The move comes after Moneyval offered a broadly positive assessment of financial security progress made at the Vatican over the last 12 years.

In 2009 The Holy See signed up to the European Monetary Convention, aiming to bring its financial institutions in line with international standards after years of financial scandals and for the last decade the Vatican has been working towards financial reform.

The last scheduled on-site inspections came in October 202 and Moneyval's latest report.

The newest report, released this month, emphasized, "the Holy See (including the Vatican City State) will be subject to MONEYVAL's regular follow-up reporting process as a result of the positive report."

"With regard to preventative measures, Moneyval underlines that the sole authorised institution [the Vatican Bank or IOR] has a sound understanding of its money laundering and financing of terrorism risks," the watchdog said.

However, the Moneyval annual report also flagged concerns about staffing and funding for financial security operations which it said delays Vatican money laundering investigations. Read More

Moneyval arrived at the Vatican on Sept. 30 for the next phase of a regular multi-year evaluation of the institution's compliance with European financial regulations.

Meetings with the Moneyval committee were "held in a constructive and cooperative atmosphere," the Vatican said Oct. 13, calling the inspection "a further important step of the evaluation process."

The purpose of this stage of the inspection was to judge the effectiveness of the Vatican and Holy See's legislation and procedures for combating money laundering and terrorism financing. A big part of that effectiveness comes down to how successful the Vatican has been at prosecuting these crimes in court.

Read More

The Vatican says the bank's former president, Angelo Caloia, is the highest-ranking Holy See financial official to be indicted on such charges.

Seventy-eight year-old Coloia, along with his lawyer, 94 year-old Gabriele Liuzzo, denied any wrongdoing.

A third person who was under investigation, former director general Lelio Scaletti, died several years ago.

The bank (officially known as the Institute for Works of Religion) alleges "unlawful conduct" by the three occurred from 2001 to 2008. This period involved "the disposal of a considerable part of the institute's real estate assets."

In December 2014, Reuters reported the Vatican's top prosecutor, Gian Piero Milano, had frozen millions of dollars in accounts held by the three men.

Milano says the men regularly under-represented the proceeds from real estate sales in the Vatican bank's official books.

They allegedly received the difference between the real sale prices and the amount officially recorded separately.

Milano's order which froze the assets says the trio often received the money from the real estate sales in cash.

He claims some of the proceeds were deposited in a Rome bank account that was not registered on the IOR's balance sheet.

The bank's internal investigation into the alleged scam begun in 2013 by then-president Ernst von Freyberg, a German businessman.

Freyberg, who was president until 2014, commissioned an independent audit of the sale of properties formerly owned by the bank.

His misgivings were aroused after noting suspicious accounting procedures under the Coloia and Scaletti administrations.

Freyberg then began an overhaul of the bank, which had been implicated in numerous financial scandals.

Thousands of accounts were closed.

Last year Italy put the Vatican on its"white list" of states with cooperative financial institutions.

This ended years of mistrust, providing an endorsement of Pope Francis's efforts to clean up finances.

Moneyval, the Council of Europe's monitoring body, has said in several evaluations the Vatican has made great strides in cleaning up the IOR and other financial departments.

At the same time, Moneyval says the Vatican still needs to be more aggressive in bringing cases to trial.

Source

• Reuters
• CruxNow
• New York Times
• Image: Speigel Online

Moneyval, which is the Council of Europe's monitoring body, also says the prosecutor should be more "proactive" in other financial crimes.

These include corruption, embezzlement and abuse of office.

Furthermore, Moneyval says the prosecutor should "actively consider appealing sentences which he considers unduly lenient".

Moneyval's mixed bag of comments in its current periodic report also praise the Vatican's efficiency in flagging suspicious transactions.

However, as was the case in 2015, Moneyval said although the Vatican freezes assets if it identifies suspicious transactions, it isn't doing enough to prosecute offenders.

Of the 69 possibly problematic transactions the Vatican's Financial Information Authority has flagged in the past four years, criminal investigations have begun in 27 of them.

Eight of the investigations were closed without charges and six ended without indictment.

The Moneyval report expresses surprise that "no prosecution or indictment has ... been brought before the [Vatican] tribunal which involves a count of money laundering".

The report goes on to say the success rate of the prosecutor before the Tribunal "is so far not encouraging".

One major case the Vatican did prosecute was in relation to the former president and treasurer of the Vatican's pediatric hospital.

They were put on trial earlier this year facing embezzlement charges for allegedly diverting donations to renovate a cardinal's apartment.

The former president was convicted of the lesser offense of abuse of office and given a suspended one-year sentence.

The former treasurer was absolved.

The Vatican has released a statement following Moneyval's report acknowledging "there are still areas for further improvement, in particular as regards law enforcement and the judicial side".

Source

• Reuters
• Crux
• Image: Global Witness

The Vatican said that EY, formerly known as Ernst & Young, will "verify and consult" on the economic activity of the Vatican City State administration, which controls the money-making Vatican Museums, post office and tax-free department store.

A Reuters report said EY will deliver its findings to a commission appointed by Pope Francis to advise him on how to make the Vatican's financial activities more transparent.

With this week's move, three Vatican departments are now under review by outside firms. The other two are the Vatican bank and APSA, a department that manages real estate holdings and financial and stock portfolios.

On Monday the Vatican also issued new statutes for its Financial Intelligence Authority, further strengthening the regulatory office's independence from potential interference from senior members of the Church hierarchy.

While the new rules mostly incorporate changes on financial transparency already enacted, they also establish a new "office for prudential supervision", a body that Moneyval, the Council of Europe's anti-money laundering committee, said was needed.

Moneyval, which carried out a review last year at the Vatican's request, is due to conduct a new assessment later this year.

Sources

Reuters
AP/ABC News
Slate
Image: AFP/Slate

The pope issued a decree expanding the role and the reach of the Vatican's Financial Intelligence Authority "in response to a recommendation" of the European watchdog Moneyval Committee.

"[The move] is a means of ensuring the road (towards transparency) continues," said Vatican spokesman Federico Lombardi.

"In today's world, it is all about resisting increasingly insidious forms of financial criminality. We have to be equal to the challenges in order to protect legality, and not be left behind," he said.

The Catholic News Service noted that the latest move of the pope was made less than a month after he updated the Vatican's criminal code to include all Vatican employees around the world and not just those working in Vatican City.

The rules also apply to the non-profit organizations operating out of the Vatican, including Caritas Internationalis and Aid to the Church in Need.

The Vatican Financial Intelligence Authority, which was instituted by Pope Benedict XVI in 2011 to investigate suspicious financial transactions, will now "evaluate and approve the financial activities and the services offered" by the Institute for the Works of Religion (the Vatican bank) and the Administration of the Patrimony of the Holy See, the office that handles Vatican property and investments, said Lombardi.

Sources

AFP/The Raw Story

Catholic News Service

Image: The Raw Story

A stringent European money laundering exam in July and a federal court ruling in Oregon this week both make the point.

Earlier this year, the Vatican faced secular scrutiny of its financial operations for the first time with a review by Moneyval, Europe's anti-money-laundering agency. The Vatican submitted voluntarily, a somewhat surprising choice given its long history of fighting off such perceived incursions on its autonomy tooth and nail. The truth, however, is it didn't have much choice. If the Vatican is perceived as a suspect financial player, it risks higher transaction costs and being shut out of important markets.

July's verdict was a mixed bag, raising questions such as whether regulation of the Vatican Bank is sufficiently strong. Yet on the whole, Moneyval concluded the Vatican "has come a long way in a very short period of time" toward transparency, and "there is no empirical evidence of corruption."

Those findings undercut conspiracy theories about Vatican finances, and, to some extent, they also offset perceptions of Benedict XVI's papacy as an administrative train wreck.

Taking its medicine, in other words, did the Vatican some good.

Something similar happened Monday, with a ruling in a federal district court in Oregon on a sex abuse lawsuit. In a nutshell, the judge held that the Vatican is not the "employer" of Catholic priests and dismissed it from the case.

Judge Michael Mosman compared policies for priests set in Rome to the sort of control a state bar association wields over lawyers — important, sure, but not tantamount to an employer/employee relationship.

Before explaining why that experience was healthy, too, a bit of background. Read more

Sources

• John L Allen Jr in National Catholic Reporter
• Image: San Francisco Sentinel

A month ago, however, I finally got one right.

On June 22, previewing an evaluation of the Vatican's financial transparency by Moneyval, the Council of Europe's anti-money laundering body, I wrote: "The report is probably destined to trigger confusing and conflicting headlines about how well the Vatican did." Read more

Sources

• John L Allen Jr in National Catholic Reporter
• Image: Nicolls And Dimes

John L Allen Jr is NCR senior correspondent.

The audit by Moneyval, a department of the Council of Europe, followed a request by the Holy See last year for an evaluation of its financial control systems and safeguards against criminal activity.

While the Holy See passed 9 of the 16 key tests — putting it in the same league as countries that have been working for years on their financial transparency — the inspectors called for improvement in several areas.

The financial transparency audit was most critical of the Vatican's new financial oversight agency, the Financial Information Authority.

The inspectors said it does not appear to have the authority and resources necessary to maintain adequate oversight of the Vatican's financial activities.

The report also recommended more professional oversight of the Vatican bank, the Institute for Religious Works. The inspectors "strongly recommended" that it should be independently supervised and should make rules about who is actually eligible to keep accounts there.

On the positive side, the report said the Holy See "has come a long way in a short period of time" and that many of the "building blocks" to combat money laundering are in place, even though more has to be done.

Responding to the report, the Holy See's Undersecretary for Relations with States, Monsignor Ettore Ballestero, said the Holy See and Vatican City had been found to be "largely compliant with international standards".

He said the Holy See had laid the foundations for "a robust and sustainable system to combat money laundering and the financing of terrorism. Now it is our wish to fully construct a building that effectively shows the Holy See's and Vatican City State's desire to be a reliable partner in the international community."

Sources:

Vatican Radio

Associated Press

Reuters

Image: Political World