In Italy, money laundering is worth almost 2% of GDP

According to the Bank of Italy, the value of money laundering, in the period 2018-2022, is between 25 and 35 billion dollars every year

We know that money laundering can take various forms and contaminate multiple sectors. By its very nature, however, it is a phenomenon difficult to measure precisely. The Bank of Italy did this through a new methodology, much more sophisticated than those used so far, arriving at the calculation that the laundering of illicit proceeds in our country, between 2018 and 2022, stood at between 25 and 35 billion dollars per year. That is to say a percentage ranging from 1.5 to 2% of the Gross Domestic Product (GDP).

How does the Bank of Italy calculate the value of money laundering

Calculating the value of money laundering is a task that various institutions have undertaken, with more or less satisfactory results. There is empirical evidence. But, as a rule, they refer to individual phenomena that give rise to illicit proceeds, such as drug trafficking. There are estimates for individual states, but they often reveal conflicting values. And in any case impossible to compare with each other. The percentages that circulate the most are those that the International Monetary Fund managed to develop almost thirty years ago, in 1998. Overall, recycling would be worth between 2 and 5% of global GDP.

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Bank of Italy has chosen to change its approach. Given that anti-money laundering legislation obliges banks, financial companies, notaries, lawyers and other entities to send reports of suspicious transactions (SOS) to the Financial Intelligence Unit (UIF), the study started from here. Which is in itself a novelty, because until now almost no one had relied on the SOS for reports of this type. At the same time, a machine learning algorithm processed data from various sources to make a projection on how much the transactions reported to the UIF by each bank in each Italian province should be worth, statistically. By comparing this data and analyzing it further, you can isolate reliable values ​​and correct unreliable ones.

How much is the laundering of illicit proceeds worth in Italy

By applying all the steps provided by this complex methodology, it is discovered that in the observation period the estimated volume of money laundering visibly increases. Going from 28.7 billion euros in 2018 to 35.6 billion in 2022. The only exception is 2020, the year in which the pandemic broke out and paralyzed the economic and social life of the country for several months. The percentage of GDP remains constant, standing at an average of 1.8%. Which suggests that the laundering of illicit proceeds is a pro-cyclical phenomenon: it increases in periods of economic growth and decreases in times of crisis.

The Bank of Italy underlines how banks, to protect themselves from the risk of incurring sanctions, tend to report to the UIF even more than is necessary. The volumes of money laundering considered plausible, in fact, amount to 62-70% of the total value of transactions reported as suspicious. The geography of the phenomenon is also rather stable over time. The top regions for the incidence of laundering of illicit proceeds on the GDP are the most populous and central for the Italian economy: Lombardy and Lazio. And those with the most deep-rooted presence of organized crime, namely Campania, Puglia, Calabria and Sicily.