Will Italian AML rules capture foreign entities operating online without a physical presence in Italy?

According to the draft law implementing the fifth Anti-Money Laundering Directive, a broader list of entities operating in virtual currencies will be subject to Italian anti-money laundering rules

What has happened?

The Italian Financial Intelligence Unit (FIU), in the context of a hearing in front of Parliament, released specific comments on the draft law implementing the fifth Anti-Money Laundering Directive (5AMLD) in Italy, noting that a broader list of entities operating in virtual currencies will be subject to Italian anti-money laundering (AML) rules.

What does this mean?

The FIU Director noted, first of all, that the development of FinTech business models requires a new regulatory approach aimed at preventing risks without jeopardising innovation.

In terms of risk mitigation, the FIU noted that, according to the draft law, a broader list of entities operating in virtual currencies will be subject to Italian AML rules.

More specifically, custodian wallet providers and entities providing services related to the issuance, offer, transfer and settlement as well as any other service related to the acquisition, trading and intermediation of virtual currencies will be included in the scope of the Italian AML rules, in addition to the exchangers.

Those entities will be subject to the Italian AML legal framework even if operating online.

This new provision would therefore capture also providers established in other countries but offering their services into Italy via distance communication means only.

Entities subject to AML rules will need to adopt specific internal procedures to comply with new obligations, including KYC requirements.

More details on obligations to be complied with will be set out under the final version of the law as well as the secondary implementing measures that will be enacted.

Along these lines, the FIU suggested that new reporting obligations should be imposed on all entities providing financial/banking/payment services and operating in Italy online, even if they do not have any physical presence in Italy.

This would, on the one hand, mitigate potential AML risks and, on the other hand, level the playing field by reducing the competitive disadvantages of domestic entities.

Next steps

We advise many financial institutions, as well as FinTechs, bringing in a fully integrated and multi-disciplinary approach to our advice, so please let us know if you have any questions on this development and what it may mean for you and your organisation.

 

Authored by Jeffrey Greenbaum, Claudia Colomba and Elisbetta Zeppieri

Contacts
Jeffrey Greenbaum
Partner
Rome
Claudia Colomba
Senior Associate
Rome
Elisabetta Zeppieri
Senior Associate
Rome

 

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