VATICAN CITY — The Vatican has made significant efforts to implement financial reforms complying with international transparency and antimoney-laundering standards, but the Holy See’s internal watchdog agency needs to step up its controls of the Vatican’s financial institutions, according to a report issued Thursday.
The report by Moneyval, a committee of financial specialists that evaluates measures to combat money laundering and terrorist financing, 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 highlighted in a first Moneyval report issued in July 2012. The report was backed by the Council of Europe, an international organization that monitors human rights and the rule of law.
The committee said these measures, though improved, need to be “tested in practice.”
Pointing out that no formal inspections had been carried out of the Institute of 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, Moneyval called on the Holy See’s oversight Financial Intelligence Authority to execute the inspections as soon as possible to test customer files for potential money laundering.
It also called on the Vatican to increase the resources available to the Financial Intelligence Authority, also entrusted with prudential supervision of the institutions, by hiring “experienced professionals” to carry out more effective, thorough controls “in the light of current and projected workloads.”
Under Pope Benedict VXI and his successor, Pope Francis, the Vatican has tried to open up the Vatican Bank and its affiliated financial organizations, traditionally secretive institutions that periodically surfaced in the public domain 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 Monsignor Nunzio Scarano, a priest who worked at the Administration of the Patrimony of the Apostolic See. The priest is being held 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 Scarano managed.
In keeping with his broader vision to reform the church and its institutions, Francis has issued documents strengthening supervision of the Vatican’s financial institutions, including one issued in August that extended the powers of the Financial Information Authority.
Last month, the pope appointed one of his personal secretaries, Monsignor Alfred Xuereb, to supervise the two commissions formed by the pontiff in recent months to scrutinize the Vatican’s economic structures and make sure they are in accord with the Church’s mission.
The Vatican Bank was established in 1942 by Pope Pius XII to handle accounts for religious orders, Vatican offices and employees, and individual religious people. In earlier recommendations, Moneyval called on the Vatican to monitor more carefully the identity and financial transactions of the account holders in all of the Holy See’s financial institutions.
The Moneyval report noted that under Financial Intelligence Authority supervision, some accounts were closed and a number of suspicious transaction reports were issued in 2013. 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.