ITALY Trends and Developments Contributed by: Enrico Maria Mancuso, Federico Bracalente, Marco Accorroni and Marco Mariotti, Herbert Smith Freehills Kramer LLP
Mandatory confiscation of “the things that were used or intended to be used to commit the offence and the things that are the price, product, or profit” thereof is ordered in all cases of conviction or plea bargaining, including confiscation of assets of equivalent value, unless they belong to a person unrelated to the case. The Decree also extends Italian jurisdiction to acts committed by Italian citizens abroad, and introduces procedural changes concerning the functional juris - diction of district prosecutors’ offices and the maxi - mum duration of preliminary investigations, set at two years in line with other serious or complex crimes. Corporate liability under Legislative Decree No 231/2001 The Decree also has a significant impact on the sys - tem of criminal liability of entities. All new types of offences, with the sole exception of negligent offenc - es, are included in the list of predicate offences pro - vided for by Legislative Decree No 231/2001. Of particular relevance to companies is the introduc - tion of a new method for calculating financial penal - ties: rather than the ordinary system of fixed amounts (with a maximum financial penalty of approximately EUR1.5 million), a different system is proposed based on percentages ranging from 0.5% to 5% of the enti - ty’s total turnover in the financial year preceding the offence (or, if lower, the financial year preceding the application of the penalty). Where it is not possible to establish the entity’s total annual turnover, a range of between EUR3 million and EUR40 million is to be applied for the most serious violations, and between EUR1 million and EUR8 mil - lion for the less serious case of violation of disclosure obligations. There is also a derogation from the ordinary two-year cap on disqualification penalties: for the most serious offences, the duration ranges from two to six years, while for breaches of disclosure obligations, it ranges from one to three years. Overall, the penalty system has been significantly strengthened compared to the standard system, which was often criticised for its lack of effectiveness.
The new financial penalties are based on the global turnover of the entity in question and are therefore potentially capable of reaching billions of euros in the case of violations committed within large business groups. Compliance implications The inclusion of the new offences in Legislative Decree No 231/2001, combined with the introduction of an entirely new penalty mechanism in terms of magni - tude, represents one of the most significant devel - opments in the field of corporate criminal liability in recent years. Both the catalogue of potentially relevant unlawful conduct and the range of economic opera - tors concerned are particularly extensive – including, above all, the banking and financial sector, interna - tional trade and service providers operating in relation to activities or goods subject to restrictive measures. In terms of corporate compliance, the new measures require a prompt and careful update of organisation - al models and internal control systems, following a meticulous identification and assessment of the cor - porate activities most exposed to the risk of commit - ting the new types of offences. In this context, the severity of the penalties shifts the balance of the regulatory framework more towards risk prevention than damage repair. The incentive rewards that, for other violations, may be sufficient to reduce penalties to manageable levels are considerably less effective here, as they do not prevent the application of financial penalties that – although reduced – could still be of a magnitude hitherto unknown in relation to corporate criminal liability in Italy. Furthermore, the extension of the whistle-blowing reg - ulations under Legislative Decree No 24 of 10 March 2023 to cover reports of violations of EU restrictive measures requires companies to adapt their existing reporting systems accordingly. Concluding Remarks Although significantly expanded since the onset of the Russian-Ukrainian conflict, EU restrictive measures have suffered – at least in Italy – from a fragmented and ineffective sanctions framework, particularly given the disproportion between the economic interests at
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