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 first 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- identified criminal activities considered partic- nificant 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 trafficking, bankruptcy & corporate Tax Evasion: Tax Evasion in Italy is estimated offences. Those of lesser severity were identi- at €86.4 billion a year (2016). fied as gambling, smuggling & counterfeiting, sexual exploitation & illegal waste trafficking. Response & Resilience: Italy’s MER was pub- lished 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 Mafia groups posing countries in seizing and confiscating 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 Trafficking: 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 financial 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 com- mon type of economic crime in 2016. Human Trafficking: US Trafficking 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 first 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, signifi- volcanoes in the South, appealing to tourists cant criminal proceeds are nevertheless gen- from all over the world. Religion is important in erated. Mafia-type Italian organised crime is Italian society, evident in the fact that 83.3% of considered to be a significant threat to Italy & its 62 million population are christian, over- the European Union (EU). The Italian Mafia 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, “Mafia groups have infiltrated 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 unification, 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 in- ternational financial centre, and is among the Economy & Trade: Italy2 is the 3rd largest IMF’s 29 systematically important financial cen- economy in the euro zone with a GDP of US$2 tres5. The Italian financial 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 re- sponses in fighting financial crime, sanctions, proliferation finance, terrorism & terrorism finance. 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) Trafficking 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