German and the Italian legal frameworks to combat money laundering and the financing of terrorism

The International Monetary Fund has assessed the German and the Italian legal frameworks to combat money laundering and the financing of terrorism. Reports have been published respectively in June and in February of this year. The evaluation of Italy is overall positive. Despite the high risk of money laundering, the country has a well developed legal system, authorities are able to undertake complex financial investigations, and entities involved in the prevention of money laundering have a good understanding of the phenomenon. Nevertheless, the achieved results are not commensurate with the volume of proceeds of crime generated in and outside the country. The use of shell-companies and other corporate vehicles for the purpose of money laundering and tax evasion is well known by authorities (especially by the Guardia di Finanza), however, more transparency with regard to beneficial owners is advocated. Particularly banks are considered vulnerable to money laundering due to the range of products they offer, the transaction volumes they handle, and the interconnectedness of the banking sector with the international financial system. Yet, the IMF does not call for the hardening of sanctions for banks, nor for the introduction of corporate liability.

The evaluation of Germany is more critical. Despite the significant reforms adopted by the country after the FATF mutual evaluation assessment of 2010, as for instance the criminalisation of self-laundering in 2015 and the expansion of the list of predicate offenses, the formulation of the offense is yet not satisfactory. Yet, the IMF does not list any specific recommendation on further changes to improve the wording of the offense. In addition, the recent sanctioning of German banks with cross-border operations by foreign authorities show that the national banks supervision needs to be strengthen. More transparency is advocated also with regard to legal persons acting in the non-financial sector, as for instance companies operating in the real estate sector. The IMF does not seem to take in consideration a recent study on money laundering dark area in the non financial sector, in particular in the real estate trading, the trade in high-end objects of art and antiques, the import and export businesses, and businesses in the service sector, particularly hotels and restaurants.