It also reported the risk of fraud is lower than ever.

ASIF said that in 2020 more financial transactions were flagged as suspicious by Vatican offices. Yet, after investigation, it did not have to suspend any transactions or freeze any accounts.

ASIF reported it received 89 suspicious activity reports in 2020, 85 of which came from the Institute for the Works of Religion (IOR), commonly called the Vatican bank. In 2019, 64 suspicious activity reports were filed.

After reviewing documents connected to the 89 transactions, the authority submitted 16 reports to the Office of the Promoter of Justice of Vatican City State for potential criminal investigation, the report said.

"Most potential financial crimes involve foreign entities or conduct undertaken in, or in connection with, foreign jurisdictions. The main potential predicate offences are international fraud and embezzlement," the annual report said.

Pope Benedict XVI established the authority in 2010 to bring the Vatican up to international standards in preventing and countering suspected money laundering and the financing of terrorism.

President Carmelo Barbagallo said 2020 has been a year "of important and profound changes" for ASIF.

The organisation had to rebuild after its director Tommaso Di Ruzza, and president René Brülhart were ousted at the end of 2019.

Both men will go on trial in connection with the London Affair, a real estate transaction. The trial starts July 27 in the Vatican.

The Vatican financial watchdog report emphasises that "the Holy See is strongly committed to ensuring international cooperation and the exchange of information for the purposes of preventing tax evasion and facilitating the fulfilment of fiscal requirements by foreign citizens and legal entities having relations with the IOR".

Sources

La Croix International

National Catholic Register

Under the pope's plan, the agency will be split into three parts, the Vatican said on Saturday. They are vigilance, rules and legal affairs, and financial information.

The Vatican's Financial Information Authority, known as AIF, will now be called the Supervisory and Financial Information Authority, or ASIF.

This reflects its regulatory function over other Vatican entities and departments.

The overhaul is part of reforms wanted by Francis to ensure "transparency and reinforce controls in the economic-financial sector," the agency's president Carmelo Barbagallo, previously at Italy's central bank, told Vatican media in an interview.

In late November, Francis told reporters aboard a papal flight that AIF had failed in "its duty of control."

Smoking out financial scandal has been a motif of Francis' papacy. One "opaque" investment deal in prime London real estate provoking a raid of the AIF offices in October 2019.

The Vatican suspended five employees after the raid, including the former director of the office, Italian layman Tommaso Di Ruzza.

The president of the anti-money-laundering authority, René Brülhart, resigned following the raids. Brülhart issued a strong defense of Di Ruzza and expressed dismay at his treatment by Vatican officials.

The deal-broker Gianluigi Torzi has been arrested and faces charges of extortion, embezzlement, aggravated fraud and money-laundering in the £160 million deal, which was paid for with money donated by ordinary churchgoers.

The scandal also saw the resignation of ex-cardinal Angelo Becciu. Becciu resigned following allegations he had sent €100,000 in Holy See funds to a charity controlled by his brother.

Shortly after the upheaval, the Egmont Group, a global network of financial intelligence authorities, suspended the AIF.

Beyond countering corruption and the financing of terrorism, ASIF will also be responsible for the "prudential supervision" and regulation of any Vatican office that handles investments or financial transactions. It is also tasked with carrying out financial investigations.

The new Vatican statute states that the new financial watchdog will "have access to documents and data, even of a confidential nature, and exchange information at domestic and international level."

Sources

• Religion News
• Bloomberg
• Morning Star

Announcing René Brülhart's replacement, the Vatican said Pope Francis has chosen a new president but does not name him or her.

The three-sentence announcement said Francis thanked Brülhart for his work as his term ended and would soon name "an individual with a high professional profile and competence at the international level."

Brülhart said he had decided to resign at the end of his five-year term, which ends on November 19.

However, according to John Allen of Crux, the president of the Financial Information Authority (AIF) has no fixed term of office, "To assert that it's the end of a non-existent "mandate" is prima facie dubious", comments Allen.

The main purpose of the financial watchdog is to prevent financial crimes at the Vatican and oversee the cleanup of the Vatican Bank.

Brülhart, a highly respected Vatican figure in the international financial community, is a former director of Liechtenstein's financial intelligence unit, where he helped end the country's reputation as a financial pariah.

A former vice-chair of the Egmont group, a global network of financial intelligence units, the Swiss lawyer, dubbed by some as the 007 of anti-money laundering efforts.

Since Brülhart's involvement at AIF, the Vatican notched a string of impressive successes, including

• the Moneyval process,
• membership of the Egmont group which groups financial information agencies from 130 countries to share information in the global fight against money laundering and terror financing,
• the MOUs signed with various countries, and, most recently,
• the Vatican's entry into the Single Euro Payments Area (SEPA), which allows the Vatican bank to have its own IBAN code to facilitate wire transfers.

Since Brülhart's resignation, Marc Odendall, a retired Swiss-German banker also tendered his resignation from the AIF.

Odendall said Brülhart's resignation and the Egmont Group removing the AIF from its communications network made his involvement pointless.

"We cannot access information and we cannot share information.

"There is no point in staying on the board of an empty shell," Odendall told the Associated Press, Tuesday.

AIF remains an Egmont member but is suspended from the secure communications network.

"Today it's difficult to resist the sense that Rome is headed back to the future, meaning a situation in which financial management is lodged with a largely Italian nexus of clerics and lay financiers, and where power dynamics have at least as much impact on outcomes as financial norms and best practices.

"Perhaps it's unreasonable to expect the Vatican's communications team to put all that in a statement, at least quite so bluntly. Just don't try to tell us there's nothing to see here, when the eye test reveals something else indeed," writes John Allen.

Police raid

In October Vatican police raided the offices of the AIF and Secretariat of State, the Holy See's executive.

The raid was part of an investigation into a large property investment in London.

The Vatican's secretariat of state had put 150 million euros into the luxury apartment building in London's tony Chelsea neighbourhood, only to see tens of millions end up in the pockets of middlemen who were managing the venture.

In 2018 the secretariat of state decided to buy the building outright while working with British authorities to nab the middlemen.

However internally, the Vatican bank and auditor general's office raised an alarm with Vatican prosecutors that the buyout looked suspicious, sparking the raids on AIF and the secretariat of state.

Since the raid, the AIF's security chief resigned and the Vatican has suspended five employees, including the AIF's deputy, Tommaso Di Ruzza.

It is unclear what the suspended employees are suspected of doing.

The saga over the Vatican's financial control comes as early next year it is expecting a review by the Council of Europe's Moneyval committee.

Moneyval measures compliance with international standards against money laundering and financing of terrorism.

Sources

• Wall St Journal
• NCR
• Crux
• Associated Press
• Crux

Two of those cases were forwarded to Vatican prosecutors for further investigation, and the other four may still warrant more formal probes, the Financial Information Agency said in its first annual report.

In the previous year only one suspicious transaction was reported, which FIA director Rene Brulhart said proves that his department and its system, which became operational in April 2011, are working well.

Brulhart said the six suspicious transactions involved sums of money greater than 10,000 Euros ($NZ15,775) but would not provide additional details.

"I'm not saying that everything is great and perfect, but that a lot of progress has been made in the last two years," said Brulhart, a Swiss lawyer and anti-laundering expert.

"It's important that we're setting a system here to protect the Holy See," he added.

He pointed to co-operation with Vatican police and Italian forces, thorough screening of financial transfers, and the signing of co-operative agreements with European countries to govern banking and financial transactions.

The FIA was established in 2010 to tighten controls on Vatican financial transactions, in response to complaints that the Vatican — and especially the Vatican Bank — could be vulnerable to exploitation by money-laundering operations.

Brulhart said the FIA would soon put into place new procedures to screen account holders at the Vatican Bank, officially known as the Institute for Works of Religion or IOR.

As he presented the FIA report, Brulhart reminded journalists that the IOR is not an ordinary bank.

"The IOR is not a commercial bank, and the Vatican is not a tax haven," he said. "The Holy See is a reliable partner in the international fight against money laundering."

Sources:

Catholic News Agency

Reuters

Vatican Radio

Image: Catholic News Agency