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The Vatican Bank can be blacklisted by the international finance community after investigators found poor anti-money laundering controls in place.
The bank is being probed by Moneyval, the Council of Europe’s watchdog which monitors standards in finance.
If the watchdog rules against the Institute for the Works of Religion, as the Vatican Bank is formally known, it will face difficulties transferring money around the world.
Such a blacklisting could prove problematic for the church which relies on the organization to fund operations around the globe, media reports said.
Italian media reports said the Holy See’s financial regulator had been less than cooperative with Italian Customs in relation to movements of money at the Vatican Bank in 2011 and 2012.
Italian daily Corriere Della Sera reported that some 1,200 of the bank’s 19,000 accounts will shortly be closed by the bank. Corriere suggests the accounts in question, known as “lay” accounts, could account for up to €300 million.
Vatican Bank sources, however, said the bank cooperated with “all the appropriate authorities” and that the “lay” accounts had been closed because the account holders had “no ongoing affiliation with the Holy See.”
An investigation by the Financial Times into the Vatican’s bank, however, reinforced what European officials have found: that for years the institution has operated with little documentation and does 25% of its business in cash — practices that raise suspicions of money-laundering.
Several financial professionals who have dealt with the Vatican told the FT on condition of anonymity that the bank, known formally as the Institute for Religious Works, doesn’t operate as a typical bank. It has a small staff of 112 people who seemed “unversed in customer due diligence,” the report said. A complex system of proxies allows representatives to perform transactions on behalf of account holders.
In July, Peter Sutherland, the former attorney-general of Ireland and currently the non-executive chairman of Goldman Sachs International, met with the Pope’s council of cardinals and encouraged them to push for more transparency in the bank’s dealings.
Past and present Vatican officials confirmed to the FT that the bank is sometimes used to channel cash secretly to places in need, such as Christian groups in Cuba or Egypt.
A senior cleric, Monsignor Nunzio Scarano, was arrested in June for allegedly acting as an intermediary on Vatican transactions, making them difficult to trace. The prosecution says he suspiciously transferred money on behalf of people he knew, including a Neapolitan ship-owning family. His trial begins in Rome on Dec. 13.
Pope Francis set up two commissions of inquiry last summer to investigate the finances of the Vatican bank and look for ways to cut waste and improve transparency.
Sources
PBS News Hour
City AM
The Irish Times
Image: Getty Images/PBS
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