Italy: Newsletter Abbatescianni September 2017

Last Updated: 26 January 2018
Article by Rosa Del Sindaco


Legislative Decree No. 90 of 25 May 2017 – Implementation of the directive (EU) 2015/849 on the prevention of use of the financial system for laundering of proceeds from criminal activities and the financing of terrorism, containing an amendment to directives 2005/60/CE and 2006/70/CE and the implementation of regulation (EU) No. 2015/847 on data accompanying transfers of funds, which replaces regulation (CE) No. 1781/2006

Through the legislative decree published in the Gazzetta Ufficiale [Official Gazette] No. 140 of 19 June 2017, which entered into effect on 4 July, the regulations on money laundering described in legislative decree No. 231/2007 were entirely rewritten.

Among the principal innovations introduced by the measure, there is a reorganisation of the regulations for notaries and lawyers.

With regard to these professional categories, included among the recipients of the measures on combating money laundering, the new regulations undertake to eliminate the obligation to maintain a register of clients, albeit while confirming the duty to retain the identification documents of the same parties.

Having eliminated the mandatory character of the register, failure to maintain which in the past is no longer subject to sanctions, lawyers and notaries must retain documents acquired during operations for adequate verification of the client base and which permit a reconstruction of:

  • the date of awarding of the assignment or the start of the professional relationship;
  • the data identifying the client, the effective holder and the executor (or of the party appointed to operate in the name and on behalf of the client or to whom representation powers were in any case granted which allow the same party to operate in the name and on behalf of the client), as well as information on the purpose and nature of the operation;
  • the means of payment used.

In observance of the regulations on privacy, all of these data must be retained for ten years, including via electronic instruments, and their complete and timely accessibility must be guaranteed by the investigative authorities (for this purpose, the obligation of submission within 3 days has been removed).

The acquisition of the information identifying clients must be timely, i.e. it must take place within 30 days of the initiation of the ongoing relationship or of the granting of the assignment, of the execution of the operation or of the professional service, of the change or termination of the ongoing relationship or of the professional service.

The new regulations have expanded the application of this risk-based approach, consisting of the need to comply with the obligations of appropriate verification of the client base, on the basis of an assessment of the client which takes account of the risk of money laundering associated with the requested professional service.

The adequate verification shall be carried out not only with regard to new clients, but also to existing ones, with regard to whom this is appropriate in view of the changed level of risk of money laundering associated with the client.

In particular, the obligation of adequate verification of the client base shall be implemented through:

a) the identification of the client and the verification of his identity through matching with an identity document, as well as on the basis of documents, data or information obtained from a reliable and independent source. The same measures shall be implemented with regard to the executor, also with regard to the verification of the existence and extent of the powers of representation by virtue of which he is acting in the name and on behalf of the client;
b) the identification of the effective holder and the verification of its identity through the adoption of measures proportionate to the risk, including, with specific reference to the effective ownership of legal persons, trusts and other related entities and legal parties, all of those measures which allow a reconstruction, with a reasonable degree of reliability, of the ownership and control structure of the client;
c) the acquisition and assessment of information on the purpose and nature of the ongoing relationship or professional service, with this understood as meaning those relating to the establishment of the relationship, to the relations between the client and the executor, between the client and the effective holder and those relating to work activity, notwithstanding the possibility of acquiring further information, as a function of the risk, including those relating to the client's economic-asset situation, acquired or possessed by virtue of carrying out the activity. In the presence of a high degree of risk of money laundering and financing of terrorism, the obliged parties shall also apply the acquisition and assessment procedure for the above information to occasional services or operations;
d) the constant monitoring of the relationship with the client, for its entire duration, through the examination of the overall operations of the client itself, the assessment and updating of the data and information acquired in carrying out the activities described in the preceding points a), b) and c), also with regard, if necessary as a function of the risk, to the verification of the origin of the funds and resources among the liquid assets of the client, on the basis of information acquired or possessed by virtue of the performance of the activity.

Notwithstanding all of the above, the legislative decree lastly specifies that professionals, limited to the cases in which they examine the legal position of their client or carry out tasks for the defence or representation of the client in proceedings before a judicial authority or with regard to such proceedings, including through a negotiation agreement assisted by one or several lawyers pursuant to the law, including consultancy on the possibility of bringing or avoiding such proceedings, shall be exempted from the obligation of verifying the identity of the client and effective holder until the time of granting of the assignment.


Court of Cassation, Civil Division, United Sections, decision No. 16601 of 5 July 2017 Recognition of foreign sentences providing for punitive damages

With the indicated pronouncement, the United Sections of the Court of Cassation chose the occasion to define the existing contrast on the acknowledge ability in our legal system of foreign sentences in which punitive damages are paid.

The decision was reached following an intense debate, including on legal theory, during which, the question was asked as to whether our legal system holds a notion of compensation which is exclusively restorative or whether it also recognises a sanctioning and punitive function of the same.

The judges of the Court of Cassation, recalling how there had been no shortage in the past of pronouncements according to which the sole function of civil liability law was a restorative one, observed how the function of punishment-sanctioning of Aquilian liability can no longer be considered as incompatible with our legal system, since cases of punitive damages have been introduced into our legal system.

The characterisation of sanction is nevertheless only admissible where it is expressly provided by a legal provision, pursuant to articles 23 and 35 of the Constitution, in addition to European regulations, as is the case, for example, in the cases considered by the law on disputes regarding discrimination and the status of workers, with reference to the quantification of compensation provided by article 18.

With particular reference to the recognisable nature of foreign sentences which impose punitive damages, the United Sections then verified whether the opening to the sanctioning function of the laws on compensation for losses could consider the said foreign decisions as being in line with public policy, pursuant to art. 64 of L. 218/1995.

On the point, it was observed how the notion of public policy had changed greatly and can today be attributed not only to the fundamental principles characterising the ethical-social structure of a national community but also to the entire system of protections prepared at a higher level. For this reason, in order to assess the compliance with public policy, reference must also be made not only to the Constitution but also to the Lisbon Treaty and to the Nice Charter.

For this reason, in order to determine whether a foreign pronouncement can be recognised within our legal system, it should be verified whether or not the provision applied by the same contradicts this updated notion of public policy, with it nevertheless remaining necessary to monitor whether or not this is compliant with the terms of our Constitution.

As stated above, in order to be accepted, punitive damages must comply with the principles described in articles 23 and 25 of the Constitution: these must indeed be expressly provided by a normative provision. It follows from this that even in the event that these are paid in a sentence by a foreign judge, it shall be verified whether this occurred due to an express legal provision contained in the legislation applied in the case in question: it is indeed necessary for a foreign sentence which imposes punitive damages to derive from a recognisable legal source and hence, that the originating judge has pronounced with adequate legal bases, compliant with the principles of typical character and predictability.

On the basis of such observations, the United Sections thus concluded by stipulating the following legal principle:

"Within the current legal system, civil liability is not only assigned the task of restoring the assets of the subject suffering the loss, since the deterrent and sanctioning function of civil liability are internal to the system. The institution of punitive damages of US origin is thus not ontologically incompatible with the Italian legal system. The recognition of the foreign sentence containing a pronouncement of this kind must nevertheless correspond to the condition that it has been issued within the foreign legal system on normative basis which guarantees the typical character of the case of sentencing, the foreseeability of the same and the quantitative limits, with the decision solely obliged to consider the effects of the foreign action and their compatibility with public policy ".

Court of Cassation, Civil Division, Sixth Section, order No. 18685 of 27 July 2017 - Credit of a professional with priority for a two-year period following the end of an assignment

The notified decision was issued following an appeal presented by a lawyer against the order of the Court which included him among the liabilities of the bankrupt estate of a company which was his client, albeit as an unsecured debt.

The Court had not recognised the priority nature of the credit claimed by the professional, insofar as he had provided his own activity with reference to four distinct cases and the right to priority remuneration had arisen on conclusion of each of these and not on conclusion of the last of such cases.

In rejecting the application, the judges had likewise specified that the privilege could be recognised to the activities carried out during the two-year period running not from the cessation of the professional relationship but from the date of bankruptcy, giving a particular interpretation of article 2751 bis item 2 of the Civil Code, which provided that credits concerning "the remuneration of professionals and of any other provider of intellectual works due for the last two years of the service" should be regarded as privileged.

Analysing the literal wording of the provision cited above, the judges of the Court of Cassation nevertheless observed how the privilege in question evidently ran from the point when the professional assignment had been concluded or had otherwise ceased, insofar as it was at that moment that the credit became liquid and payable.

In the special event of multiple assignments, the Court of Cassation specified that the time limit for the last two years of services to which the provision referred should relate to the overall professional relationship.

In the particular case, decided through the pronouncement in question, the unitary character of the assignment carried out through representation in the four distinct procedures was apparent, with the consequence that the credit relating to the activity carried out was subject, in abstract terms, to admission to the liabilities on a priority basis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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