TERRORIST FINANCE: CASH COURIERS IN ITALY

C O N F I D E N T I A L ROME 000384

SIPDIS

SIPDIS

STATE FOR EB/ESC/TFS DAVID NELSON; EB/ESC/TFS KATHERINE
LEAHY; EB/ESC/TFS LEANNE CANNON; S/CT PATTY HILL

E.O. 12958: DECL: 2/26/2017
TAGS: EFIN ETTC KTFN PREL PTER IT
SUBJECT: TERRORIST FINANCE: CASH COURIERS IN ITALY

REF: A. STATE 16120

B. 06 ROME 3172

Classified By: Economic Minister Counselor Tom Delare for
reasons 1.4 (b) and (d).


1. (C) Summary: GOI officials have demonstrated a
commitment to combating bulk cash smuggling by putting into
place effective controls to monitor financial activity.
However, challenges remain. Limited resources hamper Italian
law enforcement's ability to investigate illicit cash courier
activity within immigrant communities. Italian law punishes
any cash transaction outside regulated financial channels
with only a minor fine, not with criminal penalties. That
being said, Italy uses its domestic experience to play a
leading role the Financial Action Task Force's (FATF) efforts
against illicit cash courier activity internationally. The
GOI also continues to work well with the U.S. on combating
terrorism finance and money laundering. End summary.


2. (U) Econoff discussed illicit cash courier activity with
representatives from the Ministries of Finance, Justice, and
Foreign Affairs February 16 and 20 (ref A). Our contacts
stated that the GOI is well aware of the problem, given the
large size of Italy's underground economy and years of
experience fighting cash smuggling and money laundering
domestically. Of note, the GOI hosted and chaired FATF's
International Cooperation Review Group this January, using
its experiences to assist the international community to
better combat bulk cash smuggling.


3. (SBU) Italian law requires individuals and institutions
to report any monetary (euro- and foreign-denominated)
transaction and import into Italy in value of more than
12,500 euro (approximately 16,000 USD) to the Ufficio
Italiano dei Cambi (UIC, "Italian Exchange Office"). The UIC
then analyzes and forwards any suspicious transaction reports
(STRs) to either the GOI Anti-Mafia Investigative Unit or the
Guardia di Finanza (GdF) for further investigation (ref B).
One loophole to GOI prosecution of illicit cash courier
activity is that Italian law considers any cash transaction
outside regulated financial channels not as a criminal
offense, but, rather, as a regulatory violation subject only
to a minor fine. (Comment: Such a loophole makes it
difficult for Italian law enforcement to pressure illicit
cash couriers to cooperate in investigations into sources of
illicit cash and activity. End comment.)


4. (C) Econoff spoke in early February with the Director of
the GdF's Anti-Money Laundering and Terrorism Finance Unit in
Milan. The GdF Director stated that, while the GOI was
confident that UIC controls and those at ports of entry to
detect and prevent illicit cash courier activity were
sufficiently strong, limited resources made it difficult for
the GdF to seek out and investigate cash couriers working
inside Italy through hawala and other unregulated cash
courier systems. Even with additional staff and resources,
the Director stated, it would still be difficult to enter
into immigrant communities (e.g., Pakistani, Somali, Chinese)
-- where the GdF suspects many illicit cash couriers operate
-- given the shortage of linguists within the Italian law
enforcement community.


5. (SBU) Comment: The GOI has put into place effective
controls, through the UIC, to monitor cash flows through
standard financial channels. Italy is playing a leading role
in FATF in the international fight against illicit cash
courier activity. While challenges remain for the GOI --
notably, the lack of deterrent penalties against illicit cash
courier activities -- post notes a sustained commitment to be
a close partner with the U.S. on combating bulk cash
smuggling, terrorism finance, and money laundering. Unless
otherwise instructed, we intend to vigorously raise this
legal inadequacy at high levels of the GOI with the aim of
securing more deterrence against illicit cash courier
activity. End comment.
SPOGLI