BANKS CLAIM ITALIAN TAX AMNESTY CONSISTENT WITH

UNCLAS ROME 001349 SENSITIVE SIPDIS TREASURY FOR INTERNATIONAL AFFAIRS N DONNELLS AND FINCEN E.O. 12958: N/A TAGS: EFIN SNAR KCRM IT SUBJECT: BANKS CLAIM ITALIAN TAX AMNESTY CONSISTENT WITH ANTI-MONEY LAUNDERING RULES ¶1. (U) Italian Banking Association officials have indicated to Post that Italian banks remain beholden to know-your-client and suspicious transaction reporting obligations when processing transactions pursuant to Italy's current tax amnesty. End Summary ¶2. (U) Econoffs met on November 25 Italian with banking association (ABI) officials who explained the guidance they have received from the Italian government with respect to anti-money laundering obligations applicable to bank transactions triggered by Italy's tax amnesty. The officials said the Italian government "de-penalized" a number of money-laundering predicate crimes, such as tax evasion and accounting fraud, as part of the tax amnesty it implemented in October 2009. (Note: When the GOI was designing its tax amnesty it asked Post for information on the USG's own capital repatriation/amnesty provision a couple of years ago.) ¶3. (U) According to the ABI officials, the GOI on October 12 issued a clarification on how to treat tax amnesty-related transactions for purposes of compliance with anti-money laundering laws. Banks are required still to file suspicious transaction reports as per the ordinary criteria. Cash deposits, or transactions by unknown or new bank customers remain subject to AML procedures, whether the party to the transaction claims a benefit under the tax amnesty or not. The ABI officials noted that most amnesty transactions involve a foreign financial institution counterparty. The Italian bank account owner, moreover, needs documentation of such transactions from their Italian bank in order to qualify for benefits under the tax amnesty. ¶4. (U) The ABI officials explained that exemption of certain crimes was an essential component of the amnesty, without which the government could not hope to attract amnesty adherents. The purpose of the amnesty is to identify Italians' hidden assets abroad and incorporate them into tax rolls, whether the assets actually return to Italy or remain abroad (within the EU). With public debt at 115% of GDP and an already heavy tax burden on ordinary Italians, the government is looking for every conceivable alternative source of public revenue. THORNE