Organised criminals are using the former currency for illicit transactions, according to one senior Italian police officer, despite the Italian lira not being legal tender since 2002 when Italy joined the euro.

“We still discover big amounts of liras,” Giuseppe Arbore, a deputy in the Guardia di Finanza, Italy's financial police, told parliament on Thursday. “Italian liras still constitute parts of illicit transactions.’’

The old Italian lira. Photo: Depositphotos

His comments reportedly amazed lawmakers at the Senate Finance Committee, where he was testifying on a government bill aimed at simplifying the tax system.

When pressed to provide examples, he said he couldn’t elaborate, citing ongoing investigations.

READ ALSO: What is Italy's flat tax and who would it benefit?

“When a banknote is accepted by an organization internally, even if it is outside the law as a legal value, it can settle transactions,’’ he said. “We are obviously talking about illicit organizations.’’

It's unclear how, or even if, the money is eventually exchanged for euros.

The revelation comes following intense government debate on the viability of creating a secondary currency.

League party ministers including Matteo Salvini, Italy's co-deputy prime minister, said they want to use to use “small denomination government bonds,” known as “minibots”, for domestic transactions within Italy, but the measure is strongly opposed by many within the fractured coalition government, including Finance Minister Giovanni Tria.

The risk that the notes could be used for illegal trade was among the reasons listed by opponents of the idea.

READ ALSO: 

• 2.7 million people apply for Italy's basic income scheme
• Italy's economic policies will hit the poor hardest: IMF
• Juncker warns Italian government over its struggling economy