On December 13, 2013, the New York Times (
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"Vatican Is Found to Make Progress in Policing Its Bank
By ELISABETTA POVOLEDO
Published: December 12, 2013
VATICAN CITY — The Vatican has made significant efforts to comply with international controls to combat terrorism financing and money laundering, but needs to step up oversight of its financial institutions to ensure that new laws drafted to fight financial crimes are being properly carried out, according to a report issued Thursday.
The report by Moneyval, a European monitoring agency, concluded that “a very wide range of legislative and other measures have been taken in a short time by the Holy See” to remedy numerous deficiencies in its financial practices highlighted in a Moneyval report issued in July 2012. Moneyval is a division of the Council of Europe, an international organization that monitors human rights and the rule of law.
These measures, however, still need to be tested, the report said, adding that it was “somewhat surprising” that so far, no formal inspections of the Institute for Works of Religion, as the Vatican Bank is formally known, or the Administration of the Patrimony of the Apostolic See, which manages the Vatican’s real estate holdings and financial portfolios, had been conducted. Moneyval called on the Holy See’s internal regulator, the Financial Intelligence Authority, to carry out inspections and test customer files for potential money laundering as soon as possible.
Under Pope Benedict XVI and his successor, Pope Francis, the Vatican has made concerted efforts to open up the Vatican Bank and its affiliated financial organizations, traditionally secretive institutions that have made headlines when financial scandals have come to light.
Last summer, Paolo Cipriani, the director general of the bank, and his deputy Massimo Tulli both resigned in the wake of the arrest of Msgr. Nunzio Scarano, a priest who worked at the Administration of the Patrimony of the Apostolic See. The priest is being investigated for his role in a failed smuggling scheme that prosecutors say involved moving millions of euros from Switzerland into Italy. Investigators are also looking into other financial transactions involving the accounts that Monsignor Scarano managed.
In line with his stated mission to reform the church, Francis has kept a close watch on the Vatican’s financial institutions, issuing several papal documents that impose closer oversight. Over the summer he formed two commissions to scrutinize financial activities, and last month he appointed one of his personal secretaries to oversee the commissions, effectively forging a direct liaison with the pontiff.
After the 2012 Moneyval report raised questions about the effectiveness and independence of the Financial Intelligence Authority, the pope significantly broadened its regulatory authority.
“Over all, the legislative change is strong,” John Ringgunth, executive secretary of Moneyval, said in a telephone interview from Strasbourg, France, particularly since “there was nothing in place at all” three years ago, when Benedict began enacting measures to rid the Vatican of its murky financial reputation.
In its earlier report, Moneyval called on the Vatican to monitor more carefully the identity and financial transactions of the approximately 19,800 account holders at the Vatican Bank, which was established in 1942 by Pope Pius XII mainly to handle accounts for religious orders, Vatican offices and employees, dioceses, individual religious people and religious educational institutes.
By October, about 30 percent of its customers had been reviewed, with inspectors focusing on categories that posed the highest risk to the bank, according to a progress report that the Holy See provided to Moneyval. The rest should be completed by early 2014.
The Moneyval report said that under the Financial Intelligence Authority’s supervision, some accounts were closed and a “significant” number of reports of potential money laundering were issued in 2013 — 105, compared with six in 2012. But it called on the Vatican to draft rules to better vet people working in Vatican financial institutions to assess their fitness for the job and examine potential conflicts of interest.
In a sign of further transparency under the Vatican’s new chief, Ernst von Freyberg, the bank published its first report ever in October.
The Vatican will report back to Moneyval in two years. In a statement earlier this week, the Vatican said it was “fully committed” to building a well-functioning system capable of preventing financial crimes."