LOL there is still a royal family in Italy and in the north of Italy people that still claim the Titles of prince an princess

All this stuff we're discussing can be later compiled as a whole and cross referenced to prevent conflicts

I love the Portrait Idea and should point out that even in the HP books they show that the people in wizard portraits can show disapproval and emotions
We could simply say that if you are a Wizarding family of any means anywhere in the world then it is a must that those most powerful and important members of your family be painted by an Artist trained in Italy
Hell I can see competing schools of thought on the methods of painting portraits and secrets of the art that are as guarded by those that know them as the plans for top secret weapons
Revealing these secrets would bring Vendetta either from the master or the styles patron

Oh and as you brought up the Merchants I thought I'd bring up the Merchant Princes of Venice
Surely you've heard of Machiavelli?
He's noted for his philosophy and grasp of the power of wealth
He'd have made a Slytherin of such power that even Valdamort would have shivered at his approach
He'd be a good example how even with all the codes Italy is a dark and dangerous land
Here's a few of my more favorite quotes of his

When you disarm the people, you commence to offend them and show that you distrust them either through cowardice or lack of confidence, and both of these opinions generate hatred.

Politics have no relation to morals.

It is better to be feared than loved, if you cannot be both.

The first method for estimating the intelligence of a ruler is to look at the men he has around him.

Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage.

Never was anything great achieved without danger.

The more sand has escaped from the hourglass of our life, the clearer we should see through it.

No enterprise is more likely to succeed than one concealed from the enemy until it is ripe for execution.

If an injury has to be done to a man it should be so severe that his vengeance need not be feared.
Niccolo Machiavelli