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The FIU is an independent, autonomous body, which supports a country’s agencies by analysing and combating financial crime. The number of the FIUs participating in the EG organization has increased rapidly over the years; they are now at 150.
Another important AML institution is MONETVAL, a select committee of experts on the evaluation of anti-money laun- dering measures. It was set up in 1997 as part of the Coun- cil of Europe’s European Committee on Crime Problems.
In Italy, AML law enforcement is disciplined by the Legisla- tive Decree 231/2007 and covers a broad range of subjects such as the financial intermediaries, the professionals, the auditors, and a series of persons engaged in other (non-fi- nancial) activities.
Italian AML law enforcement also oversees the prominent role of G. di F. Guardia di Finanza, the Italian police force that deals with the fight against the economic and finan- cial violations. The G. di F. is also a “competent authority” authorized to enhance the international co-operation with foreign agencies and counterparts.
Illicit financial flows related to drug trafficking threaten the political, economic and social development and security of countries around the world. Drug trafficking is just one of the criminal activities engaged in by organized criminal groups and illicit financial flows are a critical enabler of drug trafficking from which organized criminal groups derive wealth and power. In the last decades the fight against orga- nized crime has been at the centre of the policy makers’ agen- da of most developed countries and the international securi- ty cooperation. One of the main concerns for national and international authorities is the ever-increasing investment of Organized Crime groups in the official economy through the infiltration of legitimate businesses. Organized Crime invests huge amounts of money and resources in legal firms in different fields and for different purposes. In addition to the negative effect on the allocation of resources resulting from unfair competition, these investments can increase lo- cal support for these crime groups, since they often provide economic opportunities in depressed areas.
Italy is a natural case study for investigating the role of Or- ganized Crime in the legitimate economy for two main rea- sons: its pervasive presence in the country, and the regulatory framework that has been established over the years to tackle these groups is particularly advanced. To fight criminal orga- nizations, Italian law enforcement agencies have been given the power to seize assets and corporations holding those assets.
Let me briefly remind you that money laundering is the process by which criminals attempt to conceal the illicit origin and ownership of proceeds from unlawful activities.
By means of money
laundering, criminals
attempt to transform the
proceeds from their crimes
into funds of an apparently
legal origin. Money laundering has three
stages: First, the introduction: the launderer introduces the illegal profit into the financial system; second, the layering: the launderer engages in a series of conversions or movements of the funds to distance them from their source; third, the integration: the funds re-enter the legitimate economy. Sometimes there is even a Fourth stage, according to evidence gathered by investigative journalists from The
Financial Times in London. Some Russians oligarchs have defended their wealth and reputation by engaging top law firms. There are a variety of mechanisms to disguise the illicit nature of funds, from the simple purchase of luxury items to more-sophisticated techniques involving the transfer of the money through a transnational network of banks and other financial institutions.
In conclusion, I want to underline again that the current global framework for fighting financial crime is not as ef- fective as it could be. According to policy makers and think tanks such as the Centre for European Policy Studies, there are several key issues that remain vital to developing a better anti-financial crime system and should be considered across reform efforts in the following areas:
1. global systemic improvements for financial crime risk management
2. advancing a more effective PPP (Public Private Partnership)
3. improving cross-border and domestic information sharing
4. improving the use and quality of data
5. beneficial ownership reporting transparency
6. reforming suspicious activity reporting regimes
7. mitigating the inconsistent or incoherent implementation of financial crime compliance sta- dards and guidance and providing regulatory clarity
8. increasing and improving the use of technology to combat illicit finance.
Pasquale Santini Ottawa, ON
WINTER 2023 JOURNAL 42