal shipments and retail sectors due to counterfeit and pirat- at an estimated total value €8 million (one ed imports in 2013 were for high-tech elec- shipment was estimated to be between €10 tronic, electrical and optical products, followed 000 and €15 000). This investigation was linked by clothing, footwear, leather and related to “an Italian anti-mafa investigation into illicit products. In terms of market share, the biggest traffcking of textile waste to Africa from the Ital- losses were in the watch and jewellery sector, ian ports of Genoa, Livorno and Trieste. The where the counterfeit market caused a 7.5% companies involved in this illegal activity were loss in sales. The report shows that around half also operating as brokers and carriers in a par- of the fake goods smuggled into Italy in 2013 allel plastic waste traffcking scheme”. Mem- were sold to consumers who were aware they bers of the network Italian and Chinese) were were buying fake products, with the remaining affliated with the Camorra, and were active in share purchased unknowingly”. the textile waste sector in Campania and Tus- “In Italy, at least 88 000 jobs were lost altogeth- cany. er due to counterfeiting and piracy. That repre- In it’s October 2020 infringements package50, sents 2.1% of full-time equivalent employees in the European Union announced that it would sectors directly affected by counterfeiting in be sending a formal notice to Italy for “failing Italy. In 2016, in Italy, forgone tax revenues from to adopt a national programme for radioactive the retail and wholesale sector amounted to waste management compliant with the re- €4.3 billion. That same year, forgone tax rev- quirements of the Spent Fuel and Radioactive enue from Italian right holders to the Italian Waste Directive”. government amounted to €6 billion. Altogeth- Italy - Threat Assessment - 2021 Page 21 of 57 er, trade in counterfeit and pirated goods re- are in circulation, with a total value of around sulted in a reduction in Italian public revenues €1.2 trillion54 (US$1.34 trillion). Based on con- equal to almost €10.3 billion, the equivalent fscated counterfeit banknotes seized, the of 3.2% of the taxes were collected on value- market for counterfeit Euros in 2018 was ap- added, personal and corporate incomes as well prox €28 million (US$31 million). as social security contributions, or 0.62% of Ital- 6.12.3 Cigarette Smuggling: Cigarette ian gross domestic product”. smuggling causes huge losses across the EU Member States and the EU, including in Italy, According to the Kroll Global Fraud and Risk where smokers still represent one of the Report 2019/20, “Because Italy"s manufactur- highest per capita population. According to ing base focuses substantially on luxury goods, the Tax Foundation55 “the EU consumed €38.9 the country is a perennial target for counterfeit- billion ($46.4 billion) of counterfeit and contra- ing. Italian respondents are thus more likely to band (C & C) cigarettes in 2019, representing report being affected by counterfeiting (23% 7.9% of total cigarette consumption and a loss vs. 17% globally) and to make the fght against of €9.5 billion ($10.6 billion) in tax revenues”. counterfeiting a priority (70% vs. 58% Italy imports most of its cigarettes, with a signi- globally).” fcant market for counterfeit cigarettes. Accord- ing to a RUSI Report in 2017, the Italian mafa According to the Trends in Trade & Pirated involvement in this sector is well entrenched. Goods Report 201952 by the EUIPO & OECD, Illicit cigarette consumption by region identi- 3.3% of world trade (& 6.8% of EU imports) in fes Campania at 33% and Friuli Venezia Guilia 2016 was made up from trade in counterfeit at 21%56. goods. Italy is estimated as having a low propensity to export counterfeit products with 6.13 Tax Evasion: Italy has amongst the high- a score of 0.152/1 (2016) with export trade to est rates of personal and sales taxes in the the rest of the world. Based on 3.3% of global OECD. It also has one of the highest levels for trade, estimates for counterfeit imports into tax evasion. Italy would amount to US$14.3 billion. According to the 2018 NRA, the amount estimated for tax evasion was €86.4 billion, being 6.12.2 Counterfeit Currency: The Bank of the average annual value for the period 2011- Italy53 reported that most counterfeits Euros 16, down from €140 billion. Of this new fgure, (96.4%) were found in euro area countries, & the estimate for tax evasion due to non-pay- that the most commonly counterfeited denom- ment of taxes, and errors in completing tax re- inations globally were the €50 and the €20 turns, is €13.2 billion. It is likely that a signif- notes, which jointly accounting for over 70% of cant amount of funds undeclared to the Italian all counterfeits)”. According to the European tax authorities are held offshore, with Italians Central Bank, (2019), 22 billion euro banknotes

Italy - Threat Assessment - 2021 Page 22 of 57 particularly favouring Switzerland, Monaco, the Internal Revenue Agency”. Notwithstanding San Marino & Liechtenstein57. this, the report also highlights that “The Italian judicial system is commonly recognised as one According to a 2018 OC in EU Report report,58, of the most disorganised and slowest in Europe the national industrial association claimed that and tax-related proceedings are no exception. the total tax and contribution evasion in 2015 In a country where tax evasion is widespread, amounted to €122 billion — about 7.5% of different governments have attempted to put in GDP. place remedial counter-actions”. According to the 2016 FATF MER, “Tax evasion 6.14 Human Traffcking: Italy has been cate- (i.e., income tax evasion and VAT fraud) is by far gorised as a Tier 2 country in the last 2 US Traf- the single most important source of proceeds fcking in Persons Reports in 201961 and of crime….. Tax and excise evasion (around 202062, slipping down from Tier 1 in the previ- 75% of total proceeds of crime)……By value, ous 3 years. most tax evasion takes place in northern Italy; tax evasion in the southern regions, while more Tier 2 status is assigned to countries whose widespread, tends to involve smaller governments do not fully meet the the US Traf- amounts.…The authorities have been success- fcking Victims Protection Act’s minimum stan- ful in bringing a number of cases to justice, in- dards but are making signifcant efforts to cluding large, complex tax fraud cases”. bring themselves into compliance with those standards.“The Government of Italy does not According to the European Commission in fully meet the minimum standards for the elim- 2020, the highest VAT gap (€35.4 billion) was ination of traffcking but is making signifcant recorded in Italy - 24.5%. In 2018, the EU-28 efforts to do so”.…”the government reported Member States (MS) recorded a median gap of fewer traffcking investigations, prosecutions, 9.2%59. and convictions compared to the prior report- Italy is ranked 41/133 according to the Finan- ing period and did not report sentencing data. cial Secrecy Index 202060. In the report on Italy The government remained without a national it states that: “Italy plays an important part in action plan and did not consistently implement the international tax system both as EU Mem- its national victim identifcation and referral ber and as a sovereign player that has signed mechanism”. bilateral covenants with several jurisdictions”. Tier 2 country US Traffcking in Persons - 2020 “Although Italy faces signifcant money laundering risk, mainly coming from tax-related “Victims originate primarily from Nigeria and crimes associated with organised crime, cor- other African countries, China, Romania, and ruption and drug traffcking, it has robust tax other Eastern European countries, and include laws. Those are strengthened by the guidelines ethnic Roma. Traffckers, often part of Chinese

Italy - Threat Assessment - 2021 Page 23 of 57 criminal networks, exploit Chinese women in their own organised structures, linked by and sex traffcking in apartments, beauty centres, dependent upon a leader who tends to remain clubs, and massage parlours. Massage parlours abroad”. are sometimes used as fronts for the purchase 6.15 People Smuggling: Italy is a main target of commercial sex, raising concerns about sex for people smugglers targeting European des- traffcking”. tinations. In 2014, fgures from the EU65 identifed Southern Italy as having received 170,816 illegal migrants (out of a total of 276,113) via the so called Central Mediter- ranean route mainly from Libya & Egypt towards Southern Italy & Malta. The other main “Labor traffckers operate in agriculture, pre- route is the Eastern Mediterranean route dominantly in southern Italy, construction, where 50,561 illegal migrants were reported to household labor, hospitality, and restaurants”. have travelled, which involves sea travel from Turkey to Greece, Italy or Cyprus More recent- According to the Global Slavery Index63 2018 , ly, the rate of arriving refugees and migrants Italy has a low incidence of human traffcking, has dropped in 2018 and 2019, due in part to with 2.4 in 1,000, estimating victims at approx- Italian government policies. According to the imately 145,000, ranking Italy 34 in Europe and US Traffcking in Persons Report 202066, “Italy Central Asia out of 50 countries assessed. GSI received 23,370 irregular arrivals by sea in gives Italy a good government response of 2018 and 11,471 in 2019, many through Libya, “BBB”, an improvement from it’s 2016 “B” rat- where victims reported experiencing extortion, ing and above the regional average of “BB”. torture, and rape by militias or traffckers while HT incidence of 2.4 in 1,000 / 145,000 vic- awaiting passage to Italy”. tims Global Slavery Index - 2018 6.16 Environmental “Green” Crimes: Ac- cording to the Environmental Performance In- 64 Based on fgures from the GTA , estimates for dex67 2020, Italy scores highly at 71/100 and is human traffcking/modern slavery (HT/MS) can ranked 20/180 countries. be up to 3% of criminal proceeds. These would 68 generate up to €3.8 billion. The NRA does not A 2019 article reported that illegal fshing, provide extensive information on the threats especially seahorses and sea cucumbers, oc- associated with HT/MS, except to highlight that curs along the Puglia coast where local fsher- “Human traffcking usually proves to be man- man use Chinese traffckers to transport these aged almost exclusively by foreign criminal or- species by sea or air to south-east Asia, using ganisations: to be more precise, it concerns Greece as a transshipment point. Sea cucum- individual organisations, each of which have bers are reported to fetch between US$200

Italy - Threat Assessment - 2021 Page 24 of 57 and US$600 per kilogram on the Chinese mar- ported71 that they had observed a growing ket, and US$700 per kilogram for seahorses. demand for rare birds on the black market and an investigation led by the Carabinieri from the In respect of the illegal trading in glass eels, CITES Group, and supported by Europol, was the UNODC, in its 2020 World Wildlife Crime initiated resulting in arrests and prosecutions. Report69, reported that “there are two main Supported by the Italian authorities, “over 50 sources of European glass eels illegally traf- protected species of birds were rescued, some fcked internationally, namely commercial fsh- of them so young that were still featherless, in- ers who catch glass eels for the legal market cluding hawfnches, jackdaw, goldfnches and and knowingly or unknowingly supply illegal serins. Among them were 15 European roller exporters (diversion), and poachers, who fsh birds, migratory birds with blue feathers, which clandestinely with the intent to supply the ille- are protected under national and international gal market”. legislation and so cannot be hunted”. “European investigations uncovered a Spanish “Two suspects involved in poaching and traf- eel trader who was working with a Greek eel fcking of endangered species of birds have farm to illegally export large (800 kg) ship- been identifed and prosecuted in Italy. They ments of glass eels to China. The eels were il- were involved in collecting nests and protected legally taken in Spain, transported in trucks to birds in the central region of Lazio to later sell Barcelona, and then by ferry to Italy and on- them on the illegal market, mostly to clients in wards to Greece, where the legal eel farm was northern European countries (the Netherlands, located. This ostensibly legal farming operation Germany and Belgium)”. gave cover to both illegal fshing and illegal export”. In 2019, a joint INTERPOL-WCO global enforcement operation resulted in the seizure of Italy scores 2.50/5 overall on the 2019 IUU 1,850 birds resulting from two online investiga- Fishing Index70, measured against vulnerabili- tions72. ty, prevalence and response (1 = good/strong; 5 = bad/weak). Italy has a 3.76 vulnerability Italy is not one of 26 “Focus” countries identi- score but a 2.17 response score, and shows up fed by the US State Department affected by among the bottom performers in terms of vul- illicit wildlife traffcking, or one of 3 Countries nerability and prevalence. of Concern in the 2019 END Wildlife Traffck- ing Report73 Growing demand for rare birds on the black market In the 2013 Italian Organised Crime Threat As- Europol - 2018 sessment Report74, Europol have identifed the

Italy appears to also have a particular problem “so called $Alternative or Green Energy"!market, with traffcking in birds. In 2018, Europol re- for example investments in wind energy farms,

Italy - Threat Assessment - 2021 Page 25 of 57 as being attractive markets for the Italian Mafa. warnings were also posted for Florence, Milan, Such projects offer attractive opportunities to and Naples. beneft from generous MS (Member States) 6.18 Cybercrime: As reported in the 2020 and EU grant and tax subsidies, but apart from OSAC report77, fraud is a growing concern and effectively exploiting eco-friendly incentives for if often carried out by cybercriminals, hence their fnancial gain, they also create possibilities why OSAC states that, “Cybercrime is a grow- to launder proceeds of crime via legal business ing concern for Italian authorities, and should structures”. be a priority for anyone conducting business in 6.17 Fraud: PWC’s Global Economic Crime Rome. An increase in ATM skimming devices Survey Italian Addendum 201675” reports that, has been noted, and internet romance and fn- “in Italy about one in fve organisations (21%) ancial scams are also prevalent in Italy. claimed to have been a victim of economic and When describing how the OCG ‘Ndrangheta fnancial frauds”. works, Interpol78 advised that they are taking “In Italy, asset misappropriation is still the most advantage of technology and use the Darknet common type of economic crime which repre- and deepweb to “carry out illicit commerce”. sents about 70% of all frauds declared (65% in According to PWC’s Global Economic Crime 2014), with a 5% increase. Bribery and corrup- Survey Italian Addendum 201679, “In Italy, one tion show the most signifcant increase. In in fve organisations (20%) has been affected 2016, 23% have been a victim of this crime, a by cybercrime, third most commonly reported 10% increase from 2014 (13%). In third place, economic crime, after asset misappropriation Cybercrime results the most dangerous crime, and bribery & corruption. Cybercrime contin- affecting 20% of respondents (22% in 2014)”. It ues to expand so much that for 30% of respon- also reported that “7% of Italian organisations dents it represents a serious danger for the fu- suffered losses between 5 million and 92 mil- ture”. lion Euro in the previous 2 years". “For 60% of Italian organisations cybercrime is Asset misappropriation is still the most common type of economic crime seen as a threat increasingly coming from out- PWC 2016 side the organisation (55% in 2014). Hackers, terrorists and organised crime are the biggest Citing authorities, it was reported in the 2020 threats, as they use the income obtained OSAC reports for Rome76 that “credit card through cybercrime as a fnancial resource”. fraud, ATM skimming, and identity hacking account for 75% of all fnancial crime in the city” Cyber enabled crimes are on the rise every- and warned of an “increase in the appearance where, providing opportunities to criminals, of ATM skimming devices”. ATM skimming and especially the Italian mafa, with opportunities “to engage in highly proftable quasi-le-

Italy - Threat Assessment - 2021 Page 26 of 57 gal or illegal services or activities, such as on- rate in Italy, with about 697 cases every line sales for illegal products”. 100,000 population, followed by Catania.

6.19 Theft, Robbery & Traffcking of Stolen The three most frequently stolen car models Goods: Travel guide media reports80 advise belonged to FIAT”84. that vacant holiday homes are a popular tar- Based on fgures from the GTA85, estimates for get for burglary. Theft of, and from, cars occurs theft & traffcking in stolen goods can be up to in cities where expensive, foreign-registered 5% of criminal proceeds or €6.4 billion cars are a popular target. Theft of small items such as radios, luggage, mobile phones, cam- 6.20 Murders: Homicide rates86 have been eras, briefcases, sunglasses and even ciga- falling for a decade, with rates at 555 between rettes from parked cars are especially com- August 2011 - July 2012 to the latest compa- mon. Bag snatchers (scippitori), who operate rable fgures being 278 for August 2019 - July on foot, on scooters and motorcycles, or even 2020. Mafa killings in the frst half of 2016 in cars, also steal items from unsuspecting were 34, with 28 carried out by Campanian people, and pickpockets (who are are highly mafa, the Camorra. organised and trained) also manage to uplift items.

That said, the numbers of thefts from 2011 to 2020 in Italy have been decreasing. Theft rates went from 1.5 million between August 2011 and July 2012 to 820,000 between August 2019 and July 202081”. 6.21 Cross Border Crime: Italy shares land borders with Austria, France, Slovenia, and There was also a decrease in robberies where Switzerland (Campione d’Italia is an Italian ex- the number of robberies in Italy dropped to clave in Switzerland) and the Vatican City. Italy around 20,000 between August 2019 and July surrounds the independent states of San 2020. The numbers peaked at 44,000 between Marino and Vatican City87. Including islands, 2012 and 201382.” According to the UNODC83, Italy has a coastline of 7,600km on the Adriatic the robbery rate for 2017 was 51 per 100,000 Sea, Ionian Sea, Tyrrhenian Sea, Ligurian Sea, people, with Italy ranked 29/97 countries, and Sea of Sardinia and Strait of Sicily. Interpol kidnap rates were 0.3 per 100,000 people, and opines that Italy’s “geographic location makes ranked 37/79 countries (with 1 being the high- Italy attractive to local, regional and global or- est). ganised crime groups”88. As thefts remain popular, no more so than in Italy’s major mafa organisations extend their Apulia, which recorded the highest car theft reach to many countries in the world. Italian

Italy - Threat Assessment - 2021 Page 27 of 57 OCGs, for example the Sicilian mafa and the owned some cryptocurrency, whilst 24% said ‘Ndrangheta, have “strongholds” in Canada, that they expect to own cryptocurrency in the Australia, Germany, and to a lesser degree the future, 36% said that digital currencies are the United Kingdom. The ‘Ndrangheta also has a future of spending online. presence in Latin America. Outside Italy, “the The NRA 2018 highlights that on the basis of Camorra is particularly present in countries investigative evidence, virtual assets have been such as Spain, the Netherlands, and France. used in Italy, in a limited number of cases, for The presence of the organisation in the coun- the purchase of drugs and weapons, extortion tries is mostly related to the international drug and computer fraud, and money laundering. traffcking and to money laundering”. “Although virtual assets can potentially lend International reach across its borders is further themselves to being used for the purposes of exploited by Italian OCGs as described by Risk money laundering and terrorist fnancing, at Advisory89, “Italian organised crime groups present, the evidence resulting from both have also started to $go international"!and are analysis of suspicious transaction reports and now exploiting prosecutorial and judicial investigations, together with the new regula- weaknesses in other European countries. Out- tions introduced into the Italian legal system, side of Italy, where authorities have built up the are such as to lead one to believe that, even if institutional knowledge needed to counter in the presence of a potentially high risk, the mafa infltration, prosecutors do not have the inherent risk of using virtual assets for money same expertise or tools at their disposal. Most laundering and terrorist fnancing is, as for now, strikingly, despite the continued efforts of the of lowly signifcance”. European Commission and the European Par- Whilst the inherent risk is considered low, this liament, the 416 bis article which established may change as the popularity of virtual curren- the crime of mafa association has still not been cies increases and its usage becomes more adopted in other European jurisdictions”. popular. Virtual currencies are also likely to be- The NRA highlights cross-border cash move- come a target for those wanting to exploit ments and links to fows of goods. “This espe- weaknesses in crypto wallets and safe custody. cially concerns travellers and shipments to or 6.22.2 Emerging Threat 2) Covid 19: Whilst from countries affected by high levels of institu- organised crime benefts from a growing tional or military instability in the Middle East economy, they are also a benefciary when and Africa”. economies experience signifcant downturns, 6.22.1 Emerging Threat 1): Cryptocurrency: and as they benefted from the last economic According to an ING’s Global Survey90 on cryp- crises, there are concerns that the crises creat- tocurrency published in June 2018, only 8% of ed by Covid 19 may also beneft organised those surveyed in Italy admitted that they crime.

Italy - Threat Assessment - 2021 Page 28 of 57 Transparency International (TI)91 warns that “as the future.”92 De Bolle confrmed that OCG’s with previous economic crises, organised crim- had already been praying on the public, as inal groups will likely be in possession of large well as private companies & health authorities deposits of illicit money at their disposal”. in many countries, offering highly sought after products such as disinfectant, facemasks, Some OCGs have sought to use COVID-19 by thermometers, mechanical ventilators & exploiting the economic issues associated with phantom cures for coronavirus, being made the pandemic and use this to launder illicit available for example online as well as more funds through cash intensive businesses as sophisticated scams operandi using real cor- well as investment in the real estate and con- porate identities to offer victims the sale of struction sectors. products linked to the pandemic only to dis- “FATF has warned about the risk of criminals appear into thin air, after payment is made up misusing companies to pose as legitimate front. businesses seeking fnancial assistance to con- ceal and launder illicit proceeds” and also that “stimulus measures such as loan schemes may risk being abused by criminals to launder funds”. FATF have also reported that, “the lack of transparency and oversight in emergency procurement have created plenty of opportunities for bribery, kickbacks and bad contracting. There are high risks of the increased misuse and misappropriation of public funds and con- sequent money laundering”.

Whilst OCGs have benefted from the crises, concern has been raised that the EU’s €750 billion recovery fund, aimed at helping countries re emerge from the corona crises is a Mafa target. Catherine De Bolle the Head of Europol attending a recent police summit in Rome said that there had been “an infltration into the economy” by criminal organisations in Europe, and Europol had been asked to care- fully monitor loans connected to the recovery fund, as funds “are already being targeted by criminal organisations, and we expect more in

Italy - Threat Assessment - 2021 Page 29 of 57 Section 6 - Key Threats Continued including Country Risk - �

In this Section 6 the key threats are continued focussed on areas of Italy considered at higher risk as well as threats from third countries.

Italy - Threat Assessment - 2021 Page 30 of 57 Section 7 - Sanctions & Embargoes - �

In this Section 7, the focus is on Sanctions and billion. No funds have been frozen pursuant to Terrorism threats. DPRK sanctions96.

7.1 Sanctions & Embargoes: There are no In respect of Italy-North Korea relations97: sanctions against Italy. Italy adopts both UN • Italy expelled the DPRK Ambassador to and EU sanctions and embargoes93. The sanc- Rome in September 2017, following North tions enforced by the EU and UN include Korea's sixth nuclear test; and comprehensive trade sanctions against other countries, embargoes that target arms, fnan- • In 2017, North Korean exports to Italy were cial sanctions as well as sanctions that are en- reported at US$146,000, while Italian ex- forced against specifc individuals and limited ports to North Korea were valued at sector specifc sanctions. The EU gives legal US$261,000. effect to Targeted Financial Sanction designa- Italy has also been one of Syria’s largest trad- tions by the UN Sanctions Committees through ing partners, coming 2nd after Iraq with 13.4% EU Council Regulations. Italy is required to ad- of exports from Syria sold to Italy in 201098 val- here to those EU measures. ued at approximately US$1.52 Billion99. In Prior to the imposition of international sanc- 2019, the value of exports to Syria was tions, Italy was ranked among Iran"s top trad- US$131.43 million and imports from Syria was ing partners, being the largest EU partner US$5.03 million100. along with Germany, and ranked in 2017 as 7.2 Embassies: Italy has embassies101 in Cuba, Iran’s third largest trading partner. Trade Iran and Syria, while Cuba, Iran, Syria and peaked in 2011 valued at €7.097 billions). In North Korea have embassies in Italy. the frst nine months of 2017, the trade between Europe and Iran was worth about €15 Italy has 64 named listing on OFAC"s SDN billion, with Italian exports of about €1,147 bil- and other sanctions lists lion and imports of €2 billion, which represen- US Treasury - 2021 ted an increase of 97% in comparison to 7.3 OFAC Lists: Italy has 64 named listing on 201694. In 2019 Exports to Iran were reported OFAC’s SDN and other sanctions lists, with 14 as US$929.25 million95. entities and 50 individuals named.102.

Italy has frozen signifcant Iranian assets under 7.4 Proliferation: According to the Peddling the Iran sanctions program, via Italian FIs which Proliferation Index103, Italy is a Tier 1 Country have frozen 60 accounts and transactions of 14 (highest threat), but is ranked 21st best out of individuals subject to EU and UN sanctions on 55 Tier 1 countries with a control score of Iran totalling an amount of approximately $13 884/1,300. Italy - Threat Assessment - 2021 Page 31 of 57 Italy - Threat Assessment - 2021 Page 32 of 57 Section 8 - Terrorism & Terrorism Finance - �

In this Section 8, the focus in on terrorism FTFs are considered to be returning from the threats & on terrorism fnance. Middle-East Syrian -Iraqi battlefeld or North Africa areas of confict. In the 2019 US Country 8.1 Terrorism/Extremism: Italy is ranked Report on Terrorism104 for Italy the report 59/138, and rated “low” at 3.043/10 in the states that “offcials are concerned fghters from Global Terrorism Index 2020. the Western Balkans returning to Europe could also pass through Italian territory, given the signifcant Balkan-origin communities in Italy”.

Focussing on the domestic “anarchist” threat that is rated as “Rather Signifcant”, the NRA highlights one specifc group, the Informal An- archist Federation (IAF), as being of particular According to the 2014 & the 2018 NRA, Italy concern and describe a December 2017 attack considers both the domestic threat and the “against the Carabinieri barracks in the district threat from international terrorism. of San Giovanni in Rome, where a device placed at the entrance exploded” that was Terrorism Threat NRA 2014 NRA 2018 claimed by the group. The group is considered Left Wing - Domestic Non Signifcant* Lowly Signifcant to have “offensive potential” and is described Right Wing - Domestic Non Signifcant* Non Signifcant*

Anarchist - Domestic Lowly Signifcant Rather Signifcant as being spontaneous and unpredictable, Religious International Lowly Signifcant Very Signifcant leveraging international connections. Non Religious International Non Signifcant* Lowly Signifcant

*The judgement of non signifcant does not mean “non existent” but rather that the strength of the threat is largely contained. Overall, terrorist fnancing, is rated “Rather Signifcant”, in the NRA which states that “it Rated “Very Signifcant” in the NRA, the cannot be underestimated that the scarceness threat posed by “jihadist terrorism” is consid- of the amounts intended for terrorist fnancing ered “real and relevant” with particular con- make it particularly diffcult to identify the relat- cerns regarding returning Foreign Terrorist ed fnancial fows. Also that: Fighters (FTFs) highlighted as a major risk “be- • Unlike other European countries, Italy cause they may have been able to consolidate has not been affected by a signifcant contacts, during the course of the confict, with number of fghters leaving for areas for other militants from Europe; this could make it confict and, therefore, by a proportion- easier for them to relocate to countries other al, subsequent fnancial fow from Italy than the ones where they lived before the con- to those areas, from relatives, friends fict”. The NRA states that Italy has been “hub and supporters; to get to or return from the area of confict”. Italy - Threat Assessment - 2021 Page 33 of 57 • The nature of the Jihadist terrorist activi- The Government of Italy has a robust coun- ty observed in Italy in recent years is terterrorism program and actively monitors largely confned to the broadcasting of known or suspected foreign fghters and terror- propaganda on the Internet, to the vin- ists.” dication of terrorism as well as to inter- actions on messaging platforms with “Italy also faces several indigenous terrorist members from Jihadi organisations. groups and radical elements, primarily consist- With regards to international terrorism, ing of extremist and or anarchist movements. few cases of self-funding and third-party Government institutions and diplomatic facili- funding emerged in order to make ties have received bomb threats and actual ex- peoples"!journeys towards areas of con- plosive devices. Buildings/offces have been fict much easier; the target of frebombs or Molotov cocktails, although generally at night; such incidents are Notwithstanding the response from various rare and instigated by organised crime or anar- agencies as mentioned above, the 2020 OSAC chist movements”. report advised that “The U.S. Department of The US Country Reports on Terrorism report- State has assessed Rome as being a HIGH- ed105 that “Domestically, Italy investigated and threat location for terrorism directed at or af- prosecuted terrorist suspects within its borders fecting offcial U.S. government interests. ISIS, and deported 98 subjects for terrorism-related al-Qa"ida, their affliated organisations, and security reasons in 2019. Italy is a member of other terrorist groups aspire to commit terrorist the Global Coalition to Defeat ISIS. As part of attacks against U.S. and Western interests in the Coalition, Italy was among the top contribu- Europe. Local security authorities believe tors of troops in Iraq, heads the Coalition"s po- threats and attacks are likely to be a security lice training sub-group, and leads efforts to concern as European members of ISIS return train Iraqi police and security forces”. from Syria and Iraq. There is a general continu- ing threat in Europe from unaffliated persons Terrorist incidents in 2019 include “Yemeni planning attacks inspired by major terrorist or- national Mahamad Fathe was arrested in Milan ganisations but conducted on an individual September 17 for stabbing a soldier. Fathe had basis. European governments have acted to met with #radicalised” suspects in Germany and guard against terrorist attacks, and some have fought in the civil war in Yemen. The detainee"s made offcial declarations regarding lawyer requested a psychiatric review, as Fathe " heightened threat conditions. Italy s concerns told investigators he was suicidal”. for terrorism are exacerbated by its proximity to North Africa and the Middle East. Additionally, 8.2 Terrorism Finance: As confrmed by the Italy has fgured prominently in the rhetoric of NRA 2018, “the scarceness of the amounts in- groups such as ISIS, al-Qa"ida, and al-Shabaab. tended for terrorist fnancing make it particular-

Italy - Threat Assessment - 2021 Page 34 of 57 ly diffcult to identify the related fnancial fows.” • The low amounts of money transferred and Due to the diffculties in mitigating the threat the diffculty in establishing their nature/ and the consequences the overall risk of ter- destination; and rorist fnancing is considered as “Rather Sig- • The fact that in these transactions, increas- nifcant.” ingly sophisticated techniques are used for Identifed vulnerabilities are set out below. splitting up sums of money, to prevent it being traced. Vulnerability to Terrorism Finance - NRA 2018 Italian In perhaps the largest seizure of am- Overall Rather Signifcant phetamines in the world, Italian police seized Certain Electronic and Digital Payments more than 84 million tablets of weighing 14

NPO’s / Charities / Private Donations tons and with a value of more than €1 billion ($1.2 billion), heading from Syria to European MVTS (including Hawala) markets in July, 2020106. When they were Prepaid Cards seized in Italy, the tablets were hidden in large Certain Electronic and Digital Payments paper and steel cylinders and transported to Cash Couriers the port of Salerno, in southern Italy. The ar- rived on three 3 from Latakia, a Syrian port. In- One area of particular concern in Italy as else- vestigators have no doubt that the Salerno where as far as documented use by religious shipment was to be received by the Neapoli- terror groups such as AQ and IS, is the use of tan mafa, the Camorra. Whilst Italian police Money or Value Transfer Services (MVTSs), as initially believed that the drugs seized in Saler- well as the network 'hawala'. As reported in the no may have been produced by those linked NRA 2018, “over the last few years we have to IS in order to fnance their terroristic efforts, witnessed a considerable increase of the num- investigators have also considered possible ber of suspicious transactions reported by sec- links may exist with Hezbollah in Lebanon, tor operators in question. In 2017 it was equal where drug smuggling is thought to be one of to more than 5,000 reports relating to about their main sources of income. 111,000 transactions, and in 2018 it was equal to more than 7,000 reports relating to about Some experts though believe it is likely that 115,000 transactions. This increase shows a the regime of Syrian President Bashar al-Assad greater awareness of the risk in question. The was also involved, as amphetamine production vulnerability of the system, inter alia, continues fourished in Syria after 2013, when a crack- to be linked to: down in neighbouring Lebanon likely forced Hezbollah to relocate its drug production operations next door107.

Italy - Threat Assessment - 2021 Page 35 of 57 Section 9 - Money Laundering - �

In this Section 9, the focus is on Italy’s vulner- fduciary service providers (investment and as- ability to money laundering. set management), foreign electronic payment and money institutions, cash-for-gold operat- 9.1 Money Laundering: Italian money laun- ors and chartered and expert accountants. dering methods and techniques include cash based money laundering, from illegal activities Sector Vulnerability to ML NRA 2018 such as traffcking in drugs, but also counterfeit Overall Very Signifcant goods & human traffcking, but also infltration Lawyers Very Signifcant and use of business sectors, loan sharking, and Real estate agencies Very Signifcant trade based money laundering. Use of cyber Other fduciary service companies Very Signifcant channels to commit offences, such as fraud, Electronic and payment money institutions (foreign) Very Signifcant are also used to launder funds, for example Cash for gold operators Very Signifcant through online activities and using virtual cur- Chartered and expert accountants Very Signifcant Electronic and payment money institutions (domest- Rather Signifcant rency. ic)

Supervised fduciary service companies Rather Signifcant

In addition to drug traffcking, “Other major Banks and Poste Italiane Rather Signifcant sources of laundered money are proceeds Notaries Rather Signifcant from tax evasion and value-added tax (VAT) Gaming and betting sector Difering risks Investment companies Lowly signifcant fraud, smuggling and sale of counterfeit goods, Insurance companies and intermediaries Lowly signifcant extortion, corruption, illegal gaming, illegally Labour consultants Lowly signifcant disposing of hazardous waste, and loan shark- Auditors (public interest entities) Lowly signifcant ing”, according to the 2020 US INCSR Volume Financial agents and credit intermediaries Lowly signifcant Money exchangers Lowly signifcant II report108. Non-proft Sector Lowly signifcant

In 2019, the Bank of Italy"s (BOI) Financial Intel- The rationale for increased vulnerability relates ligence Unit (UIF) identifed domestic and for- to the sectors perceived role and/or impor- eign real estate transactions, money transfers, tance in supporting small cash businesses, private banking, gambling, the art trade, and NPOs as the primary • Financial transactions, including providing avenues for money laundering. higher risk products such as correspondent and private banking or international wires, 9.2 Higher Risk Areas: According to the NRA, remittances or cash. the overall money laundering threat rating for Italy was assessed as “Very Signifcant”. In all, • Anonymity in fnancial transactions, which is 6 sectors were considered as “Very Signifc- particularly the case for some e-money ant” with vulnerability for money laundering. products, virtual currencies, and unregulated They are lawyers, real estate agencies, other crowdfunding platforms; Italy - Threat Assessment - 2021 Page 36 of 57 • Use of cash, for example particular cash in- proceeds. Particular cash intensive sectors tensive business types, for example the gam- identifed in the NRA are restaurants, bars, and ing and betting sector; and hotels.

• Involvement in establishing or maintaining Multiple borders and a long coastline are also corporate entities or other legal structures, likely to present increased opportunities, par- where identifcation of and access to benef- ticular for cash couriers. cial ownership information is limited or not Based on estimates for cash based money transparent. laundering, representing around 76% of total For money laundering risks across Italy’s re- criminal proceeds111 monies available for gions and provinces, see Page 27 above. laundering are estimated at €97 billion.

9.3 Cash Based Money Laundering: Italy re- 9.4 Trade Based Money Laundering mains a country where cash is used more often (“TBML”): In 2017, Italy generated approxi- than in most other EU Countries, and within mately US$496 billion from exports and Italy cash is used more often in Central & US$433 billion from imports112, most of which Southern Italy than in the North. The results of were with the UK, China and European coun- a survey from the European Central Bank109 tries (with the EU countries representing 33%% (ECB) on the use of cash in 2016, found that of export trade and 37% of import trade). Es- 86% of the transactions were paid for with cash timates for trade based money laundering in Italy compared to just 79% elsewhere in the suggest at least US$14.3 billion. (See Section Eurozone. Whilst these numbers will have 6.12.1 above). fallen, we can still assume that in Italy, the use 9.5 Other Money Laundering: Securities, of cash is still widespread and represents a risk Transaction & virtual currency laundering are for money laundering and tax evasion. Cash not considered comparable. The NRA high- limits of €3,000, and controls over the posses- lights that virtual assets, “have been used, in a sion and use of the €500 euro denomination, limited number of cases, for the purchase of may mitigate this risk. drugs and weapons, extortion & computer Cash is the main medium of exchange within fraud and money laundering.” These activities Italy and supports shadow economies, which can also be made possible through the use of remains signifcant in Italy, for example the the prepaid cards.” The NRA rates VC of “Lowly OC in EU Report110, ranks it 7th among 28 EU Signifcance,” for ML/TF risk. countries.

Cash intensive businesses are a target for infltration by organised crime to launder cash

Italy - Threat Assessment - 2021 Page 37 of 57 Italy - Threat Assessment - 2021 Page 38 of 57 Section 10 - Response - �

In this Section 10, the focus is on Italy’s level of due diligence undertaken by the banks when resilience and response. accepting business through agency arrangements, and the processes for identifying bene- 10.1 FATF: The country evaluation of Italy was fcial owners are not consistent. Reporting by published in February, 2016113. The report the non-fnancial sector is generally poor, es- stated Italian authorities have a good under- pecially among the lawyers and accountants, standing of the ML and terrorist fnancing (TF) but on the rise. Financial sector supervisors risks. have been using a risk-based approach (RBA) “Italy has a mature and sophisticated AML/CFT to varying degrees, but their supervisory tools regime, with a correspondingly well developed could be improved” legal and institutional framework. It is none- “In terms of effectiveness, Italy achieves sub- theless confronted with a signifcant risk of stantial results in risk assessment and national money laundering (ML) stemming principally policies, international cooperation, collection from tax crimes and activities most often asso- and use of fnancial intelligence, ML and TF in- ciated with organised crime, such as corrup- vestigation, prosecution, confscation, and tion, drug traffcking, and loan sharking”. transparency of legal persons and arrange- However, “current results are not fully comments. Only moderate improvements are mensurate with the scale of ML risks. This is needed in these areas”. partly due to the insuffcient focus on stan- In the 2019 Follow-Up Report (FUR) and Tech- dalone ML cases and other cases, generated by nical Compliance Re-Rating, Italy was able to foreign predicate and/or involving legal per- secure 8 re-rated scores to “Compliance” for sons"!offences, as well as to the length of the Recommendations 1,16, 20, 26, 27, 29, 35 and judicial process”. 40. Based on a simple scoring model devel- “Financial institutions (FIs) generally have a oped by FCN, Italy is rated at 80% for Techni- good understanding of ML threats that they cal Compliance and 58% for Effectiveness, face, and the larger banks appear to be with an overall average of 64% and 31% re- strongest in their mitigation efforts. The non spectively across more than 75 countries re- fnancial sector, with some exceptions, is far ported in 2019, making Italy one of the highest less attuned to ML/TF risk, and is hampered by scoring countries for its Technical Compliance the absence of detailed secondary legislation”. scores, but has more work to do on Effective- ness. “Customer due diligence (CDD) measures are well embedded in the fnancial sector, but Key areas for Technical Compliance with 40 there appears to be an over-reliance on the Recommendations show that Italy received 18

Italy - Threat Assessment - 2021 Page 39 of 57 “Compliant” ratings, 20 “Largely Compliant”, 2 relate to intra EU banking, where Italian Banks “Partially Compliant”, and 0 “Non Compliant”. do not need to apply FATF measures with respect to EU-based correspondent institutions, 10 Core Recommendation results were: R8 due to EU ML Directives. (NPOs) - LC, R10 (CDD) - LC, R12 (PEPs) - LC, R13 (CBR) - PC, R14 (MVTS) - C, R15 (NewTech) 10.3 Designated Non Financial Businesses - LC, R22 - (DNFPBs CDD) - LC, R26 (FI Super- & Professions (DNFPB’s): Italy was rated vision) - C, R28 (DNFPBs Supervision) - LC & “Largely Compliant” for R22 (DNFPB CDD) & R29 (FIU) - C. Taking these core elements, FCN R23 (DNFPBs Other Measures) and not “Com- scores Italy at 73%. pliant”, because there was no requirement for the identifcation of domestic PEPs, or regulations or guidance for DNFBPs on new techno- logies. Also that DNFBPs are not explicitly required to report suspicions related to all predicate offences associated to ML, and that the tipping off and confdentiality requirements do not explicitly extend to the reporting of suspi- On Effectiveness, Italy received no “Highs”, 8 cions related to the predicate offences beyond “Substantials”, 3 “Moderates”, and 0 “Lows.” those of ML. Key IO results were: IO3 (Supervision) - M, IO4 (Preventative Measures) - M, IO6 (FIU) - S and 10.4 Benefcial Ownership Registers of Le- IO8 (Confscations) - S. Taking into account gal Persons: Italy is rated as “Largely Compli- these core elements, FCN scores Italy at 50% ant” with FATF R24 (Transparency & BO of Le- for effectiveness for these key areas. The 3 Im- gal Persons), & R25 (Transparency & BO of Le- mediate Outcomes that were rated the lowest gal Arrangements). As an EU Member State, at only “Moderately Effective” were IO3 (Su- Italy is obliged to introduce a central public pervision) -, IO4 (Preventative Measures) - M, register, and is committed to doing so114. TI IO10 (TF Preventative Measures & Sanctions). has recently warned that due to COVID 19 See Section 11 for more details. “Corruption and money laundering risks may be aggravated by the relaxation or postpone- 10.2 Financial Institutions: Italy was rated ment of legal provisions regulating benefcial “Compliant” for R9 (FI Secrecy Laws), R11 ownership”115. (Record Keeping), R14 (Money or Value Trans- fer Services) & for R16 (Wire Transfers). For Italy is nevertheless rated “Compliant” by the both R10 (CDD) and R12 (PEP), Italy was rated OECD Global Tax Forum116. In its latest review “Largely Compliant” and for R13 (Correspon- carried out in 2017, Italy was rated Compliant dent Banking) rated “Partially Compliant.” Iden- in 9 out of 10 sub categories, including for A1, tifed weaknesses on correspondent banking

Italy - Threat Assessment - 2021 Page 40 of 57 Ownership & Identity Information & A3 Bank- US$1.3 billion by United States federal and ing Information. state regulators for laundering approximately US$6.76 billion through the US fnancial sys- 10.5 Regulatory Supervision: Italy scored tem by allegedly altering anti-money launder- 0.95 (43/193) in the country rankings by the ing systems to evade reporting transactions World Bank for regulatory quality (2019)117. related to Iran, Sudan, Cuba, Myanmar and Italy was rated “Compliant” for R26 (Regulation Libya. & Supervision of FIs) & for R27 (Powers of Su- pervisors), and “Largely Compliant” with R28 In February 2020, a Milan court ordered Dutch (Regulation & Supervision of DNFPBs). lender ING to pay €30 million (USD$33.17 million) after they admitted that in 2018, “that The lack of a supervisory methodology that criminals had been able to launder money provides Guardia di Finanza (GdF) with good through its accounts and agreed to pay €775 quality and comprehensive information on million euros to settle the case in its home DNFPBs inherent ML/TF risk and risk mitigants country”.120 used, was raised a remaining concern. It’s likely that signifcant improvements in the larger banks in Italy will follow as a result of these fnes & penalties with remediation & en- hancement programmes which should have, or will be largely maturing. In time this should translate into better compliance & more effective programmes to effectively combat ML, at Italy was also rated “Partially Compliant” for least in the banking sector. R35 (Monetary Sanctions) after the 2016 MER 10.6 Financial Intelligence Unit: The Finan- & updated by the FUR 2019 to “Compliant.” cial Intelligence Unit of Italy (UIF) became op- In 2017, the Bank of China Milan Branch re- erational in 2008121, and is a member of the portedly118 agreed to a fne of €600,000 Egmont group122. The UIF, has adopted an (US$640,000) in connection with a €4.5 bil- administrative model, and is embedded within lion money laundering probe. Additionally, 4 the Bank of Italy. The FIU's staff, technical and bank offcials were convicted of money laun- fnancial resources and hardware are provided dering and the seizure of the alleged amount by the Bank of Italy, though the UIF neverthe- profted by the bank of €980,000. less claims that “it is an independent body and functions in full autonomy”. In 2019, Unicredit (reportedly119 the largest bank in Italy) and operating in New York, was The FIU was rated “Largely Compliant” for R29 levied a fne and penalties amounting to (FIU) after the 2016 MER & updated by the FUR 2019 to “Compliant.”. Italy - Threat Assessment - 2021 Page 41 of 57 The 2016 MER said that “The UIF is a well-func- According to Europol126, the conversion rate in tioning fnancial intelligence unit. It produces 2013 across the EU, excluding Italy, was good operational and high quality strategic 10.88%. The conversion rate refers to the way analyses that add value to the STRs.” in which an STR is used, for example whether it is used in some other way, be it subject to fur- According to the 2019 Annual report123, in ther analysis, used within the framework of on- 2019, the UIF received 105,789 suspicious going/existing investigations, or to launch a transaction reports, 7,759 more than the previ- new one. ous year, with banks reporting 64.5% of all STRs down from 72.5% in 2018. Europol stated that, “Italy reported receiving 64,601 STRs in 2013, while in the same year 92,415 were submitted for investigation, likely cases retrospectively forwarded to GdF and DIA,” representing a conversion rate in excess of 100% due to the fact they forward more reports than they receive (some carried on from previous years) to police authorities after a pre- The sums of money reported124 totalled €84 liminary analysis process by the FIU. According billion in 2013 (5.25% of Italian GDP), and to the MER 2016, this then translated into €164 billion in 2014 (10.25% of GDP). 13,957 cases, for law enforcement to investi- STRs related to terrorism fnance125 were also gate, of which 604 were new investigations, fled and included in these numbers. In 2013, with the others largely absorbed into existing 131 STRs were reported representing 0.2% and investigations. in 2014 93 STRs representing 0.13%. An IMF Report127 published in February 2016 provided great insight into the work of the The most STRs in 2019 were reported from Italian FIU and the effect of STR’s and their con- Lombardi (19.8%), followed by Campania tribution to fghting fnancial crime. (12.2%) & Lazio (10%).

According to the IMF Report, 71,661 STRs The UIF is staffed with 152 people in 2019, an were fled with the Italian FIU. These STR’s in- increase from 146 in 2018, and 142 in 2017. volved an estimated 323.9 million transactions This is also an increase from 121 staff in 2012, valued at €21.4 billion. The main offences and 130 in 2014. identifed in these STR’s are tax evasion, fraud, According to the 2016 MER, “Intelligence dis- participation in organised crime, drug traffck- seminated by the UIF generally leads to suc- ing, illegal disposal of toxic waste and human cessful investigations into ML/TF and related traffcking. predicate offences by recipient agencies”.

Italy - Threat Assessment - 2021 Page 42 of 57 The Italian FIU analysed all of the STR’s re- existing legal proceedings, 931 (1.1%) STRs ceived and dismissed 16,263 (21%) of ana- requested to be used by prosecutors and 588 lysed STR’s, whilst including information in dis- (0.7%) to commence new legal proceedings or seminated reports on 59,595 (79%) to the GDF investigations. and DIA which includes an analysis of fnancial In 2014 STRs led to the identifcation of 755 fows with identifcation of the economic reas- criminal violations of which 66 related to ons and motivations underlying the operations money laundering, 115 to non compliance and assessment of the origin of the funds. with AML/CFT Laws and Regulations, 276 from fscal violations, 43 from fraud, 13 from loan sharking, 31 from illegal unlicensed fnancial activity and 35 from falsifcations. In addition 449 additional organised crime investigations were triggered by STRs in 2014, with 143 against the Cosa Nostra, 105 against the Cam- orra, 187 against the Ndrangheta & 10 against the Apulian and 4 others. A scale of risk linked to the STR is also assigned by way of LEA feedback based on dif- Italy was also rated as “Largely Compliant” for ferent criteria (i.e. recurring patterns of beha- R34 (Guidance & Feedback) after the 2016 viour, risk exposure of sectors and vulnerability MER & 2019 FUR, which left the rating un- of certain payment instruments) as well as the changed. The 2016 MER stated that,“While likely predicate offence. comprehensive guidance has been provided to FIs there is need, with the exception of auditors Once received by GdF a decision on whether and notaries, to strengthen the guidance to to open an investigation is then considered. DNFPB’s.” This was directed to the UIF on STRs and from the BoI on ML/TF more generally.

10.7.1 Law & Order: According to Eurostat128, Italy spends an estimated 1.6% of GDP (2018) on law and order (excluding fre services), with 1.1% spent on policing, 0.3% on law courts and 0.2% on prisons.

In 2014 of 85,581 STR’s analysed by GdF, This would represent approx US$30.4 billion, 28,220 (33%) led to further investigations, with US$21 billion on policing, US$5.7 billion 8,355 (10%) led to investigations with positive on law courts & US$3.8 billion on prisons. outcomes, with 6,049 (7%) STRs absorbed into

Italy - Threat Assessment - 2021 Page 43 of 57 Italian spending on law and order exceeds the Law and order in Italy is the responsibility of EU average of 1.5% (excluding fre services) fve national police forces, and two local police and most other large countries, including forces. Together, these organisations employ Germany (1.4%), France (1.4%) and equal with over 300,000 offcers, the highest number em- Spain (1.6%). ployed by any of the countries in the European Union.

The two local forces are:

• Provincial Police (Polizia Provinciale) - this force is responsible for enforcing national and local hunting and fshing laws as well as some traffc regulations. They are not present in every province. 10.7.2 Prisons: Italy’s incarceration rate has an incidence rate of 77 per 100,000 people in • Municipal Police (Polizia Municipale) - each 129 prison in 2018. comune has a Municipal Police force, responsible for enforcing local regulations, traffc control and investigating petty crimes.

The fve national forces are:

• State Police - Polizia di State - a civilian police force primarily responsible for the mainten- ance of public order and security, under the 10.7.3 Law Enforcement: Italy was rated control of the Department of Public Security. “Compliant” for R30 & R31 (Law Enforcement It currently employs around 110,000 person- Responsibilities & Powers) after the 2016 MER. nel.

There are 4 principal police forces in Italy, (Pol- • Finance Police - Guardia di Finanza - employs izia di Stato (Ministry of Interior), Arma dei Ca- around 70,000 offcers and is a military or- rabinieri (Ministry of Defence): Guardia di Fin- ganisation under the control of the Minister anza (GdF: Ministry of Economy and Finance) of Economy and Finance. It is responsible for & Polizia Penitenziaria (Ministry of Justice), all crimes involving fnance, such as: bribery which all report into the Interior Ministry, and corruption, money laundering, credit through its Department of Public Security card fraud, cybercrime, and counterfeiting. It (DPS), which is headed by the #Chief of Police - also shares responsibility for border controls Director General of Public Security”. Investiga- with the 'State Police' and the 'Carabinieri', tions are coordinated through the Public Pro- investigating such crimes as: illegal immigra- secutor"s Offce. Italy - Threat Assessment - 2021 Page 44 of 57 tion, smuggling and international drug traf- Confscation), “Compliant” for R39 (Extradition) fcking. & “Largely Compliant” for R40 (Other Forms of International Cooperation). In the 2019 FUR, • Military Police - Arma dei Carabinieri R40 was updated to “Compliant”. • Prison Police - Polizia Penitenziaria 10.8 Statistics: Italy is rated “Largely Compli- • Forestry Police - Corpo Forestale dello Stato ant” for R33 (Statistics) after the 2016 MER, which stated that “Italy maintains comprehen- Other notable dedicated agencies are the The sive statistics on key issues. Statistics should be Direzione Investigativa Antimafa (DIA, Anti- improved in relation to MLA and extradition Mafa Anti-Mafa Investigation Directorate)130 and further developed in relation to ML/TF in- which is a cooperative venture between all fve vestigations, prosecutions & convictions.” The of the police forces which is charged with tack- FUR 2019 has not changed this rating. ling organised crime and The Italian National Anti Corruption Authority (NACA)131.

In January 2021132, the largest anti mafa trial started, against 355 people including, politicians, police offcers, civil servants as well as alleged members and accomplices of the mafa which was the result of a long investiga- The 2016 MER included statistics which tion targeting the 'Ndrangheta on drug traf- showed that for Jan 2013 - November 2013, fcking, mafa association, murder, attempted assets seized targeting the mafa were: murder, extortion, loan sharking, disclosure of offcial secrets, abuse of offce charges and • €2.869 billion in total money laundering. The trial is expected to last • Of which €1.394 billion in liquid assets, in- more than 2 years. This is reminiscent of anti cluding cash and securities mafa trials in Italy in the past, where these trials which ran from 1986 to 1992 and targeted • Of which €1.447 billion in fxed assets such a large number of organised crime families in as property Sicily, this trial is aimed at just one group, the • Of which €27 million in assets such as cars Mancuso family, which forms a powerful sec- and boats tion of the 'Ndrangheta mafa, operating in the

Calabrian province of Vibo Valentia. • Representing 9,278 in number of assets involved. Italy was rated in the 2016 MER “Largely Com- pliant” for R37 (Mutual Legal Assistance -MLA) , • Of these, €826 million was seized in Campa- “Largely Compliant” for R38 (MLA, Freezing & nia, €806 million in Sicily, €534 million

Italy - Threat Assessment - 2021 Page 45 of 57 seized in Calabria, and €15.8 million from laundering in both 2013 & 2014, but even abroad. these are still dwarfed by those from the mafa.

In the same period assets confscated were:

• €2.941 billion in total

• Of which €2.408 billion in liquid assets, including cash and securities In total the value of assets seized overall were • Of which €507million in fxed assets, such as property • In 2013, €2.657 billion

• Of which €24 million in assets such as cars In total the value of assets seized overall were and boats • In 2014, €4.664 billion • Representing 4,499 in number of assets in- As far as individuals are concerned, investiga- volved tions into corruption in 2014 led to 762 arrests • Of these, €1.822 billion was confscated in and 558 convictions. Investigations by the Anti- Sicily, €468 million in Lombardy, €173 from Mafa Investigation Directorate (DIA) into mafa Lazio, €143 million in Campania, €134 in operations in 2014 led to 164 arrests and 305 Apulia, €125 million confscated in Calabria convictions. and €2.907 billion from abroad

For the period 2010 to 2014, assets seized averaged €1.685 billion & assets confscated averaged €1.453 billion.

Whilst most of these assets were mafa-related, less than 6% were seized and or confscated based on ML offences in 2013 & 15% in 2014. Assets seized included from corruption and tax evasion, which were larger than for money

Italy - Threat Assessment - 2021 Page 46 of 57 Investigations into ML which led to prosecu- €9 billion were seized or confscated, up from tions in 2012 related to 14,688 persons, and €5.4 billion in 2017”. convictions in 2012 were reported as 4,927 persons, or a success rate of 34%.

The success in seizing & confscating assets have been aided by Anti-Mafa Laws, which according to the MER 2016, “the (the Anti- Mafa Code) provides for a number of so called #preventive” measures specifcally aimed at fa- Based on these fgures, Italy is likely one of the cilitating the recovery of assets linked to the most successful countries in the world, when it specifc serious crimes & depriving criminals of comes to asset seizures and confscations. the assets at their disposal.” Based on fgures from this threat assessment estimated crime proceeds are €127.3 billion “The main beneft of the preventive confsca- (see Page 8 above), & asset seizures or confs- tion is the reversal of the burden of proof. It is cations are in excess of 1%, with the fgure not necessary for the prosecution to bring a 7.3% in 2018. Europol133 however reported proof that the person targeted has committed that from 2010 to 2014, just 2.2% (€2.4 billion an offence. It must only be established that the or 0.018% of EU GDP) of the estimated pro- person is habitually engaged in criminal activit- ceeds of crime were provisionally seized or ies or is living, even in part, from the proceeds frozen, & only 1.1% (€1.2 billion or 0.009%) of of criminal activity. A wide range of fnancial the criminal profts were ultimately confscated crimes is captured such theft, robbery, extor- in the EU. tion, fraud, usury, third party ML or self-launder- 10.9 Financial Information Sharing Partner- ing, & tax offences. It is up to the person af- ships (FISPs): Italy has yet to establish a dedi- fected by the measure to demonstrate the le- cated domestic FISP. Italy is though a member gitimacy of the assets seized or confscated. of The Europol Financial Intelligence Public Preventive confscation may also be applied in Private Partnership (EFIPPP)134, which is con- instances where the person is deceased”. vened by Europol and “enables cross-border

In 2019, the Interior Minister, Lamorgese, reit- typology co-development groups, coupled erated that “the fght against the mafa was a with a policy and legal research function”. high priority as she revealed that almost €3 bil- As described by RUSI, “The EFIPPP provides an lion (£2.6 billion) assets, including businesses, operationally focused environment for cooper- property and furniture, had been either seized ation and information exchange between Eu- or confscated from the mafa since the begin- ropol, law enforcement authorities, fnancial ning of the year. In 2018, mafa assets totalling intelligence units (FIUs) and other competent authorities, as well as regulated fnancial ser-

Italy - Threat Assessment - 2021 Page 47 of 57 vices entities, with the support of their repre- Italy is a Global Forum Member that is rated sentative bodies” “Compliant” by the OECD Global Tax Forum139. In its latest review carried out in 10.10 Other Indices: A number of important 2017, Italy was rated Compliant in 9 out of 10 sources identify both indirect and direct indi- sub categories, including particularly for A1, cators that contribute to an assessment of re- Ownership & Identity Information, A3 Banking sponse to the fnancial crime threats Italy faces, Information & B1 Access to Information. The which include the following: one “Partially Compliant” rating was for C5 10.10.1 Freedom: Freedom House’s, Free- Quality & Timeliness of Responses. dom in the World Index, scores Italy at 90/100, 10.10.5 Cyber security: According to the and is rated!#free135”. According to the Herit- 2018 Global Cybersecurity Index (GCI)140, Italy age Foundation’s 2019 Index of Economic scored 0.837/10 and is described as having a Freedom136, Italy’s economic freedom score is “High” level of commitment ranked 25th glob- 64.9/100 making its economy one described ally out of 176, and 15th out of 23 in the Eu- as “moderately free”. rope Region in terms of cybersecurity. 10.10.2 AML Indices: According to the 10.11 Anti Corruption Commitments: Italy 2020137 fndings, Italy scored 4.61/10 in the has ratifed the United Nations Convention Basel AML Index, rated 99/141 countries. against Corruption (UNCAC) and the Organ- isation for Economic Co-operation and Devel- opment (OECD) Anti- Bribery Convention.

According to the Accountability Lab’s G20 anti- corruption tracker141, of 98 commitments made by G20 members including UNCAC & OECD & FATF commitments, Italy is rated (ex- 10.10.3 Global Slavery Index: Whilst Italy cluding the 40 FATF Recommendations - see has a low incidence of human traffcking, (2.4 Section 10.1 above) 37/58 as “Fully in 1,000, estimating victims at approximately Compliant”, 1/58 as “Largely Compliant”, 0/58 145,000), the Global Slavery Index138 2018 as “Partially Compliant”, 1/58 as “Non Compli- gives Italy a good government response of ant” & 11/58 as Information “Not Yet Available” “BBB”, an improvement from it’s 2016 “B” rat- & 7/58 as “Not Applicable”. In particular, Italy is ing and above the regional average of “BB”. rated according to the Accountability Lab as 10.10.4 Global Tax OECD: Italy is a Global “Fully Compliant” with 9/9 commitments under Forum Member that was rated “Largely com- UNCAC, being the highest rated G20 Country pliant in round 1 and “Compliant” in round 2 alongside Australia as a result. by the OECD Global Tax Forum.

Italy - Threat Assessment - 2021 Page 48 of 57 An IMF Report147 published in February 2016, reported on corruption related arrests and convictions, namely 762 arrests and 558 in 2013, which relate to the number of individuals arrested for corruption in public administra- tion. Italy's parliament approved an anti-cor- As far as the commitments made with respect ruption law in May 2015. Among the various to the OECD Anti-Bribery Convention, Italy is provisions, the law re- introduces the crime of rated, according to the Accountability Lab as presenting false accounts, increases the pun- “Fully Compliant” for 4/11 commitments, with ishment for corruption cases, and lengthens ratings of 5/11 “Information Not Yet Available” the terms of the statute of limitations. All in- and 1/11 for “Non Compliant.” Reviews of vestigations must be notifed to Italy’s anti-cor- compliance with the OECD Convention are ruption authority. undertaken by the OECD Working Group on

142 Bribery, through peer reviews . Countries are 10.12 Reform: Across the EU an AML Action expected to be reviewed through 4 phases. Plan was announced by the EU Commission148 Italy has completed 3 phases with the phase 3 on 7th May, 2020 and accompanying the an- 143 Report published in 2014 . Phase 4 Report- nouncement include an the EU Factsheet 149 144 ing is expected in 2021 . described as intended as #Closing the door on

According to TI145, “the enforcement of foreign dirty money.” The Plan aims to increase effect- bribery laws among most OECD countries is iveness, based on 6 pillars. shockingly low”. Italy is rated as having “active • Effective application of EU rules enforcement” on rankings of enforcement of OECD obligations on corruption alongside the • Single EU Rulebook US, Switzerland & Israel. According to the • EU level supervision OECD, foreign bribery cases in Italy have led to 23 prosecutions leading to sanctions from • A co ordination & support mechanism for EU 146 1999 - 2019 (excluding 32 prosecutions in FIU’s connection with the UN Iraq Oil for food programme). Of these, 16 prosecutions were of • Enforcing EU level criminal laws and informa- natural persons, and 7 of legal persons. A fur- tion exchange ther 9 prosecutions of natural persons led to • A stronger EU in the world. acquittals. This compares to 268 prosecutions with sanctions in the USA over the same peri- These have been informed by and will be od, 352 in Germany, 33 in the UK & in South shaped by work from the European Banking Korea & 32 in France which make up the Top 5. Federation150 and think tank CEPS151.

Italy - Threat Assessment - 2021 Page 49 of 57 Section 11 - Detailed FATF Results & FCN Scoring - �

The country evaluation of Italy was published in February, 2016 and the Re-Rating in 2019. Italy reported 2 “Partially Compliant” ratings for R7 (Targeted Financial Sanctions related to Proliferation) and R13 (Corre- spondent Banking). Italy is not included on the FATF Strategic Defciencies/Call to Action lists. Italy reported 3 “Moderately Effective” ratings for IO3 (Supervision), IO4 (Preventative Measures), and IO10 (TF Preventa- tive Measures & Financial Sanctions).

FATF 40 Recommendations - “Technical Compliance“

R1 R2 R3 R4 R5 R6 R7 R8* R9 R10*

C LC LC C C LC PC LC C LC

R11 R12* R13* R14* R15* R16 R17 R18 R19 R20

C LC PC C LC C LC LC C C

R21 R22* R23 R24 R25 R26* R27 R28* R29* R30

LC LC LC LC LC C C LC C C

R31 R32 R33 R34 R35 R36 R37 R38 R39 R40

C LC LC LC C C LC LC C C

Key: C = Compliant, LC = Largely Compliant, PC = Partially Compliant, NC = None Compliant, * = core

FATF 11 Immediate Outcomes - “Efectiveness”

IO1 IO2 IO3* IO4* IO5 IO6* IO7 IO8* IO9 IO10 IO11

SE SE ME ME SE SE SE SE SE ME SE

Key: HE = Highly Efective, SE = Substantially Efective, ME = Moderately Efective, LE = Low Efective, * = core

FATF Overall Scores by FCN

1. FATF 40 Recommendations - “ Technical Compliance“ 80

2. FATF 10 Core* Recommendations - “ Technical Compliance“ 73

3. FATF 11 Immediate Outcomes - “ Efectiveness“ 58

4. FATF 4 Core* Immediate Outcomes - “ Efectiveness“ 50

Scoring by FCN = C/HE -3, LC/SE -2, PC/ME -1, NC/LE -0. Total score divided by total available score x 100

FATF Strategic Defciency List No

Italy - Threat Assessment - 2021 Page 50 of 57 Section 12- Remittance & Migration Data - �

Remittances inbound in 2019 were approx Romania, Albania, Switzerland, and Bangla- US$10.4 billion (0.6% of GDP) up from US$9.6 desh. Lombardi hosts Italy"s largest share of billion in 2015 according to the World Bank, immigrants and is the origin of the most remit- and outbound were US$9.5 billion (0.5% of tance outfows, followed by Lazio. GDP) in 2019, up from US$9 billion in 2015. According to the Bank of Italy154 the main recipient countries were Romania, Bangladesh,Philippines, Senegal, Morocco, India, China, Sri Lanka, Peru & Pakistan.

According to the United Nations Department of Economic and Social Affairs (UN DESA), around 6.3 million international migrants live in Italy. That"s approximately 10.4% of the country"s total population. From 1990 to 2019, Italy"s immigration rate increased, with a signifcant spike occurring between 2000 and 2010. During this period, the immigration rate increased from 3.7% to 9.8%, which later stabil- Since the late 19th century, Argentina has ised to the current 10.4% recorded in 2019. been a top destination for the Italian diaspora. As recently as 2018, the Italian Ministry of For- The three most signifcant immigrant groups eign Affairs and International Cooperation155 reported152 to be living in Italy by 2019 were: recorded that around 1 million Italians were Romanians: 1.1 million, Albanians: 475.2 thou- living in the South American country. With an sand & Moroccans: 450.6 thousand. A recent estimate of 5 million156 Italians living abroad, study from the International Organisation for the number is equivalent to 1/5th of all Italians Migration153 found Moroccans and Chinese to residing abroad. Germany and Switzerland are be two of Italy"s largest entrepreneurial immig- the next most popular destinations for Italian rant communities. Other top countries of ori- migrants. They host around 807,000 & 640,000 gin of migrant entrepreneurs recorded include Italian emigrants157 respectively.

Italy - Threat Assessment - 2021 Page 51 of 57 Appendix 1 - FCN Threat Types Mapping - �

Based on this Italy Threat Assessment, the following FCN Threat types are risk rated “Very Signifcant”, “Rather Signifcant”or “Not Rated” using the same rating system from the Italian National Risk Assessment in 2018. This can be converted into “Higher” “Medium” and “Lower” as appropriate. The mapping has been carried out based on a full analysis of the information contained in this Threat Assessment, in particular from the sources and summaries set out in Section 6 above. For more details see the separate document available from FCN/ Metriqa Limited a graphic of which is set out below.

Italy - Threat Assessment - 2021 Page 52 of 57 Appendix 2 - Sources - �

These are the main sources for the Italian Threat Assessment by Financial Crime News/Metriqa Limited.

Italy - Threat Assessment - 2021 Page 53 of 57 Endnotes - �

1 See: https://migrationdataportal.org/data?focus=profle&i=netnumbermig&t=2020&cm49=826 2 See: https://www.cia.gov/the-world-factbook/ 3 See: https://www.gfmag.com/global-data/non-economic-data/worlds-safest-countries-2019 4 See: https://www.theguardian.com/world/2019/oct/30/italy-mafa-networks-are-more-complex-and-powerful-says-minister 5 See: https://www.fsb.org/about/leading-by-example/participation/ 6 See: https://www.imf.org/en/Publications/CR/Issues/2020/08/03/Italy-Financial-Sector-Assessment-Program-Technical-Note-Systemic- Risk-Oversight-Framework-49634 7 See: https://datareportal.com/reports/digital-2020-italy?rq=italy 8 See: https://www.knomad.org/data/remittances?tid%5B149%5D=149 9 See: http://www.dt.mef.gov.it/en/pubblicazioni/analisi_nazionale_rischi_riciclaggio/ 10 See: http://www.dt.mef.gov.it/en/pubblicazioni/analisi_nazionale_rischi_riciclaggio/ 11 See: https://thefnancialcrimenews.com/wp-content/uploads/2019/11/FCN-GTA.2019.Pub-Final.pdf 12 See: https://thefnancialcrimenews.com/wp-content/uploads/2019/11/FCN-GTA.2019.Pub-Final.pdf 13 See: http://www.dt.mef.gov.it/en/pubblicazioni/analisi_nazionale_rischi_riciclaggio/ 14 See: http://www.dt.mef.gov.it/en/pubblicazioni/analisi_nazionale_rischi_riciclaggio/ 15 See: http://www.dt.mef.gov.it/modules/documenti_en/prevenzione_reati_fnanziari/prevenzione_reati_fnanziari/NRA_Synthes- is_11_01_2017.pdf 16 See: https://www.state.gov/wp-content/uploads/2020/03/Tab-1-INCSR-Vol.-I-Final-for-Printing-2-25-20-508.pdf 17 See: https://www.state.gov/wp-content/uploads/2020/03/Tab-2-INCSR-Vol-2-508.pdf 18 See: http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf 19 See: http://www.dt.mef.gov.it/en/pubblicazioni/analisi_nazionale_rischi_riciclaggio/ 20 See: https://www.transparency.org/en/cpi/2020 21 See: https://en.m.wikipedia.org/wiki/Corruption_in_Italy 22 See: https://www.transparency.org/gcb2013/country/?country=italy 23 See: https://www.traceinternational.org/trace-matrix#36 24 See: Ernesto U. Savona and Michele Riccardi (eds), 2018, Mapping the risk of Serious and Organised Crime infltration in European Businesses – Final report of the MORE Project Milano: Transcrime – Università Cattolica del Sacro Cuore. © 2018. See: http://www.transcrime.it/wp-content/uploads/2018/12/MORE_FinalReport.pdf 25 See: https://www.ganintegrity.com/portal/country-profles/italy/ 26 See: https://ec.europa.eu/commfrontoffce/publicopinion/index.cfm/Survey/getSurveyDetail/instruments/SPECIAL/surveyKy/2176 27 See: https://ec.europa.eu/home-affairs/what-we-do/policies/organized-crime-and-human-traffcking/corruption/anti-corruption-re- port_en 28 See: https://www.interpol.int/en/Who-we-are/Member-countries/Europe/ITALY 29 See: https://link.springer.com/content/pdf/10.1007/s12117-020-09400-z.pdf 30 See: Ernesto U. Savona and Michele Riccardi (eds), 2018, Mapping the risk of Serious and Organised Crime infltration in European Businesses – Final report of the MORE Project Milano: Transcrime – Università Cattolica del Sacro Cuore. © 2018. See: http://www.transcrime.it/wp-content/uploads/2018/12/MORE_FinalReport.pdf 31 See: https://www.europol.europa.eu/publications-documents/threat-assessment-italian-organised-crime 32 See: https://www.theguardian.com/world/2019/oct/30/italy-mafa-networks-are-more-complex-and-powerful-says-minister 33 See: was https://www.osac.gov/Country/Ireland/Content/Detail/Report/ddd81b65-864e-4b6c-9f3c-18571e1f0705 34 See: https://www.state.gov/wp-content/uploads/2020/03/Tab-2-INCSR-Vol-2-508.pdf 35 See: https://ourworldindata.org/illicit-drug-use 36 See: https://www.emcdda.europa.eu/countries/drug-reports/2019/italy/drug-markets_en 37 See: https://www.emcdda.europa.eu/system/fles/publications/11329/italy-cdr-2019_0.pdf 38 See: https://www.emcdda.europa.eu/countries/drug-reports/2019/italy/drug-use_en 39 See: https://www.fatf-gaf.org/media/fatf/documents/reports/mer4/MER-Italy-2016.pdf 40 See: https://www.statista.com/statistics/1071150/usury-rate-by-province-in-italy/ 41 See: https://uif.bancaditalia.it/pubblicazioni/rapporto-annuale/2019/index.html 42 See: https://www.reuters.com/article/us-health-coronavirus-italy-crime-idUSKBN22B2V2 43 See: https://www.theguardian.com/world/2020/nov/16/italian-police-swoop-on-mafa-racket-extorting-50-a-coffn-from-funeral- homes 44 See: https://www.transcrime.it/wp-content/uploads/2015/11/Project-ARIEL_Final-report.pdf 45 See: https://www.transcrime.it/wp-content/uploads/2015/11/Project-ARIEL_Final-report.pdf 46 See: https://www.businessinsider.com/r-mafa-thrives-on-italys-legalized-gambling-addiction-2015-3?IR=T 47 See: https://www.statista.com/statistics/1072348/illegal-waste-traffcking-in-italy/ 48 See: https://www.europol.europa.eu/newsroom/news/trash-worth-millions-of-euros 49 See: https://www.europol.europa.eu/newsroom/news/trash-worth-millions-of-euros 50 See: https://ec.europa.eu/commission/presscorner/detail/en/inf_20_1687 51 See: https://www.oecd.org/newsroom/trade-in-fake-italian-goods-costs-economy-billions-of-euros.htm

Italy - Threat Assessment - 2021 Page 54 of 57 52 See: https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/observatory/documents/reports/trend- s_in_trade_in_counterfeit_and_pirated_goods/trends_in_trade_in_counterfeit_and_pirated_goods_en.pdf 53 See: https://www.bancaditalia.it/compiti/emissione-euro/contraffazione/index.html?com.dotmarketing.htmlpage.language=1 54 See: https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.pr190726~d8a42deb53.en.html 55 See: https://taxfoundation.org/cigarette-taxes-in-europe-2020/ 56 See: https://rusi.org/sites/default/fles/201712_rusi_on_tap_italy_ganz_haenlein_web.pdf 57 See: https://www.wsj.com/articles/italy-to-get-4-4-billion-in-proceeds-from-tax-amnesty-1449688492 58 See: Ernesto U. Savona and Michele Riccardi (eds), 2018, Mapping the risk of Serious and Organised Crime infltration in European Businesses – Final report of the MORE Project Milano: Transcrime – Università Cattolica del Sacro Cuore. © 2018. See: http://www.transcrime.it/wp-content/uploads/2018/12/MORE_FinalReport.pdf 59 See: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1579 60 See: https://fsi.taxjustice.net/PDF/Italy.pdf 61 See: https://www.refworld.org/docid/5b3e0a36a.html 62 See: https://www.state.gov/wp-content/uploads/2020/06/2020-TIP-Report-Complete-062420-FINAL.pdf 63 See: https://www.globalslaveryindex.org/2018/fndings/regional-analysis/europe-and-central-asia/ 64 See: https://thefnancialcrimenews.com/wp-content/uploads/2019/11/FCN-GTA.2019.Pub-Final.pdf 65 See: https://www.globalslaveryindex.org/2018/fndings/regional-analysis/europe-and-central-asia/ 66 See: https://www.state.gov/reports/2020-traffcking-in-persons-report/italy/ 67 See: https://epi.yale.edu/downloads/epi2018reportv06191901.pdf 68 See: https://www.theguardian.com/environment/2019/dec/09/boom-in-seahorse-poaching-spells-bust-for-italy-coastal-habitats-aoe 69 See: https://www.unodc.org/documents/data-and-analysis/wildlife/2020/World_Wildlife_Report_2020_9July.pdf 70 See: https://globalinitiative.net/wp-content/uploads/2019/02/IUU-Fishing-Index-Report-web-version.pdf 71 See: https://www.europol.europa.eu/newsroom/news/over-50-protected-birds-destined-to-be-traded-illegal-market-rescued-in-italy 72 See: https://www.interpol.int/en/News-and-Events/News/2019/Wildlife-traffcking-organized-crime-hit-hard-by-joint-INTERPOL-WCO- global-enforcement-operation 73 See: https://www.state.gov/2019-end-wildlife-traffcking-report/ 74See: https://www.google.co.za/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwir-b6Huc3tAhWYQUEAHbCoBN4QFj- AAegQIAhAC&url=https%3A%2F%2Fwww.europol.europa.eu%2Fsites%2Fdefault%2Ffles%2Fdocuments%2Fitalian_organ- ised_crime_threat_assessment_0.pdf&usg=AOvVaw3FEWhZJdH3jJ2rM4AT_Xrq 75 See: https://www.pwc.com/it/en/services/forensic/assets/docs/gecs-2016-es.pdf 76 See: https://www.osac.gov/Country/Italy/Content/Detail/Report/ca3ab1ab-85b0-4aa9-9009-1886592457d2 77 See: https://www.osac.gov/Country/Italy/Content/Detail/Report/ca3ab1ab-85b0-4aa9-9009-1886592457d2 78 See: https://www.interpol.int/en/News-and-Events/News/2020/Italy-and-INTERPOL-launch-global-project-to-combat-Ndrangheta 79 See: https://www.pwc.com/it/en/services/forensic/assets/docs/gecs-2016-es.pdf 80 See: https://www.justlanded.com/english/Italy/Articles/Culture/Crime-in-Italy 81 See: https://www.statista.com/statistics/614306/total-number-of-thefts-italy/ 82 See: https://www.statista.com/statistics/614304/total-number-of-robberies-italy/ 83 See: https://www.theglobaleconomy.com/indi_menu.php?page_url=rankings&indicator=theft&type=0&withDataFor= 84 See: https://www.statista.com/statistics/664161/top-provinces-for-vehicle-theft-rate-italy/ 85 See: https://thefnancialcrimenews.com/wp-content/uploads/2019/11/FCN-GTA.2019.Pub-Final.pdf 86 See: https://www.statista.com/topics/4051/crime-in-italy/ 87 See: https://en.wikipedia.org/wiki/Outline_of_Italy 88 See: https://www.interpol.int/en/Who-we-are/Member-countries/Europe/ITALY 89 See: https://www.riskadvisory.com/news/the-mafa-beyond-southern-italy-a-pan-european-risk/ 90 See: https://think.ing.com/reports/cracking-the-code-on-cryptocurrency/ 91 See: https://knowledgehub.transparency.org/assets/uploads/kproducts/2020_Professional-enablers-of-economic-crime-during- crises.pdf 92See:https://www.thelocal.it/20200915/the-recovery-fund-is-in-their-sights-europol-warns-eu-countries-of-mafa-profting-from- covid-19-crisis 93 See: https://sanctionsguide.eversheds-sutherland.com/countries/ireland/ 94 See: https://www.mediterraneanaffairs.com/italy-trade-tehran-us/ 95 See: http://www.worldstopexports.com/syrias-top-10-exports/ 96 See: https://www.imf.org/external/pubs/ft/scr/2016/cr1643.pdf 97 See: https://www.northkoreaintheworld.org 98 See: http://www.worldstopexports.com/syrias-top-10-exports/ 99 See: https://tradingeconomics.com/syria/exports/italy 100 See: https://tradingeconomics.com/italy/imports-by-country 101 See: https://embassy-fnder.com/italy_embassies 102 See: https://www.treasury.gov/ofac/downloads/ctrylst.txt; and See: https://sanctionssearch.ofac.treas.gov 103 See: https://isis-online.org/ppi/detail/peddling-peril-index-for-2019 104 See: https://www.state.gov/reports/country-reports-on-terrorism-2019/italy/ 105 See: https://www.state.gov/wp-content/uploads/2020/06/Country-Reports-on-Terrorism-2019-2.pdf 106 See: https://www.arabnews.com/node/1782831/world Italy - Threat Assessment - 2021 Page 55 of 57 107 See: https://foreignpolicy.com/2020/08/10/syria-captagon-amphetamine-trade-islamic-state-assad-regime-drug-seizure-salerno/ 108 See: https://www.state.gov/wp-content/uploads/2020/03/Tab-2-INCSR-Vol-2-508.pdf 109 See: https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op201.en.pdf 110 See: Ernesto U. Savona and Michele Riccardi (eds), 2018, Mapping the risk of Serious and Organised Crime infltration in European Businesses – Final report of the MORE Project Milano: Transcrime – Università Cattolica del Sacro Cuore. © 2018. See: http://www.transcrime.it/wp-content/uploads/2018/12/MORE_FinalReport.pdf 111 See: https://www.croweclarkwhitehill.co.uk/wp-content/uploads/sites/2/2018/05/The-Financial-Cost-of-Fraud-2018.pdf 112 See: https://www.cia.gov/library/publications/the-world-factbook/geos/it.html 113 See: http://www.fatf-gaf.org/countries/d-i/italy/documents/mer-italy-2016.html 114 See: https://www.openownership.org/map/#IT 115 See: https://www.u4.no/publications/professional-enablers-of-economic-crime-during-crises 116 See: http://www.oecd.org/tax/transparency/documents/exchange-of-information-on-request-ratings.htm 117 See: https://www.theglobaleconomy.com/rankings/wb_regulatory_quality/#Italy 118 See: https://apnews.com/article/b5002922673c4fb886f098e08db9550c 119 See: https://nypost.com/2019/04/15/italian-bank-will-pay-1-3b-fne-for-money-laundering/ 120 See: https://uk.reuters.com/article/us-ing-moneylaundering-italy/ing-ordered-to-pay-30-million-euros-to-settle-italy-money-laundering-probe-source-idUKKBN1ZY1D3 121 See: https://uif.bancaditalia.it/sistema-antiriciclaggio/uif-italia/index.html 122 See: https://egmontgroup.org/en/content/italy-fnancial-intelligence-unit-italy 123 See: https://uif.bancaditalia.it/pubblicazioni/rapporto-annuale/2020/index.html 124 See: https://www.europol.europa.eu/sites/default/fles/documents/ql-01-17-932-en-c_pf_fnal.pdf 125 See: https://www.europol.europa.eu/sites/default/fles/documents/ql-01-17-932-en-c_pf_fnal.pdf 126 See: https://www.europol.europa.eu/sites/default/fles/documents/ql-01-17-932-en-c_pf_fnal.pdf 127 See: https://www.imf.org/external/pubs/ft/scr/2016/cr1643.pdf 128 See: https://ec.europa.eu/eurostat/statistics-explained/index.php/Government_expenditure_on_public_order_and_safety#Expendit- ure_on_.27public_order_and_safety.27 129 See: https://ourworldindata.org/grapher/prison-population-rate? tab=table&time=2018&country=USA~DEU~England%20and%20Wales~FRA~PRT~BRA~JPN~IDN~AUT~AUS~ITA~IND 130 See: https://direzioneinvestigativaantimafa.interno.gov.it 131 See: https://www.anticorruzione.it/portal/public/classic/MenuServizio/ENG/Aboutus 132 See: https://www.bbc.com/news/world-europe-55633091 133 See: https://www.europol.europa.eu/sites/default/fles/documents/ql-01-17-932-en-c_pf_fnal.pdf 134 See: https://www.gcffc.org/wp-content/uploads/2020/08/FFIS-Report-Five-Years-of-Growth-of-Public-Private-Partnerships-to-Fight- Financial-Crime-18-Aug-2020.pdf 135 See: https://freedomhouse.org/report/countries-world-freedom-2019 136 See: https://www.heritage.org/index/ranking 137 See: https://baselgovernance.org/basel-aml-index 138 See: https://www.globalslaveryindex.org/2018/fndings/regional-analysis/europe-and-central-asia/ 139 See: http://www.oecd.org/tax/transparency/documents/exchange-of-information-on-request-ratings.htm 140 See: https://www.itu.int/dms_pub/itu-d/opb/str/D-STR-GCI.01-2018-PDF-E.pdf 141 See: https://civil-20.org/2020/wp-content/uploads/2020/07/G20-AC-Commitments-Tracker.pdf 142 See: http://www.oecd.org/daf/anti-bribery/italy-oecdanti-briberyconvention.htm 143 See: http://www.oecd.org/daf/anti-bribery/italy-oecdanti-briberyconvention.htm 144 See: http://www.oecd.org/daf/anti-bribery/countryreportsontheimplementationoftheoecdanti-briberyconvention.htm 145 See: https://www.transparency.org/en/exporting-corruption 146 See: http://www.oecd.org/daf/anti-bribery/OECD-Anti-Bribery-Convention-Enforcement-Data-2020.pdf 147 See: https://www.imf.org/external/pubs/ft/scr/2016/cr1643.pdf 148 See: https://ec.europa.eu/fnance/docs/law/200507-anti-money-laundering-terrorism-fnancing-action-plan_en.pdf 149 See: https://ec.europa.eu/info/fles/200507-anti-money-laundering-terrorism-fnancing-action-plan-factsheet_en 150 See: https://www.ebf.eu/wp-content/uploads/2020/03/EBF-Blueprint-for-an-effective-EU-framework-to-fght-money-laundering-Lift- ing-the-Spell-of-Dirty-Money-.pdf 151 See: https://www.ceps.eu/wp-content/uploads/2021/01/TFR_Anti-Money-Laundering-in-the-EU.pdf 152 See: https://migrationdataportal.org/?i=groups&t=2019&cm49=380 153 See: https://italy.iom.int/sites/default/fles/documents/IOM_Italy_Briefng%2003_February%202018_Migration%20and%20transna- tionalism%20in%20Italy.pdf 154 See: https://blog.riamoneytransfer.com/history-migration-remittances-in-italy/ 155 See: https://www.statista.com/statistics/789389/the-biggest-italian-communities-living-abroad-by-country/ 156 See: https://www.esteri.it/mae/en/servizi/italiani-all-estero 157 See: https://italy.iom.int/sites/default/fles/documents/

Italy - Threat Assessment - 2021 Page 56 of 57 Italy - Threat Assessment - 2021 Page 57 of 57