AML: Bank of Italy's Provisions on Organisation, Procedures and Internal controls amended
Published on 19th Sep 2023
With Measure dated 1 August 2023, published in the Official Gazette on 16 August 2023 and due to enter into force on 14 November 2023, the Bank of Italy made amendments to its Provisions on organisation, procedures and internal controls for anti-money laundering purposes of 26 March 2019.
The most important changes include: (i) the introduction of the figure of the anti-money laundering representative, (ii) a strengthening of the role of the anti-money laundering function, (ii) a change in the responsibilities, in case of outsourcing of the anti-money laundering function, (iii) a strengthening of the role of the parent company in group anti-money laundering matters.
The addressees of the Measure - i.e. banks, SIMs, SGRs, SICAVs, SICAFs, intermediaries registered in the register provided for by Article 106 TUB (including trust companies), electronic money institutions, payment institutions, branches established in Italy of banking and financial intermediaries having their registered office and central administration in another EU country or in a non-EU country, banks, payment institutions and electronic money institutions having their registered office and central administration in another Member State required to designate a central contact point in Italy, microcredit providers, pursuant to Article 111 TUB, Poste Italiane S. p.a., Cassa Depositi e Prestiti S.p.a. - will be required to appoint the anti-money laundering representative upon the first renewal of their corporate bodies after 14 November 2023 and in any case no later than 30 June 2026. The Measure does not apply to smaller confidi (i.e. consortia and collective guarantee cooperatives), as the competence of the Bank of Italy as anti-money laundering sector supervisor ended in 2020.
New structures, tasks and responsibilities: highlights
The new figure of the corporate representative responsible for anti-money laundering
The Measure dated 1 August 2023 introduces the figure of the anti-money laundering representative, who must be appointed from among the members of the management body - although the choice may also fall, in certain cases, on the general manager. In particular, this representative must have adequate knowledge, skills and experience in the area of anti-money laundering, with specific reference to anti-money laundering risks, policies, controls, procedures and the addressee's specific business model.
The AML representative must be provided with adequate time and resources to effectively perform their duties, which essentially consist of monitoring the adequacy and proportionality of AML and CTF policies, procedures and internal control measures, as well as liaising between the AML function and the strategic supervisory body (i.e., the Board of Directors).
The AML representative may hold the position of head of the anti-money laundering function, provided that they have no other delegation which would affect their autonomy, unless the officer is also the sole director of the addressee.
New tasks of the anti-money laundering function
As a result of the Measure, the anti-money laundering function is given additional tasks, as it must now also:
- assess, on a preventive basis, the money laundering risk associated with the offering of new services and products (or the modification of those already offered, as well as entry into new markets), recommending appropriate measures for the prevention and management of such risks;
- define, in agreement with the SOS manager, appropriate procedures for managing internal reports in the event of particularly high-risk and urgent situations;
- ensure periodic information flows to the corporate bodies on the implementation of the corrective actions taken in the face of the deficiencies and inadequacies identified in the overall anti-money laundering framework (if so provided by the anti-money laundering policy, possibly through the anti-money laundering representative - a possibility, however, excluded in the case of significant violations).
The anti-money laundering function of the addressees, under the recent Measure, is also obliged to draw up and transmit to the body with management function and to the body with strategic supervision function a so-called anti-money laundering manual - which defines in detail the responsibilities, tasks and operating methods in the management of the risk of money laundering - as well as to ensure that it is updated.
It remains possible for the addressees of the Measure to outsource the performance of operational tasks related to the anti-money laundering function. In this case, the AML representative takes on the role of the person responsible for outsourcing the function in question, and therefore assumes the task of: (i) monitoring, through periodic checks, compliance with contractual obligations and the proper performance of the service by the supplier; (ii) verifying that the service provided by the supplier allows for the effective fulfilment of anti-money laundering obligations; and (iii) reporting regularly to the corporate bodies on the performance of the outsourced tasks so as to ensure that any necessary corrective measures are taken promptly.
It is now also provided that, where the supplier has its registered office or is otherwise established in a third country, the addresses must take the necessary measures to ensure full compliance with anti-money laundering rules and the effective performance of the outsourced tasks, as well as to ensure that the Bank of Italy and the FIU can effectively exercise their powers vis-à-vis the supplier.
If the addressee is part of a group, the parent company must also appoint a member of the board of directors as AML representative and designate a head of the group AML function, also by setting up - consistently with the principle of proportionality - a central organisational structure with operational and coordinating tasks at the group level on AML matters.
The group AML representative cooperates with the heads of the AML functions of the individual group components, including foreign components, ensuring that they perform their duties in a coordinated manner and in accordance with policies and procedures consistent with those of the group.
- The parameters to be taken into account for the correct application of the principle of proportionality have been supplemented: the addressees of the Measure are now also required to take into account the number of their employees and the number of clients.
- The obligation for the SOS officer of the addressee to promptly assess suspicious transactions reported to them and to include staff involved in the SOS process in specific anti-money laundering training has been made explicit.
- Finally, it has been accepted that the obligation to bring the internal reporting procedures for potential or actual breaches of the AML provisions to the attention of all staff members of the addressees may also be assigned to a person other than the AML representative, provided that this does not jeopardise the proper performance of the task.